Inventory management, managerial competence and financial performance of small businesses
Journal of Accounting in Emerging Economies
ISSN: 2042-1168
Article publication date: 29 May 2020
Issue publication date: 17 August 2020
Abstract
Purpose
The purpose of this study is twofold (1) to establish the relationship between inventory management, managerial competence and financial performance and (2) to test whether inventory management mediates the relationship between managerial competence and financial performance.
Design/methodology/approach
We employed cross-sectional and correlational research designs. A questionnaire survey of 304 small businesses in Uganda was utilized. Hypotheses were tested using a bootstrap analysis technique with the aid of Analysis of Moments Structures (AMOS) software.
Findings
Results indicate that inventory management and managerial competence are significantly associated with financial performance of small businesses. Further, inventory management partially mediates the relationship between managerial competence and financial performance.
Originality/value
Rather than focusing on only the direct effects of managerial competence and inventory management, moreover independently, the indirect effect of inventory management is tested. Further, the behavioral perspective of inventory management, as opposed to financial ratios, is utilized.
Keywords
Acknowledgements
We are grateful to the respondents who spared their time to complete this study questionnaire. We are thankful to the Editor and the two anonymous reviewers for their constructive feedback.
Citation
Orobia, L.A., Nakibuuka, J., Bananuka, J. and Akisimire, R. (2020), "Inventory management, managerial competence and financial performance of small businesses", Journal of Accounting in Emerging Economies, Vol. 10 No. 3, pp. 379-398. https://doi.org/10.1108/JAEE-07-2019-0147
Publisher
:Emerald Publishing Limited
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