Working capital management efficiency in large firms during crisis: implications for community-based enterprises

Purpose This study aims to examine the impact of the COVID-19 pandemic on the working capital management (WCM) efficiency of resilient and nonresilient firms listed on India's BSE 500 index. It focuses on key WCM components such as cash conversion cycles (CCC), accounts receivable periods, inventory conversion periods and accounts payable periods. Design/methodology/approach Panel data from 2012 to 2023 is analyzed using the System Generalized Method of Moments model. This study differentiates between resilient and nonresilient firms based on liquidity stress tests and cash flow performance before and during the pandemic. Findings Resilient firms demonstrated superior WCM efficiency, maintaining shorter CCCs, effective receivables and inventory management and stable payables. Nonresilient firms faced significant inefficiencies, including extended CCCs and slower receivables and inventory turnover, exposing gaps in their WCM practices. Research limitations/implications This study is limited to the pandemic period. Future research could explore broader timeframes to understand the long-term effects on WCM. Practical implications Managers should enhance WCM strategies, focusing on cash flow optimization to strengthen firm resilience during crises. Social implications Efficient WCM supports job retention, preserves supplier relationships and stabilizes local economies, contributing to broader community resilience during crises. Originality/value This study extends the resource-based view by emphasizing WCM as a critical internal resource that supports firm resilience during economic crises. It contributes new insights into how Indian firms adapted their WCM strategies in response to COVID-19.