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Focus on working capital management practices among Mauritian SMEs: Survey evidence and empirical analysis

Kesseven D Padachi and Carole Howorth
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Kesseven D Padachi: School of Accounting, Finance and Accounting, University of Technology, Mauritius La Tour Koenig Pointe aux Sables
Carole Howorth: School of Management, Bradford University, United Kingdom

E3 Journal of Business Management and Economics., 2014, vol. 5, issue 4, 097-108

Abstract: This study investigated into working capital management (WCM) practices of small to medium sized manufacturing firms operating in diverse industry groups of the Mauritian economy. Previous studies have revealed that SMEs tend to neglect this area and are often credited as the main reason for their poor performance. Therefore the purpose of this paper is to investigate into the SMEs’ approach to WCM routines. The research objectives were met using a survey based approach. The findings consistently highlighted that Mauritian SMEs are not a homogenous group with regard to WCM routines. Exploratory factor analysis identified three underlying dimensions in the take up of WCM routines, namely stock review, debtor review and finance review of Mauritian SMEs. The education level and the field of study consistently showed that financial knowledge gained in accounting related field make a difference. The results also showed that firms which claimed a more severely late payment focused more on credit management and pay more attention to working capital financing. Interestingly, the smaller firms may not be adopting formal analysis of WCM, not only because of resource constraint, but due to a lack of need. Financial institutions and policy makers need to focus on educating such owner-managers with necessary WCM knowledge.

Keywords: Working capital management; Mauritian SMEs; Survey; Factor Analysis. (search for similar items in EconPapers)
Date: 2014-05
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