Does lean inventory management alleviate financing constraints?
Journal of Manufacturing Technology Management
ISSN: 1741-038X
Article publication date: 14 March 2024
Issue publication date: 18 April 2024
Abstract
Purpose
This study explores the intricate relationship between inventory leanness, financial constraints and digital transformation in listed Chinese manufacturing firms.
Design/methodology/approach
Using a large panel data collected from 2,563 Chinese listed manufacturing enterprises over the period from 2012 to 2021, this research employs the instrumental variable method combined with two-stage least squares estimators to explore the U- shaped relationship between inventory leanness and financial constraints. Furthermore, the moderating role of digital transformation is demonstrated.
Findings
Contrary to traditional assumptions, our research uncovers a U-shaped relationship between inventory leanness and financial constraints, indicating that excessive inventory reduction can exacerbate financial constraints. Digital transformation plays a significant moderating role, particularly in highly digitalized environments.
Practical implications
Our findings have practical significance for top managers and policymakers. We advocate for a balanced approach to lean inventory management to mitigating financial constraints. The study emphasizes the pivotal role of digital transformation in alleviating the impact of inventory leanness on financial constraints, highlighting the need for digital transformation strategies.
Originality/value
This research provides a comprehensive analysis of inventory leanness, financial constraints and digital transformation dynamics. It challenges conventional thinking by revealing the nonlinear nature of the inventory leanness–financial constraints relationship. The concept of moderation highlights the moderating effect of digital transformation. This study offers practical guidance for practitioners and policymakers.
Keywords
Acknowledgements
The authors would like to acknowledge that this research has received support from the National Social Science Fund of China (22CGL008).
Citation
Wang, J., Yao, X., Zhu, X. and Li, B. (2024), "Does lean inventory management alleviate financing constraints?", Journal of Manufacturing Technology Management, Vol. 35 No. 3, pp. 590-608. https://doi.org/10.1108/JMTM-10-2023-0468
Publisher
:Emerald Publishing Limited
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