Global Trends in Working Capital Management: A Bibliometric Review and Future Research Directions

INTRODUCTION

Rising concerns over liquidity crises, supply chain disruptions, financial distress, tightening credit conditions, earnings volatility, and shocks such as global economic downturns and the COVID-19 pandemic have served as persistent wake-up calls for firms worldwide. These challenges highlight the critical importance of effective working capital management (hereafter, WCM) in ensuring operational continuity, financial resilience, and sustainable firm performance. Consequently, researchers and practitioners increasingly recognise the need to integrate Working Capital (WC) considerations into strategic, operational, and financial decision-making processes. WC is commonly defined as the excess of current assets over current liabilities, representing the short-term liquidity available to support a firm’s day-to-day operations. As a result, WCM has emerged as a vital area of research, focusing on how firms can balance liquidity and profitability while navigating uncertainty and maintaining long-term value creation. The origins of this research stream can be traced back to early theoretical studies on WC.

Sagan (1955) laid the foundational groundwork for WCM research by highlighting the critical role of managing cash, inventories, payables, and receivables in ensuring smooth firm operations. Building on this early framework, Walker (1964) examined the trade-off between risk and return in WCM decisions, emphasising the need to balance liquidity with profitability. Subsequently, Smith (1980) further advanced the literature by explicitly analysing the impact of WCM on firm profitability, thereby establishing WCM as a strategic financial function rather than a purely operational concern. Later empirical studies expanded this by identifying firm-specific and macroeconomic factors influencing WC requirements (Hill et al., 2010). Complementing these insights, Shin and Soenen (1998) and Deloof (2003) provided robust empirical evidence demonstrating that efficient WCM significantly enhances corporate profitability. Motivated by this evidence, subsequent empirical research has sought to disentangle the mechanisms through which WC level affects firm performance.

Higher Working Capital Investment (WCI) can be value-enhancing, particularly for firms facing liquidity constraints, by supporting sales growth and operational stability. As adequate inventories reduce supply disruptions, hedge against input price volatility, and mitigate sales losses due to stockouts (Blinder and Maccini, 1991; Fazzari and Petersen, 1993; Corsten and Gruen, 2004). Moreover, the extension of trade credit facilitates price discrimination, signals product quality, and strengthens long-term customer relationships (Brennan et al., 1988). However, excessive WCI may erode shareholder value by increasing financing requirements and opportunity costs (Kieschnick et al., 2013), elevating bankruptcy risk, and constraining firms’ ability to undertake value-enhancing investments (Ek and Guerin, 2011).

Conversely, lower WCI reduces financing needs, carrying costs, and interest expenses, thereby improving capital efficiency (Brandenburg, 2016). Nevertheless, overly aggressive WC policies may impair firm performance by increasing the likelihood of stockouts, weakening customer relationships, and reducing financial flexibility, ultimately leading to sales losses and reputational damage (García-Teruel and Martínez-Solano, 2007; Chang, 2022). Taken together, these arguments highlight the inherently nuanced and context-dependent nature of WC decisions, which has motivated a growing and diverse body of academic research. Consequently, the following section reviews the existing literature on WCM, synthesising prior review-based evidence, summarising key findings, and identifying gaps addressed by the present study.

The remainder of the paper is structured as follows. Section 2 reviews the existing literature, while Section 3 describes the methodology and literature search strategy. Section 4 presents the bibliometric results and key findings. Section 5 develops the conceptual framework. Section 6 identifies research gaps and outlines future research directions. Section 7 discusses the findings and highlights their implications and limitations. Finally, Section 8 concludes the study.

LITERATURE REVIEW

This section reviews the extant literature on WCM by synthesising evidence from existing review-based studies. Although a few literature reviews exist, they are limited in number and scope; to the best of our knowledge, only ten review studies published between 2014 and 2022 have examined this domain, each pursuing distinct research objectives (see Table 1). Existing review studies on WCM have systematically examined the evolution of the literature by synthesising prior empirical and theoretical research (Singh and Kumar, 2014; Kayani et al., 2019; Prasad et al., 2019). Bibliometric analyses have mapped publication growth, influential journals, authors, institutions, and countries, providing a structured overview of the intellectual landscape (Martinho, 2021; Nobanee and Dilshad, 2021). Meta-analytical studies have quantitatively assessed the relationship between WCM and firm profitability, offering consolidated evidence on performance linkages (Singh et al., 2017; Yasmin and Mohiuddin, 2021; Enow, 2022). Sector-specific and thematic reviews have further explored WCM in construction and supply chain finance contexts (Asare et al., 2023; Chiu and Hsieh, 2021). Collectively, these studies present a descriptive and organised account of how WCM research has developed over time across different contexts and streams.

Despite the significant growth and importance of WCM, the field has remained relatively underexplored, and its development has not kept pace with corresponding academic, empirical, theory building and critical knowledge. The limited research restricts comprehensive understanding of WCM, as the absence of quantitative bibliometric analyses hinders the development of informed academic debate and future research directions (Asare et al., 2023). Hence, the literature remains fragmented, with limited consensus on underlying mechanisms, motivating the need for a comprehensive and structured review.

Building on earlier review studies on WCM, several important research gaps can be observed. First, existing systematic reviews and meta-analyses (Pratap Singh and Kumar, 2014; Kayani et al., 2019; Prasad et al., 2019; Singh et al., 2017; Yasmin and Mohiuddin, 2021) primarily focus on specific dimensions of WCM, such as “profitability” and “WC practices,” while offering limited insight into the intellectual structure and knowledge diffusion of the field. Second, although recent bibliometric studies provide a broader overview of WCM research by identifying leading authors, journals, and countries (Martinho, 2021; Nobanee and Dilshad, 2021), they largely rely on descriptive indicators and do not undertake deeper content-based, influence-oriented, or network-level analyses, resulting in limited understanding of collaboration patterns and cross-country or cross-disciplinary linkages. Third, prior studies do not employ advanced influence metrics, such as PageRank analysis, to identify the most influential works within citation networks, nor do they systematically examine the temporal evolution of research themes. Finally, earlier studies do not develop an integrative conceptual framework or articulate a structured future research agenda, thereby limiting theoretical synthesis and guidance for advancing WCM research. Table 2 presents the research questions formulated to address the identified research gaps.

To address these gaps, we conduct a review of 913 articles published between 1981 and 2025 using bibliometric and content analyses from the Scopus database. This study contributes to prior review studies in four keyways. First, it identifies influential authors, leading journals, and seminal articles, providing a clear picture of the intellectual landscape. Second, it delineates the theoretical structure of the field by categorising the literature into three dominant themes: WCM and firm profitability, WCM and financial constraints, and WCM and supply chain finance. Third, a thematic evolution analysis of publications between 2020 and 2025 reveals that the field is still developing, with emerging topics including excess Net Working Capital (NWC), corporate investment, economic conditions, corporate governance, and trade credit. Finally, by combining bibliometric analysis with content review and cluster analysis, the study constructs a conceptual framework, highlights research gaps, and proposes future research agendas. This study thereby addressing knowledge gaps and offering actionable insights for scholars, practitioners, and policymakers in government, business, and society.

METHODOLOGY

Literature search

To retrieve relevant literature for this study, the Scopus database was employed, given its extensive use in prior bibliometric research (Baas et al., 2020). Scopus was chosen for its robust indexing standards and reliable bibliometric information. The selection of this database is primarily justified by the following factors: (1) its broad coverage of high-quality publications from 1788 to the present, (Baas et al., 2020); (2) its user-friendly functionalities for sorting and exporting academic records, which are crucial for bibliometric analysis; and (3) its relatively larger collection of peer-reviewed articles on WCM compared to other sources such as the Web of Science Core Collection and Google Scholar. After finalizing the database, a comprehensive keyword string (see Figure 1) was developed and implemented in Scopus, with the search strategy systematically applied across titles, abstracts, and keywords (Goyal and Kumar, 2021).

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Exclusionary criteria

Based on the specified keyword string, the Scopus database initially yielded 4,166 records, but after restricting the period to 1981-2023, 3,333 records remained. Subsequently, restricting the subject areas to “business, management and accounting”, “economics, econometrics and finance”, and “social sciences” owing to their direct relevance to the field, resulted in 1,018 records. Further refinement by document type (articles, conference papers, and reviews) reduced the sample to 944 records. Finally, limiting the selection to English-language publications led to a final dataset of 913 relevant records, which were used for the bibliometric analysis.

Analysis of Final Records

This study adopts a bibliometric approach to analyse 913 research records, a method widely recognised for effectively examining the structural characteristics of a research domain (Li et al., 2017). Accordingly, this study utilises multiple analytical methods, including publication trend analysis, citation network analysis (Paul and Benito, 2018), co-citation clustering, keyword analysis (Comerio and Strozzi, 2019), and PageRank analysis (Brin and Page, 1998). Table 2 presents an overview of the techniques applied mapping four research questions. The Bibliometrix R-package (Aria and Cuccurullo, 2017) and VOSviewer (Rialti et al., 2019) were employed to conduct the bibliometric analysis, enabling comprehensive science mapping and visualisation. Although Scientometrics analysis is a robust review technique, its findings are often influenced by highly cited publications, which may lead to the underrepresentation of recent studies with fewer citations. To mitigate this limitation, a supplementary content analysis was performed on 605 articles published between 2020 and 2025 to capture emerging research themes. Of these, 267 articles overlap with the final dataset of 913 records, while an additional set of 338 recent studies published between 2023 and 2025 was compiled using the same database and search strategy.

FINDINGS

Publication trends

Figure 2 illustrates the annual publication trend in WCM research from 1981 to 2025. The figure shows a relatively low and sporadic number of publications during the initial phase (1981-2000), indicating limited academic attention to WCM during this period (Pass and Pike, 1987). A gradual increase is observed after the early 2000s, reflecting growing recognition of WCM as a critical component of corporate financial performance and liquidity management, particularly in response to heightened market competition, financial globalization. From around 2010 onwards, the number of publications rises sharply, with a pronounced surge after 2015, reaching a peak during the early 2020s. This rapid growth can be attributed to increased global financial volatility, heightened focus on cash flow efficiency, supply chain disruptions, and the impact of economic shocks such as the GFC-2008 and the COVID-19 pandemic. Overall, the upward trend highlights the expanding relevance of WCM research in addressing contemporary financial, operational, and sustainability challenges faced by firms.

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Leading Journals

As shown in Table 3, journals such as the “International Journal of Managerial Finance” and the “International Journal of Production Economics” emerge as key contributors with high citation impact and A-level ABDC rankings, reflecting the strong relevance of WCM to corporate finance and managerial decision-making. The presence of “Managerial Finance” and the “International Journal of Production Research” further demonstrate sustained scholarly interest from both financial and operational perspectives, underscoring the integration of WCM practices with production efficiency. Despite a lower publication volume, the “Journal of Accounting and Economics” exhibits substantial academic influence, as indicated by its A* ABDC and 4* ABS rankings, highlighting the theoretical significance of WCM within top-tier accounting and economics research. However, the concentration of influential WCM studies within a limited set of journals suggests scope for broader theoretical development and cross-disciplinary diffusion across finance, accounting, and operations research.

Disciplinary Landscape

Figure 3 shows that WCM studies are predominantly concentrated in “business, management and accounting”, followed by “economics, econometrics and finance”, while emerging contributions from “decision sciences”, “engineering”, and “computer science” indicate increasing methodological sophistication. These results imply that while WCM research has achieved strong theoretical grounding within finance and management disciplines, future studies would benefit from greater interdisciplinary integration and the application of advanced analytical and data-driven approaches to address complex and evolving WC challenges.

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Contributors and Collaboration Networks Across Authors, Countries, and Institutions

Table 4 presents the top contributors to WCM research, encompassing 2013 authors from 1096 organisations across 69 countries. At the author level, Table 4 highlights several highly influential contributions to the WCM literature. Lind et al., (2012) is seminal for advancing a financial value chain perspective, demonstrating how WC decisions are interdependent across firms and effectively bridging insights from corporate finance and Supply Chain Management (SCM). Similarly, García-Teruel and Martínez-Solano (2007) has been widely cited for providing one of the earliest robust empirical analyses showing how efficient WCM directly enhances SME profitability, thereby combining methodological rigor with practical relevance. Together, these studies have shaped both the theoretical and applied understanding of WCM, serving as foundational references for subsequent research in the field. This hierarchy is mirrored in Figure 4, where the Lind and Kärri T cluster forms the most cohesive collaborative nucleus, while groups around García-Teruel and Simon Savard N remain smaller and locally oriented. The absence of strong cross-cluster links demonstrates that, despite identifiable leaders, collaboration is structurally fragmented, constraining knowledge diffusion across author groups.

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Country-level evidence reinforces this pattern. Table 4 positions the US as the dominant research hub in both citations and publications, reflecting its early and extensive adoption of WCM research, strong academic networks, and the presence of leading finance and operations journals, followed by China, the UK, and India. Consistent with this evidence, Figure 5 presents the international collaboration network in WCM research. The USA emerges as the central hub, reflecting its dominance in publications, citations, and cross-country collaborations, effectively connecting both developed and emerging economies. Secondary hubs, including China, the United Kingdom, and India, exhibit strong regional ties but comparatively lower global connectivity, while peripheral countries occupy marginal positions, indicating asymmetries in participation and a hierarchically coordinated research structure. Despite the global relevance of WCM, collaborative research remains concentrated in a few dominant countries, suggesting limited cross-regional knowledge diffusion and the need for broader international engagement to develop more generalizable insights.

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Institutional patterns further consolidate these findings. Table 4 identifies Lappeenranta University of Technology and Universiti Utara Malaysia as leading institutions by output, a status confirmed in Figure 6, where Universiti Utara Malaysia operates as the most interconnected node anchoring a major collaboration cluster. Other institutional groupings, such as IIM Ranchi and elite Western universities (e.g., Stanford, University of Pennsylvania, University of Manchester), display dense intra-cluster activity but limited cross-cluster exchanges, producing an institutional architecture with strong local cohesion but weak global integration. Overall, Table 4 and Figures 4-6 indicate concentrated scholarly leadership alongside fragmented collaboration, with a small set of authors, countries, and institutions shaping the field. Strengthening cross-author, cross-institutional, and international collaboration remains essential for improving knowledge diffusion and theoretical convergence.

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Highly influential studies: Local Citation (LC) and Global Citation (GC)

Local Citations (LC) capture a study’s influence within the core corpus of 913 WCM articles, whereas Global Citations (GC) reflect its broader impact across disciplines. As reported in Table 5, the citation structure reveals a clear distinction between domain‐specific influence and cross-disciplinary relevance. Deloof (2003) emerges as the most influential work within the WCM literature, recording the highest LC (229) along with a substantial GC (560). This prominence reflects its role as a seminal empirical benchmark that formally operationalized the profitability implications of WC practices and has since been extensively adopted and extended in subsequent research. In contrast, Dechow (1994, 2002) exhibits relatively lower local citation intensity but exceptionally high global visibility, indicating that while these studies are not positioned directly within the WCM stream, they provide the foundational methodological framework for measuring accrual quality through WC based estimation errors. Building on this theoretical lineage, the present study aligns with and extends this stream of research by conceptualizing accrual quality as an outcome of WC estimation efficiency and linking it to operating performance and earnings persistence. Consistent with these patterns, the PageRank analysis identifies Deloof (2003) and Lazaridis and Tryfonidis (2006) as structurally central nodes in the citation network, underscoring their pivotal role in anchoring and transmitting core empirical insights within the WCM literature.

Figure 7 illustrates the citation structure of WCM research and confirms Deloof (2003) as the field’s primary intellectual reference, as reflected by its prominent node and extensive cross-cluster linkages. Building on this foundation, green and blue clusters led by García-Teruel and Martínez-Solano (2007), Baños-Caballero et al., (2014), and Aktas et al., (2015) advance the literature by examining efficiency trade-offs, financing constraints, and nonlinear effects in WC decisions. In contrast, the red cluster, centred on Wuttke et al., (2013a, 2013b) highlights the emergence of supply-chain finance as an important extension of the traditional firm-level perspective. The more peripheral positioning of recent and specialised studies indicates developing research streams that remain only weakly connected to the core, suggesting scope for stronger theoretical integration across subdomains.

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Dominant keywords and co-occurrence analysis

Table 6 shows keyword analysis of 913 articles, encompassing 936 author keywords, identifies “working capital management,” “profitability,” and “cash conversion cycle” as the most prevalent terms, signalling the field’s central focus on firm performance and operational efficiency. Emerging keywords such as “supply chain management,” “investments,” and “inventory control” suggest a growing interdisciplinary orientation, linking financial and operational perspectives. The keyword co-occurrence network (Figure 8) reinforces these patterns, with central nodes and densely interconnected clusters mapping the intellectual structure of WCM research. The clusters reveal thematic concentrations: performance and SCM (green), liquidity and efficiency (blue), trade credit metrics such as accounts receivable and inventory (red), and methodological approaches (yellow and purple). Together, the analysis shows that WCM research is not only anchored in traditional performance and liquidity themes but is also evolving toward integrated, multidimensional perspectives that connect operational, financial, and governance considerations, offering a roadmap for future inquiry.

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PageRank analysis

PageRank (Brin and Page, 1998) is employed to assess intellectual influence by accounting for the prominence of citing studies, thereby capturing structural importance within the citation network beyond simple citation frequencies. Applied to a corpus of 617 articles, the analysis uncovers three dominant clusters comprising 318, 264, and 35 studies, respectively, with the ten highest-ranked papers in each cluster reported in Table 7. The resulting hierarchy diverges notably from conventional citation-based rankings: among the 21 most-cited studies (see Table 5), only four, Deloof (2003), García-Teruel and Martínez-Solano (2007), Aktas et al., (2015), and Baños-Caballero et al., (2014), also ranks highly under PageRank. Several articles achieve elevated PageRank positions despite moderate citation counts, reflecting their structurally central roles in connecting foundational and applied research streams. Seminal contributions, Shin and Soenen (1998) provide one of the earliest comprehensive analyses linking WC efficiency to firm value; Blinder and Maccini (1991) establish the macroeconomic and firm-level relevance of inventory behaviour; Faulkender and Wang (2006) connect corporate liquidity and financial policy to firm valuation; Hill et al., (2010) formalise the determinants of WCI across operating environments; Lazaridis and Tryfonidis (2006) extend profitability-WCM linkages to international equity markets; and Gill et al., (2010) contribute evidence on WC profitability dynamics in developed market contexts. Collectively, these studies form the conceptual backbone of the WCM literature by anchoring key theoretical constructs and empirical relationships, explaining their structural centrality and elevated PageRank within the citation network.

The identified clusters delineate the intellectual architecture of WCM research and trace its evolution from firm-level performance and profitability analyses toward broader perspectives encompassing liquidity management, financial policy, investment decisions, and supply-chain considerations. To evaluate their scholarly relevance, a focused content analysis is conducted on the top ten PageRank-ranked studies within each cluster.

WCM and profitability

Cluster 1 represents the foundational theme of the WCM literature, focusing on the core relationship between WCM and firm performance. A dominant strand of the foundational WCM literature documents a negative association between WC intensity and firm profitability when measured using aggregate indicators such as the Cash Conversion Cycle (CCC) and net trade cycle (Deloof, 2003; Baños-Caballero et al., 2012; Sharma and Kumar, 2011). This evidence suggests that prolonged investment in inventories and receivables ties up scarce financial resources, increases holding and financing costs, and reflects operational inefficiencies that depress returns. Component-level analyses reinforce this interpretation, shorter inventory and receivables periods are consistently associated with higher profitability, while delayed payables may impose indirect costs through strained supplier relationships or foregone discounts (Deloof, 2003; García-Teruel and Martínez-Solano, 2007). Collectively, these findings support the view that excessive WC represents a value-destroying use of funds.

In contrast, an alternative stream of research identifies a positive relationship between WCM and firm performance, highlighting the strategic benefits of higher WCI under certain conditions (Gill et al., 2010; Sharma and Kumar, 2011). From this perspective, larger inventory buffers reduce stock-out risks and production disruptions, lenient credit policies stimulate sales and strengthen customer relationships, and timely payments to suppliers enhance supply reliability. Disaggregated evidence further indicates that longer inventory holding periods can improve profitability by mitigating price volatility and ensuring operational continuity (Afza and Nazir, 2007), while the impact of payables on performance appears context-dependent or insignificant in some settings (Raheman et al., 2010). These findings suggest that WC can function as a strategic asset rather than a cost burden, contributing to firm value when aligned with operational and market conditions. The coexistence of negative and positive profitability effects at both aggregate and component levels indicates persistent ambiguity in the WCM-performance nexus, underscoring the need for research that systematically integrates WC components, firm heterogeneity, and contextual conditions within a unified analytical framework.

WCI and financial constraints

The second cluster extends the intellectual structure of WCM research by linking WCI decisions to financing frictions and capital market imperfections. Departing from the Modigliani and Miller (1958) irrelevance framework, subsequent studies show that information asymmetries and financial constraints materially shape WCI behaviour (Myers and Majluf, 1984; Whited, 1992). Within this framework, firms strategically adjust WC to mitigate financing costs and sustain investment under constrained conditions (Chauhan and Banerjee, 2018). Empirical evidence further indicates that firms with greater liquidity exhibit lower cash-flow sensitivity of investment (Fazzari and Petersen, 1993; Ding et al., 2013; Wasiuzzaman, 2015), while financially constrained firms rely more heavily on WC as a flexible substitute for external finance (Faulkender and Wang, 2006). Collectively, this cluster reframes WCM as a strategic buffer against financial constraints, broadening the literature from performance effects to capital allocation and firm value considerations.

WCM and SCM

The third cluster broadens the intellectual structure of WCM research by extending analysis beyond the firm to the supply-chain level, thereby recognising the interdependencies embedded within value chains. Departing from firm-centric approaches that treat WC decisions in isolation (Lind et al., 2012), this stream shows that unilateral efforts by dominant firms to compress payment cycles can transmit liquidity stress to suppliers and customers (Blackman and Holland, 2006), whereas coordinated adjustments in trade credit terms enhance value-chain stability and resilience (Saranga, 2009). Empirical evidence further indicates that effective WC practices improve operational efficiency across interconnected firms (Deloof, 2003; Saranga, 2009), while conceptual models such as financial value chain analysis embed WCM within broader industry-level optimisation frameworks (Hofmann and Kotzab, 2010). Collectively, this cluster reframes WCM as an inter-organisational coordination problem, underscoring the importance of system-wide approaches to value creation.

Emerging themes

This study examines the thematic evolution of WCM research (Goyal and Kumar, 2021) by tracing emerging trends, structural linkages, and shifts in dominant research themes. From an initial pool of 605 records, 145 articles published in ABDC-ranked journals were selected for detailed content analysis (Spasojevic et al., 2018). Prior co-citation analyses largely excluded low-cited studies, thereby limiting the identification of emerging and underexplored themes. To address this shortcoming, author keywords from the 2020-2025 period were analysed and visualised using a Sankey diagram (Figure 9), revealing key thematic concentrations around excess NWC, corporate investment, corporate governance, macroeconomic conditions, and trade credit.

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Excess NWC and firm performance

Recent empirical research highlights the complex and multifaceted role of excess NWC in shaping firm performance. Evidence from emerging markets consistently indicates that excessive investment in NWC is associated with lower firm value and reduced competitiveness, as surplus liquidity often reflects inefficient resource allocation and weak operational discipline (Akbar et al., 2024; Roshan and Chatnani, 2024). However, this relationship is not strictly linear. Studies focusing on Indian and Pakistani firms demonstrate that moderate levels of excess NWC can serve as a strategic buffer, enabling firms to finance long-term investments, stabilize operations, and mitigate financial risk without adversely affecting firm value (Akbar et al., 2021; Akbar et al., 2022). In contrast, excessive accumulation of WC has been shown to distort capital structure decisions, increase reliance on debt financing, and heighten both operational and market risk. Sector-specific evidence further suggests that the impact of excess NWC varies across industries and economic environments, particularly in capital-intensive and emerging-market contexts (Sierpińska and Kowalik, 2021). Collectively, these findings support the existence of an optimal WC zone and underscore the importance of viewing excess NWC not merely as a liquidity measure but as a strategic determinant of investment efficiency, risk exposure, and firm value.

Excess NWC and corporate investment

Building on performance implications, prior studies examine how excess NWC shapes corporate investment. Evidence from US and emerging-market firms suggests that reducing WCI frees internal funds for fixed asset investment (Fazzari and Petersen, 1993; Appuhami, 2008). Subsequent research shows that efficient WC management can alleviate financing constraints and support capital investment, especially in imperfect capital markets (Ding et al., 2013). Consistent with an optimal WCI framework, reallocating excess WCI toward long-term assets and acquisitions enhances shareholder value (Aktas et al., 2015), while internal capital markets gain importance during external financing frictions (Hovakimian, 2011). Recent evidence from Pakistan reinforces the role of redeploying blocked WC funds to stimulate investment (Akbar et al., 2022). Nonetheless, comprehensive analyses of the WCI-investment nexus remain limited (Prasad et al., 2019). The effectiveness of such investment decisions, however, depends on firms’ internal governance structures.

WCM and corporate governance

Corporate governance plays a pivotal role in shaping managerial discretion and enhancing monitoring effectiveness in WCM, encompassing cash, receivables, and inventories. Empirical evidence indicates that board characteristics, CEO duality, ownership structure, and board independence significantly affect WCM efficiency and firm performance (Gill and Mathur, 2011; Shahid et al., 2020). Recent evidence shows that strong governance not only improves WCM efficiency but also partially mediates its impact on firm performance (Naz et al., 2022). These findings suggest that effective governance enhances firm outcomes both directly through oversight and indirectly by promoting efficient management of WC. However, governance-driven WCM practices are also shaped by broader macroeconomic conditions, particularly during periods of economic stress.

WCM and economic conditions (COVID-19 or financial distress)

Macroeconomic conditions significantly affect WCI decisions and financing policies (Enqvist et al., 2014; Çetenak et al., 2017). Prior studies document the influence of inflation, interest rates, and GDP growth on WC efficiency, though crisis-specific dynamics remain underexplored (Filbeck and Krueger, 2005; Wasiuzzaman and Arumugam, 2013; Mathuva, 2014). The GFC 2008 and COVID-19 pandemic renewed attention to WCM under distress, with evidence suggesting that traditional practices may be inadequate during crises (Simon et al., 2023). Complementary findings indicate moderate WCM efficiency during COVID-19, highlighting scope for improvement (Habib and Kayani, 2023). These conditions intensify firms’ reliance on short-term and inter-firm financing channels, particularly trade credit.

Trade credit

Trade credit is a central component of WCM, encompassing receivables from customers and payables to suppliers. Receivables affect liquidity, profitability, and firm value, while also supporting demand stimulation, quality verification, and long-term relationships (García-Teruel and Martínez-Solano, 2010a, 2010b; Baker et al., 2022). However, excessive receivables increase current asset investment and may reduce profitability, underscoring the need for an optimal balance. On the payables side, trade credit serves as a critical short-term financing source, particularly for Indian firms, often rivaling bank credit (Petersen and Rajan, 1997). Payables ease financing constraints, lower transaction costs, and offer flexibility relative to formal debt (Ferris, 1981; Smith, 1987). Recent studies further demonstrate how governance attributes, firm age, and financial distress shape trade credit dynamics across institutional settings (Pattnaik and Baker, 2023; Luo et al., 2023). Collectively, these themes demonstrate that WCM outcomes are jointly shaped by internal investment and governance mechanisms, external economic conditions, and trade-credit dynamics.

Conceptual framework development (RQ 5.1)

Figure 10 presents an integrated conceptual framework derived from the systematic content analysis of the thematic clusters identified in this review. The framework identifies key determinants of WCM emerging from three principal streams of prior research. The first stream focuses on firm-specific characteristics, including cash flow generation, sales growth and volatility, firm size and age, leverage, liquidity, asset tangibility, investment intensity, and financial distress, which consistently explain variation in WCI decisions across studies (Deloof, 2003; Baños-Caballero et al., 2012; Aktas et al., 2015). The second stream emphasises macroeconomic and country-level conditions, such as GDP growth, inflation, interest rates, exchange rates, business cycles, and crisis periods, which shape firms’ liquidity needs and financing constraints, particularly during periods of economic uncertainty (Filbeck and Krueger, 2005; Enqvist et al., 2014; Simon et al., 2023). The third stream highlights corporate governance and industry-related factors, showing that governance mechanisms, such as board structure, CEO duality, ownership patterns, and monitoring intensity, influence managerial discretion in liquidity management and trade credit decisions (Gill and Mathur, 2011; Shahid et al., 2020; Pattnaik and Baker, 2023). Collectively, these strands motivate the inclusion of internal, governance-related, and external determinants within a unified framework.

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The framework also reflects the heterogeneous measurement of WCM documented in the literature. Prior studies employ both composite measures, such as NWC and the cash conversion cycle (Deloof, 2003; Baños-Caballero et al., 2012), and component-based measures, including accounts receivable, accounts payable, inventory management, and trade credit (García-Teruel and Martínez-Solano, 2010a; Baker et al., 2022). Incorporating both approaches allows the framework to capture aggregate liquidity positions as well as granular managerial decisions underlying WCM practices.

Consistent with the thematic clusters on firm performance and corporate investment, the framework links WCM decisions to firm-level outcomes, including profitability, firm value, and investment efficiency (Aktas et al., 2015; Akbar et al., 2022). However, the review reveals mixed and nonlinear effects, particularly in the excess NWC-performance relationship (Baños-Caballero et al., 2012; Chauhan and Banerjee, 2018), indicating that WCM outcomes are context dependent. This motivates the explicit inclusion of moderating variables, such as financial constraints, financial flexibility, leverage, firm size, and firm age, which are frequently acknowledged but rarely modelled explicitly. Overall, the proposed framework integrates determinants, measurement dimensions, moderators, and outcomes into a single analytical structure, clarifying how firm characteristics, governance mechanisms, and macroeconomic conditions jointly shape WCM decisions and their performance implications.

Research gaps and future research agenda (RQ 5.2 and 5.3)

Drawing on the major and emerging themes, this study identifies several promising avenues for future research. These insights, summarized in Table 8, highlight key themes and underexplored areas that can guide scholars in extending and deepening the scope of research within the WCM domain.

DISCUSSION

The bibliometric evidence presented in Table 9 highlights the observed expansion of WCM studies following periods of economic disruption underscores the need for deeper investigation into the dynamic and countercyclical role of WC policies. While existing research remains largely grounded in finance and management, the growing interdisciplinary orientation suggests scope for methodological innovation and cross-country analysis. Future studies should therefore move beyond static performance-based models to examine governance structures, investment efficiency, and the role of macroeconomic uncertainty in shaping WC decisions.

IMPLICATIONS

This study offers several implications for different stakeholders. First, for academic researchers, the findings highlight the need to move beyond profitability-centric analyses toward integrated WCM frameworks that incorporate governance mechanisms, macroeconomic conditions, sustainability, and supply-chain dynamics. The fragmented pattern of international collaboration indicates scope for cross-country and interdisciplinary research, while future studies may extend foundational work using dynamic, crisis-sensitive, and network-based approaches to capture the evolving role of WCM under economic uncertainty. Second, for governments, the results underscore the strategic importance of WCM in enhancing firm resilience and reducing bankruptcy risk during periods of economic stress, with firm-level liquidity management playing a key role in sustaining employment, investment continuity, and economic stability. Third, from a policy perspective, the growing links between WCM, corporate governance, and macroeconomic conditions point to the need for transparent and prudent regulatory frameworks, including improved disclosure of WC components and access to short-term financing, particularly in emerging economies. Lastly, for corporate managers and other stakeholders, the findings reinforce WCM as a strategic decision-making tool, where effective management of receivables, inventories, payables, trade credit, and supply-chain relationships supports firm performance, liquidity risk assessment, and long-term financial sustainability.

LIMITATIONS

This study is subject to several limitations. First, the data were sourced exclusively from the Scopus database, thereby excluding publications indexed in other bibliographic repositories. In addition, the analysis was restricted to peer-reviewed articles published in English, which may limit the generalisability of the findings. Future research could address this constraint by incorporating multiple databases, alternative document types, and non-English publications. Second, the selection of keywords, the use of fuzzy terms, and variations in keyword combinations and Boolean operators may yield different search outcomes; consequently, the search query employed cannot be regarded as exhaustive in capturing the entire body of research on WCM. Third, bibliometric analyses inherently prioritise publication counts and citation metrics, which may not fully reflect the qualitative contribution of individual studies. Finally, the results generated using VOSviewer and Biblioshiny may be influenced by algorithmic sensitivity and potential sampling bias, which should be considered when interpreting the findings.

CONCLUSION

Focusing on WCM, this study undertakes a comprehensive bibliometric analysis to map the intellectual structure and knowledge base of the field. The review contributes to the literature in two keyways. First, it extends existing WCM scholarship by offering a systematic and integrative overview of the domain, providing a holistic assessment of performance indicators (such as publication trends, geographical distribution, leading authors, influential journals, and highly cited studies) along with the underlying intellectual framework and major research fronts from the inception of WCM research to the present. By documenting the evolution of WCM scholarship over time, this study enables readers to develop a consolidated understanding of the accumulated knowledge in the field, thereby reducing the need for repetitive large-scale reviews in the near future. Second, through in-depth content analysis, the study bridges the gap between established and emerging knowledge by identifying dominant themes, emerging research fronts, and underexplored areas that can inform future research agendas. In doing so, it encourages scholars to examined dimensions of WCM, supporting the continued growth and advancement of research in this increasingly important area of corporate finance.

Future research on WCM may benefit from incorporating additional databases such as Science Direct, Wiley, Taylor and Francis, and Google Scholar, as well as integrating practitioner-oriented literature to obtain a more comprehensive understanding of the field. Scholars are also encouraged to extend bibliometric and scientometric analyses by linking WCM with complementary research domains, including sustainable development, corporate governance, SCM, behavioural finance, and macroeconomic conditions. Moreover, given the limited representation of emerging and developing economies in the existing literature, future studies should focus on context-specific WCM issues in these regions. Overall, it is expected that this review will stimulate further scholarly interest and motivate researchers to explore the identified research fronts, thereby supporting continued academic engagement and advancement in WCM research.