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

Author

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  • Huynh, Nhan
  • Le, Quynh Nga

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.

Suggested Citation

  • Huynh, Nhan & Le, Quynh Nga, 2025. "From chain to capital: Supply chain risks and working capital management," Economics Letters, Elsevier, vol. 247(C).
    • Handle: RePEc:eee:ecolet:v:247:y:2025:i:c:s0165176524005846
    DOI: 10.1016/j.econlet.2024.112100
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    More about this item

    Keywords

    Supply chain risk; Supply chain disruptions; Working capital management; Financial flexibility;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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