Lean inventory, fintech and financing: interactive influences on Chinese SMEs

Abstract

PurposeFor decades, financing constraints have been a major obstacle to corporate performance. Volumes have been written about the probable factors that can help firms alleviate such financial constraints. Nonetheless, empirical evidence concerning the various perspectives on how inventory control may influence financing constraints has been surprisingly scant. Using the resource- and region-based view as theoretical lenses, this study seeks to estimate the relationship between lean inventory, regional financial technology (fintech) and financing constraints.Design/methodology/approachUtilizing a large-scale sample of small- and medium-sized enterprises (SMEs) in China's manufacturing sector, the authors empirically test their hypotheses by using hierarchical linear regression models with multiple high-dimensional fixed effects.FindingsResults indicate that firms with higher levels of inventory leanness and those located in more fintech-developed regions are less likely to encounter financing constraints. Furthermore, inventory leanness and regional fintech ecosystem development interact with each other to mitigate financing constraints. Moreover, inventory leanness significantly decreases firms' financing constraints when the regional fintech ecosystem is highly developed.Originality/valueThe present research contributes to the literature on the interface of supply chain management and financial management. It also provides managerial implications for policymakers and SME stakeholders.

Tax planning and financial default: role of corporate life cycle

“…Finally, future research could investigate the interaction between tax planning and other financing tools, like, e.g. working capital management or fintech (Liu et al. , 2023).…”

Does lean inventory management alleviate financing constraints?

“…Firstly, it extends the scope of our understanding concerning the impact of inventory leanness on financial constraints. Historically, prevailing research has predominantly assumed a linear and negative relationship between inventory leanness and financial constraints (Liu et al, 2023). While this perspective has illuminated the advantageous role of lean inventory management in alleviating financial constraints, it has yet to explore the nuanced functional form of this relationship comprehensively.…”

“…On the flip side, financial constraints encapsulate the obstacles firms encounter when seeking external financing due to weak performance, limited competitiveness, or inadequate local reputation (Liu et al, 2023). Sustaining optimal inventory levels, robust financial performance, and competitive market presence become pivotal drivers for attracting investment and securing financing.…”

“…This operational framework has gained immense traction owing to its potential to streamline operations, optimize resource allocation, and fortify financial performance (Goshime et al, 2019;Palange and Dhatrak, 2021). Within the manufacturing realm, leaders continuously strive to alleviate financial constraints by refining inventory management practices, anticipating a significant positive impact on their bottom line (Liu et al, 2023). However, the allure of lean inventory management comes with a caveat.…”

“…From a practical standpoint, businesses leverage e-commerce tools and advanced analytics, such as big-data analytics and enterprise resource planning, to extend lean inventory management throughout their inventory. This approach minimizes waste, damage, breakage, and resource loss, optimizing financial allocation (Liu et al, 2023). The…”