From chain to capital: Supply chain risks and working capital management

Nhan Huynh and Quynh Nga Le

Economics Letters, 2025, vol. 247, issue C

Abstract: This study empirically examines the influence of supply chain risks on working capital management. By employing a text-based measure of firm-specific supply chain risks and a large sample of US listed firms, this study uncovers a strong positive correlation between supply chain risk exposure and net working capital, with an increase of approximately 6 % annually. Firms strategically adjust by increasing inventory and accounts receivable while reducing accounts payable to buffer against disruptions. This adaptive response is particularly evident in firms facing financial constraints, higher international exposure, and those in high-risk sectors, offering critical insights into enhancing resilience and operational efficiency.

Keywords: Supply chain risk; Supply chain disruptions; Working capital management; Financial flexibility (search for similar items in EconPapers)
JEL-codes: G30 G31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176524005846

DOI: 10.1016/j.econlet.2024.112100

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