Inventory stickiness, environmental dynamism, financial constraints and survival of new SMEs in China
Journal of Manufacturing Technology Management
ISSN: 1741-038X
Article publication date: 10 August 2020
Issue publication date: 23 February 2021
Abstract
Purpose
Although the adoption of lean inventory management for performance improvement has been widely recognized, sticky inventory management is still a stopgap measure for new small and medium enterprises (SMEs) against survival risks. The purpose of this paper is to demonstrate the nonlinear relationship between new SMEs inventory stickiness and venture survival by focusing on the moderating effects of environmental dynamism and financial constraints.
Design/methodology/approach
Classical moderating model is employed to investigate the effects of environmental dynamism and financial constraints on the relationship between inventory stickiness and venture survival. This study uses the accelerated failure time model for survival analysis and tests the relationships based on a large set of new manufacturing SMEs in China over the period from 1999 to 2007.
Findings
The main finding is that inventory stickiness has an inverted U-shaped impact on the likelihood of survival. However, the inflection point of this inverted U-shaped relationship lies at the end of the sample. Further moderation analysis indicates that environmental dynamism positively moderates the inverted U-shaped relationship between inventory stickiness and venture survival, while financial constraints negatively moderate this relationship.
Practical implications
Most new SMEs have great potential to increase the likelihood of survival by improving inventory stickiness before achieving effective lean inventory management. Sticky inventory management can help new SMEs achieve better survival in a dynamic environment. However, new SMEs that are financially constrained should prudently implement sticky inventory management.
Originality/value
This paper contributes to the existing understanding about the likelihood of SMEs survival by addressing the role of sticky inventory management. It may be the first study to empirically demonstrate the moderating effect of environmental dynamism and financial constraints on the inverted U-shaped relationship between inventory stickiness and venture survival.
Keywords
Acknowledgements
This research was supported by the Humanities and Social Science Fund of Ministry of Education of China (20YJC630244)
Citation
Zhu, X., Wang, J., Liu, B. and Di, X. (2021), "Inventory stickiness, environmental dynamism, financial constraints and survival of new SMEs in China", Journal of Manufacturing Technology Management, Vol. 32 No. 2, pp. 400-422. https://doi.org/10.1108/JMTM-11-2019-0401
Publisher
:Emerald Publishing Limited
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