Inventory investment and production in Europe during the “Great Recession”: Is there a pattern?

Abrahamsen, Yngve; Hartwig, Jochen

doi:10.1016/j.ijpe.2011.03.023

Cited by 3 publications

(3 citation statements)

References 15 publications

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“…Zaman (2017) argues that better IT infrastructure has enabled irms in recent years to decrease or delay their inventory investments, thus enhancing the liquidity of irms. For the inancial crisis, economic research suggests that inventory investment is positively correlated with changes in production and follows the latter with a lag of two to three quarters (Abrahamsen and Hartwig, 2011). Chen (1996) originally introduced the AMC framework for analyzing inter-irm competition in a strategic management context.…”

Section: The Financial Perspectivementioning

confidence: 99%

Inventory agility upon demand shocks: Empirical evidence from the financial crisis

Udenio

Hoberg

Fransoo

2018

J of Ops Management

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The objective of this paper is to identify antecedents of inventory agility (i.e., the capability to quickly adapt inventories to changes in demand) upon demand shocks based on the awareness‐motivation‐capability (AMC) framework and to explore the link between inventory agility and financial performance. We introduce an empirical measure of inventory agility based on the deviation of relative inventories (i.e., inventory days) from their forecasted values. We hypothesize that firms with higher awareness, motivation, and capabilities are associated with higher inventory agility in the presence of demand shocks. We define two empirical measures for each of the three dimensions of the AMC framework in the context of inventory agility: awareness (i.e., market orientation and technology orientation), motivation (i.e., gross margin and liquidity), and capabilities (i.e., inventory management capability and resource availability). In addition, we incorporate the constraining factor model (CFM) into the AMC framework, thus allowing for complementarity among the different measures. In this view, the influence of each of the measures on inventory agility varies according to which of the measures is the constraining factor for a given firm. The 2008 financial crisis may have tested firms' inventory agility more than any other crisis since the Great Depression, as an unprecedented collapse of demand coincided with a reduction in credit availability. Therefore, for our analysis, we use firm‐level empirical data from 1263 public U.S. manufacturing firms for the 2005–2011 period. We find that firms' motivation and capabilities are key factors associated with inventory agility. Through the CFM, we show that identifying the constraining factors leads to a more refined understanding of the moderating effects of the antecedents of inventory agility. In a separate analysis, we find that inventory agility is positively associated with a number of financial performance metrics during crisis periods. We distinguish between inventory underages and overages and find that, during the crisis, they are both associated with lower financial performance. Furthermore, we find evidence that higher underages (overages) magnify the effect of overages (underages). Among other managerial insights, our findings suggest that the use of inventory reductions as a quick way to increase liquidity must be gauged against their potential impact on other aspects of financial performance.

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Section: The Financial Perspectivementioning

confidence: 99%

Inventory agility upon demand shocks: Empirical evidence from the financial crisis

Udenio

Hoberg

Fransoo

2018

J of Ops Management

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“…This paper shows that the stockout avoidance theory has much better potential than other competing theories for explaining the seemingly paradoxical features of inventory fluctuations observed at different cyclical frequencies. Using the data of 29 European countries during the "Great Recession" of 2008 to 2009, Yngve & Jochen (2011) suggest that a fairly uniform pattern emerges. Inventory investment is positively correlated with changes in production and follows the latter with a time-lag of two to three quarters.…”

Section: Inventory Fluctuation and Business Cyclementioning

confidence: 95%

A Review of Inventory Investment: The Macro and Micro Perspective

Jian-yu¹

2016

JFRM

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This article combed the domestic and foreign researches on inventory investment since 1990. We find that researches mainly focus on the macro level of the relationship between inventory investment and business cycle, the effects of inflation or interest rates on inventory adjustment. While in the micro enterprise level, they study the determiners of inventory investment, including financing constraints, size and location. Besides, the role of inventory investment behavior on corporate performance has not yet reached a consensus. Based on the analysis of the existing literatures, we put forward the possible directions for future research in the field of inventory investment, combining with China's specific conditions.

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“…Lv (2014) in his study explained that firms accounting performance of return on the total assets are the only significant factor that may influence firms' level of inventory holding. But other variables such as capital structure, firm size, the board size, level of cash holdings and capital investment were found to have a significant relationship in determining the effects of inventory holding on corporate firm performance ( (Disatnik, Duchin, & Schmidt, 2014); (Garcia-Appendini & Montoriol-Garriga, 2013); (Xu, Xue, & Che, 2012); (Yang, Yang, & Wu, 2015); (Abrahamsen & Hartwig, 2011); (Bolton, Chen, & Wang, 2011); (Zhang & Chen, 2010)).…”

Section: Introductionmentioning

confidence: 99%

Macroeconomic factor, firm characteristics and inventory holding in Nigeria: A quantile regression approach

Egbunike,

Oranefo

2023

IJFAM

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Purpose: Prior studies show that inventory holding is closely linked to liquidity and procyclical dependent on the combination of macroeconomic and firm characteristics. Thus, conditional linear factor models such as OLS should fail to explain the inventory-holding motive, especially in the context of developing countries. This study seeks to empirically investigate the determinants of corporate inventory holding based on evidence from pharmaceutical companies in Nigeria. Research methodology: The study adopts the ex post facto research design. The final sample was eight pharmaceutical & healthcare firms quoted on the Nigerian Stock Exchange (NSE). The data were analysed using the quantile regression technique. Results: The results showed that the inflation rate had a positive effect on the inventory holding distribution at upper quantiles (75th); and, the cash conversion cycle on the inventory holding was significant at different quantiles (25th, 50th and 75th). Profitability and liquidity were non-significant at different quantile distributions. Limitations: The focus on pharmaceutical firms limits the generalizability of the study findings to other sectors of the economy. Contributions: The study contributes to the literature in the context of developing countries, on the impact of varying firm characteristics and inflation rates on the different conditional distribution of the regressand, i.e., inventory holding.

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Inventory investment and production in Europe during the “Great Recession”: Is there a pattern?

Cited by 3 publications

References 15 publications

Inventory agility upon demand shocks: Empirical evidence from the financial crisis

Inventory agility upon demand shocks: Empirical evidence from the financial crisis

A Review of Inventory Investment: The Macro and Micro Perspective

Macroeconomic factor, firm characteristics and inventory holding in Nigeria: A quantile regression approach

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