99Copernican Journal of Finance & Accounting e-ISSN 2300-3065 p-ISSN 2300-12402024, volume 13, issue 3 Date of submission: June 29, 2024; date of acceptance: October 6, 2024. * Contact information: amola@nirmauni.ac.in, Institute of Management, Nirma University, S G Highway, Ahmedabad – 382481, Gujarat, India, phone: +91 9825191485; ORCID ID: https://orcid.org/0000-0003-0077-4543. ** Contact information: bhoomi@nirmauni.ac.in (corresponding author), Institute of Management, Nirma University, S G Highway, Ahmedabad – 382481, Gujarat, India, phone: +91 7600050973; ORCID ID: https://orcid.org/0000-0002-9840-1464. *** Contact information: avaniraval@nirmauni.ac.in, Institute of Management, Nirma University, S G Highway, Ahmedabad – 382481, Gujarat, India, phone: +91 9375482929; ORCID ID: https://orcid.org/0000-0002-3933-6316. **** Contact information: nisarg.joshi@nirmauni.ac.in, Institute of Manage- ment, Nirma University, S G Highway, Ahmedabad – 382481, Gujarat, India, phone: +91 9723500052; ORCID ID: https://orcid.org/0000-0002-2417-4158. Bhatt, A., Mehta, B., Raval, A., & Joshi, N. (2024). An Inquiry Into the Effect of Working Capital Manage- ment on Firm Performance Using a Combined Approach of Bibliometric and Thematic Analysis. Co- pernican Journal of Finance & Accounting, 13(3), 9–28. http://dx.doi.org/10.12775/CJFA.2024.011 amola bhatt* Nirma University bhoomi mehta** Nirma University avani Raval*** Nirma University nisaRg Joshi**** Nirma University an inquiRy into the effect of woRking capital management on fiRm peRfoRmance using a combined appRoach of bibliometRic and thematic analysis Keywords: working capital, firm performance, bibliometric analysis, thematic analy- sis, operating cycle, profitability, firm value. Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi1010 J E L Classification: G3. Abstract: The current study evaluates the existing literature to understand the evolv- ing nature of the relationship between a firm’s short-term financial decisions and its performance. This paper aims to understand the knowledge progression and its pre- sent status, and identify future research directions. The study achieves this by looking at the existing research through an integrated lens of bibliometric analysis and themat- ic literature review. The findings of bibliometric analysis reveal the most influential works and authors in the domain and discuss the conceptual and intellectual structure of working capital and its impact. Through the thematic analysis, the existing literature has been analyzed by grouping them under four major themes. Based on the findings, the current research gaps have been identified and the study has suggested the future research direction.  Introduction Introduction Corporate finance theory offers four fundamental decisions of which the work- ing capital (WC) decision deals with the application and raising of short-term funds of a firm. Brigham and Houston (2007) said that working capital is a fi- nancial parameter that depicts the operating liquidity that is available to com- panies. Working capital, which was seen as the summation of CA, gradually evolved, and the concept of net working capital (NWC), which is the difference between CA and CL (Bhattacharya, 2009), came to become more popular in usage. Further, investment in working capital can be compartmentalized and studied through various ratios like liquidity and activity ratios (Tauringana & Afrifa, 2013; Deloof, 2003); as well as through operating cycle (OC) and cash conversion cycle (CCC) (Gitman, 1974; Jose, Lancaster & Stevens, 1996; Mathu- va, 2010). So, also the pattern of financing working capital can be studied in de- tail (Nobanee, Abdullatif & Al Hajjar, 2011). Purpose of the study & research gapPurpose of the study & research gap WC is a significant factor affecting the routine operations of a business; proper management of the same helps achieve the fundamental objective of maximiz- ing shareholders’ wealth and thereby resorting to value-based management (Raza, Tursoy, Shaikh & Shaikh, 2024). Smith (1973) noted that many firms fail because financial managers are unable to plan and control WC efficiently. Ex- amining the WC to sales ratio can predict firm bankruptcy according to a study by Foreman (2003). However, contrary to conventional wisdom which sug- an inquiry into thE EffECt of working CaPital managEmEnt… 1111 gests that a dearth of WC makes a firm financially weak, this study observed that excessive levels of WC without a proper sales or customer base can lead a firm to insolvency. This view is supported by Kouaib and Haya (2024), and Chakraborty (2008) who opine that excess WC reflects operational inefficien- cy. Hence, observing the levels of WC and efficient management of WC becomes critical for the performance of the firm. The authors reviewed the present works on WC management which have used a bibliometric approach. The search was carried out in the Scopus data- base using the words “working capital” and “bibliometric”. The search resulted in 4 documents of which only 2 were specifically carried out on working capital (Martinho, 2021; Nobanee & Dilshad, 2021). These two papers had taken a wide view of WC for their analysis; however, the current study restricts WC research in the context of firm performance. This study aims to understand the evolution of literature and the current status of knowledge as well as identify future research directions in the do- main of the impact of WC with following research questions: RQ1: Which are the most influential documents, authors, sources, institu- tions, and countries in WC and firm performance research? RQ2: What is the conceptual structure and intellectual structure of the re- search involving WC and firm performance? RQ3: Which are the dominant themes of WC and firm performance research? RQ4: Which areas in WC and firm performance need further research? This study uses a two-step approach of presenting the bibliometric analysis and findings and supplementing the same with a thematic analysis of the litera- ture. This approach not only validates the findings but also provides a compre- hensive view of the domain of WC and firm performance. Moreover, it contrib- utes to the field by reviewing the existing literature and eliciting novel factors for future studies. Research methodology & research processResearch methodology & research process The bibliometric analysis is used to present the intellectual structure of stud- ies in WC management. The thematic literature review classifies the existing body of literature into significant themes and presents the knowledge progres- sion in those particular themes and also provides insights on future research directions. Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi1212 To identify the documents relevant to the objectives of this research, a search was conducted on June 20, 2023, in the Scopus database. The study used strings like “working capital” AND “firm performance” and “working capital” AND “profitability”, since these were highly cited keywords (Martin- ho, 2021) as keywords for the search in author keywords, abstract, and title field. There was no limitation on the period of research, but documents from 2023 were not considered, as their publication stage and recency of publica- tion may affect citation analysis. The combined searches resulted in 695 doc- uments. The documents were checked for duplication, which resulted in the removal of 50 documents. The documents were then filtered for document type to include only Articles, language to include only English, source type to include only Journal, and publication stage to include only Final. No other refinements were made. The screening resulted in a total of 456 documents, which were finally considered for the bibliometric analysis using Biblioshiny (figure 1). Figure 1. Flowchart of search strategy and document selection for bibliometric analysisFigure 1. Flowchart of search strategy and document selection for bibliometric analysis Source: authors’ own creation. BIBLIOMETRIC ANALYSIS AND FINDINGS Descriptive Analysis After the filtering process, 456 documents from 273 journals were elicited. About 978 authors were identified with 2.54 co-authors per document on average. The average number of citations per document came to 22.61. This shows multiple avenues of publication on the subject with a healthy number of researchers and networking as well. This section analyses the most influential documents, authors, sources, institutions, and countries in WC and firm performance research, primarily by looking at the number of articles published, the number of global and local citations, and normalized citations. Annual Production WC is one of the oldest financial decisions as elicited from the literature on corporate finance. Hence, the period of research publications was not restricted. However, beginning from 1977 till 2009, there was very sparse research on the topic (figure 2). Research on WC and firm performance or profitability picked up post-2009 and about 91% of the publications belong to these last twelve years (2010-2022). Database - Scopus Keywords search – 645 articles extracted Keywords applied for document search – “working capital” AND (“firm performance” OR “profitability”) Final data after data cleaning and removal of duplicates – 456 articles Refinement measures 1. Period – excluding 2023 2. Document type – Articles 3. Language – English 4. Source type – Journals 5. Publication Stage - Final Exporting the final documents for analysis S o u r c e : authors’ own creation. an inquiry into thE EffECt of working CaPital managEmEnt… 1313 Bibliometric analysis and findingsBibliometric analysis and findings Descriptive AnalysisDescriptive Analysis After the filtering process, 456 documents from 273 journals were elicited. About 978 authors were identified with 2.54 co-authors per document on aver- age. The average number of citations per document came to 22.61. This shows multiple avenues of publication on the subject with a healthy number of re- searchers and networking as well. This section analyzes the most influential documents, authors, sources, in- stitutions, and countries in WC and firm performance research, primarily by looking at the number of articles published, the number of global and local cita- tions, and normalized citations. Annual Production WC is one of the oldest financial decisions as elicited from the literature on corporate finance. Hence, the period of research publications was not restrict- ed. However, beginning from 1977 till 2009, there was very sparse research on the topic (figure 2). Research on WC and firm performance or profitabil- ity picked up post-2009 and about 91% of the publications belong to these last twelve years (2010–2022). Figure 2. Number of articles by year Figure 2. Number of articles by year Source: authors’ compilation. Three Field Plot The three-field plot (figure 3) depicts the relationship between three fields using Sankey Plots, where the size of the portion represents the node’s value (Riehmann, Hanfler & Froehlich, 2005). The three fields were authors, keywords, and sources. As evident from figure 3, WC management/ WC, profitability, and CCC are prominent keywords. Major journals to publish work on this topic are the International Journal of Managerial Finance, Investment Management and Financial Innovations, International Research Journal of Finance and Economics, and Global Business Review among others. Figure 3. Three field plot Source: authors’ compilation. Authors, Affiliations and Countries The most relevant authors based on the number of publications are Karri, T., Kumar, S., and Farhan N.H.S. among others (table 1). It is worth noting that all their works were collaborative. Based on the number of citations, the most relevant authors are Dechow, P. 0 10 20 30 40 50 60 70 S o u r c e : authors’ compilation. Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi1414 Three Field Plot The three-field plot (figure 3) depicts the relationship between three fields us- ing Sankey Plots, where the size of the portion represents the node’s value (Rie- hmann, Hanfler & Froehlich, 2005). The three fields were authors, keywords, and sources. As evident from figure 3, WC management/WC, profitability, and CCC are prominent keywords. Major journals to publish work on this topic are the International Journal of Managerial Finance, Investment Management and Financial Innovations, International Research Journal of Finance and Econom- ics, and Global Business Review among others. Figure 3. Three field plot S o u r c e : authors’ compilation. Authors, Affiliations and Countries The most relevant authors based on the number of publications are Karri, T., Kumar, S., and Farhan N.H.S., among others (table 1). It is worth noting that all their works were collaborative. Based on the number of citations, the most rel- an inquiry into thE EffECt of working CaPital managEmEnt… 1515 evant authors are Dechow, P. M., Garcia-Teruel, P. J., Martinez-Solano, P., Zhao, W., Kouvelis, P. (table 1). While most of the authors are common in both the lists as mentioned above, Dechow has authored only one publication which was cited 1300 times. This could be the case as the publication belongs to 1994, and this was a pioneering work on the role of accounting accruals on firm performance. Table 1. Most relevant authors Most relevant authors by articles published Most relevant authors by citations Authors Articles Authors Total citations KÄRRI T. 6 DECHOW P.M. 1,300 KUMAR S. 6 GARCÍA-TERUEL P.J. 889 FARHAN N.H.S. 5 MARTÍNEZ-SOLANO P. 889 ALMAQTARI F.A. 4 ZHAO W. 727 BONAZZI G. 4 KOUVELIS P. 720 GARCÍA-TERUEL P.J. 4 DELOOF M. 642 IOTTI M. 4 BAÑOS-CABALLERO S. 500 KOUVELIS P. 4 RHEE B.-D. 309 MARTÍNEZ-SOLANO P. 4 KUMAR S. 269 PIRTTILÄ M. 4 AKTAS N. 215 WANG Z. 4 CROCI E. 215 ZHAO W. 4 PETMEZAS D. 215 S o u r c e : authors’ compilation. Table 2. Most relevant affiliations and countries Most relevant affiliations Most relevant countries Affiliations Articles Countries Total citations LAPPEENRANTA UNIVERSITY OF TECHNOLOGY 18 USA 1,046 BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE 11 SPAIN 928 Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi1616 Most relevant affiliations Most relevant countries Affiliations Articles Countries Total citations UNIVERSITI PUTRA MALAYSIA 11 INDIA 661 UNIVERSITY OF MURCIA 11 BELGIUM 642 UNIVERSITI UTARA MALAYSIA 10 CHINA 642 INDIAN INSTITUTE OF MANAGEMENT RANCHI 9 UNITED KINGDOM 507 UNIVERSITY OF SCIENCE AND TECHNOLOGY OF CHINA 8 KOREA 310 LINCOLN UNIVERSITY 7 SWEDEN 219 OBAFEMI AWOLOWO UNIVERSITY 7 MALAYSIA 183 S o u r c e : authors’ compilation. Lappeenrata University of Technology, Birla Institute of Technology and Sci- ence, Universiti Putra Malaysia, and University of Murcia are the most prolific universities for literature based on WC management (table 2). USA, Spain, India, Belgium, and China are the most productive countries for studies focused on WC management based on total citations (table 2). At the same time, Belgium, Spain, Sweden, Korea, and the UK are the most prominent countries based on average article citations. This reflects the dominance of the more developed countries in the domain of WC. Document Citation Analysis Citations become an important consideration while reviewing the quality of the work and popularity of the topic. As evident in table 3, Dechow (1994), Deloof (2003), Kouvelis and Zhao (2012), Garcia-Teruel and Martinez-Solano (2007), and Baños-Caballero, García-Teruel and Martínez-Solano (2014) were the most cited works based on global citations. Based on the normalized global citations, Kouvelis and Zhao (2012), Cui, Wang, Liao, Fang and Cheng (2021), Kouvelis and Zhao (2016), and Aktas, Croci and Petmezas (2015) are the most cited works. Seth, Chadha, Ruparel, Arora and Sharma (2020), and Farhan, Almaqtari, Al- Table 2. Most… an inquiry into thE EffECt of working CaPital managEmEnt… 1717 Matari, Senan, Alahdal and Hazaea (2021) were the most cited based on local citations. It is observed that there are very few works that have been cited on a local basis. Kouvelis and Zhao (2012) and Kouvelis and Zhao (2016) publica- tions belong to the domain of supply chain financing and study the structuring of the trade contract between supplier and retailer, both of whom need short- term financing. The study by Seth et al. (2020) tests the relationship between the efficiency of managing WC and exogenous variables of companies operat- ing in the manufacturing sector in India. Farhan et al. (2021) explores the re- lationship between the WC policies of a firm and a firm’s profitability and sus- tainability. Table 3. Most relevant publications by citations Document Global citations Document Normali- zed global citations Document Local citations DECHOW P.M., 1994, J ACCOUNT ECON 1,300 KOUVELIS, 2012, OPER RES 9.83 SETH H., 2020, MANAG FINANC 2 DELOOF M., 2003, J BUS FINANC ACCOUNT 642 CUI X., 2021, PAC BASIN FINANC J 9.05 FARHAN N.H.S., 2021, SUSTAINABILITY 1 KOUVELIS P., 2012, OPER RES 472 KOUVELIS P., 2016, MANAGE SCI 8.71 MABANDLA N.Z., 2019, ACAD ACCOUNT FINANC STUD J 1 GARCÍA-TERUEL P.J., 2007, INT J MANAGE FINAN 389 AKTAS N., 2015, J CORP FINANC 8.24 SIDDIQUI D.A., 2019, ASIAN J ECON MODEL 1 BAÑOS-CABALLERO S., 2014, J BUS RES 269 ZHANG D., 2021, J ENVIRON MANAGE 7.74 MAHMOOD F., 2019, SUSTAINABILITY 1 AKTAS N., 2015, J CORP FINANC 215 BAÑOS-CABALLERO S., 2014, J BUS RES 7.57 SETH H., 2020, BENCHMARKING 1 KOUVELIS P., 2016, MANAGE SCI 214 TAURINGANA V., AFRIFA G.A., 2013, J SMALL BUS ENTERP DEV 6.42 AKGÜN A.İ., 2020, INT J MANAGE FINAN 1 LEE C.H., 2011, EUR J OPER RES 194 BOISJOLY R.P., 2020, J BUS RES 6.07 DALCI I., 2018, HEALTH POLICY 1 BAÑOS-CABALLERO S., 2012, SMALL BUS ECON 178 ALI Z., 2020, BUS PROCESS MANAGE J 5.76 OSEIFUAH E., 2018, ACAD ENTREP J 1 S o u r c e : authors’ compilation. Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi1818 Conceptual StructureConceptual Structure This section analyzes the conceptual structure of the research involving WC and firm performance based on the most frequently occurring keywords and co-occurrence of keywords. Most Frequent Keywords WC/WC management, profitability, CCC, firm performance, and financial man- agement are some of the most frequently used keywords by authors. These key- words give an idea of the popular themes on which research on WC is done. While the above-listed keywords are generic, some of the other prominent key- words are supply chain, investments, manufacture, construction, India, China, Europe, etc. These words give a fair idea of the industrial and country context in which research on WC and firm profitability has been carried out over the years. The word cloud of the 50 most relevant keywords indicates the basic and motor themes as listed above (figure 4). Figure 4. Word cloud of 50 most frequent keywords Source: authors’ compilation. Intellectual Structure For reviewing the intellectual structure of the research conducted on WC's impact on firm performance, the co-citation network of the most relevant documents is given below. Co-citation Network Analysis Based on the figure 5, it is evident that there are two major clusters in the area of WC and firm performance. Cluster 1 denoted in red colour consists of papers that have reviewed the WC position of a firm and analysed its impact on the profitability of the business. Shin and Soenen (1998) has done pioneering work in this area. The other studies then have concentrated on particular geographical regions like Belgium (Deloof, 2003), Mauritius (Padachi, 2006), Turkey (Vural, Sokmen & Çetenak, 2012) and Pakistan (Raheman & Nasr, 2007). Garcia-Teruel and Martinez-Solano (2010) has mainly focused on SMEs in the European context. The papers in Cluster 2 denoted by blue are well-connected to papers of Cluster 1 as the former has also studied WC in the context of firm profitability. However, these papers have included additional variables in their research. Baños-Caballero et al. (2014) has also studied financial restrictions faced by the firm while evaluating the effect of WC on firm performance. Aktas et al. (2015) has looked at value enhancement from WC decisions by analyzing the impact on firm performance and investments made by a firm. Kieschnick, Laplante and Moussawi (2013) has studied the impact of WC management on shareholders’ wealth which is broader as compared to firm profitability. Enqvist, Graham and Nikkinen (2014) and Wang, Akbar and Akbar (2020) have differentiated their studies by observing the impact of WC on firm performance in different business life-cycle stages. Figure 5. Co-citation network of documents and clusters S o u r c e : authors’ compilation. an inquiry into thE EffECt of working CaPital managEmEnt… 1919 Intellectual StructureIntellectual Structure For reviewing the intellectual structure of the research conducted on WC’s im- pact on firm performance, the co-citation network of the most relevant docu- ments is given below. Co-citation Network Analysis Based on figure 5, it is evident that there are two major clusters in the area of WC and firm performance. Cluster 1 denoted in red color consists of papers that have reviewed the WC position of a firm and analyzed its impact on the profita- bility of the business. Shin and Soenen (1998) have done pioneering work in this area. The other studies then have concentrated on particular geographical re- gions like Belgium (Deloof, 2003), Mauritius (Padachi, 2006), Turkey (Vural, Sok- men & Çetenak, 2012) and Pakistan (Raheman & Nasr, 2007). Garcia-Teruel and Martinez-Solano (2010) have mainly focused on SMEs in the European context. The papers in Cluster 2 denoted by blue are well-connected to papers of Clus- ter 1 as the former has also studied WC in the context of firm profitability. How- ever, these papers have included additional variables in their research. Baños- Caballero et al. (2014) has also studied financial restrictions faced by the firm while evaluating the effect of WC on firm performance. Aktas et al. (2015) has looked at value enhancement from WC decisions by analyzing the impact on firm performance and investments made by a firm. Kieschnick, Laplante and Moussawi (2013) has studied the impact of WC management on shareholders’ wealth which is broader as compared to firm profitability. Enqvist, Graham and Nikkinen (2014) and Wang, Akbar and Akbar (2020) have differentiated their studies by observing the impact of WC on firm performance in different busi- ness life-cycle stages. Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi2020 Figure 5. Co-citation network of documents and clusters S o u r c e : authors’ compilation. Thematic Literature ReviewThematic Literature Review Based on the preliminary analysis, most related research manuscripts have led to the major themes as below: Impact of WC on firm performance through different metrics Every business aims to increase shareholders’ wealth. One way to improve shareholders’ wealth is through the improvement of firm performance. The decisions taken in the business directly or indirectly affect the firm’s perfor- mance/profitability (Baser Gokten, Kucukkocaoglu & Ture, 2016). The perfor- mance indicators could be related to either current level or long-term perfor- mance. They could evaluate the revenue-generating capacity or the proportion of the margins; accounting information (Khan, Alam & Syed, 2021) or market information (Ross, 2002). The most frequently used indicator to measure prof- itability is the return on assets (ROA) (Asaduzzaman & Chowdhury, 2014) as it an inquiry into thE EffECt of working CaPital managEmEnt… 2121 is readily available from the annual reports. Many researchers who studied the listed firms studied WC and return on equity (ROE) and/or earnings per share (EPS) (Alarussi & Alhaderi, 2018). Dechow (1994) has used cash flow to meas- ure profitability, while Al-Najjar & Belghitar (2011) studied the WC impact us- ing dividend policy (Chakraborty & Maruf, 2023; Islam, 2018). Some of them have used innovative measures for profitability such as economic value added (EVA) and return on capital employed (ROCE). A few researchers took multiple indicators of profitability for robustness. Impact of WC components on firm performance The existing literature was reviewed to analyze the indicators used to measure WC. Many researchers have studied gross WC, i.e., considering every CA, while many of them have studied net WC, i.e., difference of CA and CL (Afrifa, 2016). Some studies have focused on a niche area of WC and have analyzed one of the WC components. These components could be inventory (Peng & Zhou, 2019), cash balance (Huang, Wang & Chen, 2007), WC finance, short-term cash flows, etc. The trade credit could either be given by a firm or received by a firm, i.e., it could be a debtor or creditor study (Cao & Yu, 2018). Trade credit from sup- pliers has been studied as a resource of financing (Ali, Gongbing & Mehreen, 2018). The firm’s OC and CCC (Jose, Lancaster & Stevens, 1996; Nobanee, Abdul- latif & Al Hajjar, 2011) have been studied to analyze WC. Some research papers have also studied components of OC in the form of inventory period, debtors’ period, and payable period (Mathuva, 2010). Most studies have taken annual data of the above variables as it can be easily fetched from the annual report. However, as the frequency of WC decisions is higher, quarterly data analysis could give more accurate insights. Evaluating WC and firm performance via the firm’s financing and investment policy While corporate finance decisions are segregated based on (i) the raising of funds and application of funds and (ii) duration, it is not surprising that these decisions are interrelated and have an impact on one another. For instance, the investment decisions relating to the purchase of long-term assets also affect the investment decisions of CA. Similarly, the decision about long-term sources of finance does have an impact on the decisions of short-term financing. Kouv- elis & Zhao (2012) compared credit financing and bank financing; Lee & Rhee Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi2222 (2010) compared stock financing cost and supply chain synchronization and Baños-Caballero, García-Teruel & Martínez-Solano (2016) compared different sources of short term financing. Research has been conducted on the preva- lence of financial constraints (Baños-Caballero et al., 2014), innovative invest- ments (Cui, Wang, Liao, Fang & Cheng, 2021), and the association of WC and profit. Within WC financing and investment decisions, the level of financing and investment from conservative to aggressive has been studied (Aktas et al., 2015; Boisjoly, Conine & McDonald, 2020). Impact of WC on firm performance across different clusters Different economic factors and organizational factors have an impact on un- derstanding the relationship between WC and firm performance. The related factors are grouped and a cluster has been formed to understand them better. First cluster is related to region of study. Accessibility of financial data could be the reason for the selection of geography which is why most studies per- tain to Western countries (Al-Najjar & Belghitar, 2011; Sah, Banerjee, Malm & Rahman, 2022). However, a few researchers have studied emerging economies (Asaduzzaman & Chowdhury, 2014) while a few others have considered multi- ple regions and compared them (Chambers & Cifter, 2022). The second cluster differentiates the study based on firm selection or industry selection. Though many of them have taken all firms (Lee & Rhee, 2010; Nobanee et al., 2011) or all non-financial firms (Aktas et al., 2015), there are a few studies which have focused on specific industry such as textile, manufacturing, construction etc. (Yousaf & Bris, 2021). The third cluster is related to firm size in which few re- searchers have selected large firms (Cui et al., 2021; Deloof, 2003), while some of them have selected small and medium-scale (SME) firms (Afrifa, 2016; Khan, Alam & Syed, 2021). The form of organization is the fourth cluster where most studies are concentrated on listed firms. Future research direction and conclusionFuture research direction and conclusion Future Research DirectionFuture Research Direction The bibliometric and thematic analysis shows that there has been ample litera- ture that has studied the WC and firm performance over the last decade. The analysis also highlighted that most of these studies have been confined to a few an inquiry into thE EffECt of working CaPital managEmEnt… 2323 aspects only. Therefore, there still exists a research gap and following could be the broader themes for future research: WC and sustainable firm performance One of the themes evaluated various performance indicators relating to ac- counting and the market. However, the performance indicators relating to sus- tainable criteria have not yet been evaluated. Some of the sustainable criteria on which WC’s impact can be evaluated could be environmental indicators, so- cial indicators and governance indicators, carbon footprint, carbon credit, sus- tainability indices, etc. (Mengistu & Panizzolo, 2023; Wu & Wu, 2012). WC and firm performance for currently relevant (newer) clusters Existing researchers have also selected few traditional clusters and analyzed WC and firm performance in those clusters. With the advent of technology and innovative business practices, there have emerged many new clusters that may affect the existing relation. The studies can be conducted considering emerging industries such as the service industry and e-commerce industry; new busi- ness models such as customer-to-customer models, direct-to-customer mod- els, business-to-government models; different geographical regions/econo- mies such as developing and underdeveloped countries; different organization types such as private firms, public and non-listed firms; different firm charac- teristics such as board diversity, ownership structure, firm size, employee size, firm age, etc. (Chakraborty, 2023; Desai & Desai, 2020). Role of technology and innovations on WC and firm performance The efficiency of the business cycle could be improved with the use of technol- ogy. For instance, inventory levels can be reduced with the usage of the just- in-time technique. The usage of technology will lead to a reduction in the busi- ness cycle and a sequential reduction in the WC requirements. But the cost of technology installation and maintenance will rise, which in turn may negative- ly affect the profit. The role of technology in distinct business operations and functions and its impact could therefore be explored. Innovations in businesses also affect the firm operations and thereby WC and firm performance. The re- searchers could examine the role of innovations concerning WC and firm per- formance. Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi2424  Conclusion Conclusion Working capital while being a traditional corporate finance decision is also a very significant decision for a firm as it deals with day-to-day operations of the firm. As working capital is believed to have repercussions on firm perfor- mance, this is a highly explored area of study in this domain. This study has been carried out to throw light on the existing intellectual and conceptual structure of the literature in this domain. The existing literature is broadly cat- egorized into four distinct themes so as to understand the length and depth of work carried out in this field. This analysis aptly portrays the status of litera- ture in the current context and gives a scope to look for research gaps. These have been identified and laid out for the future researchers interested in work- ing in this domain.  References References Afrifa, G.A. (2016). Net working capital, cash flow and performance of UK SMEs. Review of Accounting and Finance, 15(1), 21–44. https://doi.org/10.1108/RAF-02- 2015-0031. Aktas, N., Croci, E., & Petmezas, D. (2015). Is working capital management value-en- hancing? Evidence from firm performance and investments. Journal of Corporate Finance, 30, 98–113. https://doi.org/10.1016/j.jcorpfin.2014.12.008. Alarussi, A.S., & Alhaderi, S.M. (2018). Factors affecting profitability in Malaysia. Journal of Economic Studies, 45(3), 442–458. https://doi.org/10.1108/JES-05-2017-0124. Ali, Z., Gongbing, B., & Mehreen, A. (2018). Does supply chain finance improve SMEs per- formance? The moderating role of trade digitization. Business Process Management Journal, 26(1), 150–167. https://doi.org/10.1108/BPMJ-05-2018-0133. Al-Najjar, B., & Belghitar, Y. (2011). Corporate cash holdings and dividend payments: Evidence from simultaneous analysis. Managerial and Decision Economics, 32(4), 231–241. https://doi.org/10.1002/mde.1529. Asaduzzaman, Md., & Chowdhury, T. (2014). Effect of Working Capital Management on Firm Profitability: Empirical Evidence from Textiles Industry of Bangladesh. Research Journal of Finance and Accounting, 5(8), 175–185. Baños-Caballero, S., García-Teruel, P.J., & Martínez-Solano, P. (2016). Financing of working capital requirement, financial flexibility and SME performance. Journal of Business Economics and Management, 17(6), 1189–1204. https://doi.org/10.3846/1 6111699.2015.1081272. Baños-Caballero, S., García-Teruel, P.J., & Martínez-Solano, P. (2014). Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67(3), 332–338. https://doi.org/10.1016/j.jbusres.2013.01.016. an inquiry into thE EffECt of working CaPital managEmEnt… 2525 Baser, F., Gokten, S., Kucukkocaoglu, G., & Ture, H. (2016). Liquidity-profitability tradeoff existence in Turkey: an empirical investigation under structural equation modeling. Copernican Journal of Finance & Accounting, 5(2), 27–44. https://doi.org/10.12775/ CJFA.2016.013. Bhattacharya, H. (2009). WCM: Strategies and Techniques. New Delhi: PHI Learning Private Limited. Boisjoly, R.P., Conine, T.E., & McDonald, M.B. (2020). Working capital management: Financial and valuation impacts. Journal of Business Research, 108, 1–8. https://doi. org/10.1016/j.jbusres.2019.09.025. Brigham, F., & Houston, J. (2007). Fundamentals of financial management. Cincinnati: Thomson Southwestern. Cao, E., & Yu, M. (2018). Trade credit financing and coordination for an emission-de- pendent supply chain. Computers & Industrial Engineering, 119, 50–62. https://doi. org/10.1016/j.cie.2018.03.024. Chakraborty, B. (2023). Does Board Structure and Ownership Structure Influence The Performance of Listed Companies: Evidence from Pharmaceuticals and Chemical Industry of Bangladesh? Copernican Journal of Finance & Accounting, 12(1), 29–45. https://doi.org/10.12775/CJFA.2023.002. Chakraborty, B., & Maruf, M.Y.H. (2023). Are Liquidity, Dividend Policy, Leverage, and Profitability the Determinants of Firm Value: Evidence from the Listed Firms? Copernican Journal of Finance & Accounting, 12(1), 47–63. https://doi.org/10.12775/ CJFA.2023.003. Chakraborty, K. (2008). Working Capital and Profitability: An Empirical Analysis of Their Relationship with Reference to Selected Companies in the Indian Pharmaceutical Industry. The IUP Journal of Management Research, 34, 112–126. Chambers, N., & Cifter, A. (2022). Working capital management and firm perfor- mance in the hospitality and tourism industry. International Journal of Hospitality Management, 102, 103144. https://doi.org/10.1016/j.ijhm.2022.103144. Cui, X., Wang, C., Liao, J., Fang, Z., & Cheng, F. (2021). Economic policy uncertainty ex- posure and corporate innovation investment: Evidence from China. Pacific-Basin Finance Journal, 67, 101533. https://doi.org/10.1016/j.pacfin.2021.101533. Dechow, P.M. (1994). Accounting earnings and cash flows as measures of firm perfor- mance: The role of accounting accruals. Journal of Accounting and Economics, 18(1), 3–42. https://doi.org/10.1016/0165-4101(94)90016-7. Deloof, M. (2003). Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business Finance & Accounting, 30(3–4), 573–588. https://doi. org/10.1111/1468-5957.00008. Desai, R., & Desai, J. (2020). Moderating effect of firm size on capital structure determi- nants: evidence from Indian food processing industry. Copernican Journal of Finance & Accounting, 9(3), 61-81. https://doi.org/10.12775/CJFA.2020.012. Enqvist, J., Graham, M., & Nikkinen, J. (2014). The impact of working capital manage- ment on firm profitability in different business cycles: Evidence from Finland. Research in International Business and Finance, 32, 36–49. https://doi.org/10.1016/j. ribaf.2014.03.005. Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi2626 Farhan, N.H., Almaqtari, F.A., Al-Matari, E.M., Senan, N.A.M., Alahdal, W.M., & Hazaea, S.A. (2021). Working capital management policies in Indian listed firms: A state- wise analysis. Sustainability, 13(8). https://doi.org/10.3390/su13084516. Foreman, R.D. (2003). A logistic analysis of bankruptcy within the US local telecom- munications industry. Journal of Economics and Business, 55(2), 135–166. https:// doi.org/10.1016/S0148-6195(02)00133-9. Garcia-Teruel, P.J., & Martinez-Solano, P. (2007). Effects of working capital management on SME profitability. International Journal of Managerial Finance, 3(2), 164–177. https://doi.org/10.1108/17439130710738718. Garcia-Teruel, P.J., & Martinez-Solano, P. (2010). Determinants of trade credit: A comparative study of European SMEs. International Small Business Journal, 28 (3), 215–233. https://doi.org/10.1177/0266242609360603. Gitman, L. (1974). Estimating corporate liquidity requirements: A simplified ap- proach. The Financial Review, 9(1), 79–88. https://doi.org/10.1111/j.1540-6288.1974. tb01453.x. Huang, C.-F., Wang, M.H.L., & Chen, C.-W. (2007). Managing Target Cash Balance in Construction Firms Using Novel Fuzzy Regression Approach. In D.-S. Huang, L. Heutte, & M. Loog (Eds.). Advanced Intelligent Computing Theories and Applications. With Aspects of Artificial Intelligence (pp. 702–711). Springer. https://doi.org/10.1007/978- 3-540-74205-0_74. Islam, M.S. (2018). Dividend Practices in Listed Banks of Bangladesh. Copernican Journal of Finance & Accounting, 7(2), 43–61. https://doi.org/10.12775/CJFA.2018.008. Jose, M.L., Lancaster, C., & Stevens, J.L. (1996). Corporate returns and cash conversion cycles. Journal of Economics and Finance, 20(1), 33–46. https://doi.org/10.1007/ BF02920497. Khan, M.A.I., Alam, M.S., & Syed, A.J. (2021). Correlation between the Profitability and Working Capital Practices: A Case Study in the Gulf Cooperation Council. Journal of Asian Finance, Economics and Business, 8(3), 229–236. Scopus. https://doi. org/10.13106/jafeb.2021.vol8.no3.0229. Kieschnick, R., Laplante, M., & Moussawi, R. (2013). Working capital management and shareholders’ wealth. Review of Finance, 17(5), 827–1852. https://doi.org/10.1093/ rof/rfs043. Kouaib, A., & Haya, M. (2024). Firm Performance of Saudi Manufacturers: Does the Management of Cash Conversion Cycle Components Matter? Journal of Risk and Financial Management, 17(1). https://doi.org/10.3390/jrfm17010016. Kouvelis, P., & Zhao, W. (2012). Financing the Newsvendor: Supplier vs. Bank, and the Structure of Optimal Trade Credit Contracts. Operations Research, 60(3), 566–580. https://doi.org/10.1287/opre.1120.1040. Kouvelis, P., & Zhao, W. (2016). Supply Chain Contract Design Under Financial Constraints and Bankruptcy Costs. Management Science, 62(8), 2341–2357. https:// doi.org/10.1287/mnsc.2015.2248. Lee, H.C., & Rhee, B.-D. (2010). Coordination contracts in the presence of positive inventory financing costs. International Journal of Production Economics, 124(2), 331–339. https://doi.org/10.1016/j.ijpe.2009.11.028. https://doi.org/10.3390/jrfm17010016 an inquiry into thE EffECt of working CaPital managEmEnt… 2727 Martinho, V.J.P.D. (2021). Bibliometric Analysis for Working Capital: Identifying Gaps, Co-Authorships and Insights from a Literature Survey. International Journal of Financial Studies, 9(4), 72. https://doi.org/10.3390/ijfs9040072. Mathuva, D. (2010). The Influence of Working Capital Management Components on Corporate Profitability: A Survey on Kenyan Listed Firms. Research Journal of Business Management, 4(1), 1–11. https://doi.org/10.3923/rjbm.2010.1.11. Mengistu, A.T., & Panizzolo, R. (2023). Analysis of indicators used for measuring industrial sustainability: A systematic review. Environment, Development and Sustainability, 25(3), 1979–2005. https://doi.org/10.1007/s10668-021-02053-0. Nobanee, H., & Dilshad, M.N. (2021). A bibliometric analysis on working capital man- agement: Current status, development, and future directions. Academy of Strategic Management Journal, 20(Special 2), 1–13. Nobanee, H., Abdullatif, M., & Al Hajjar, M. (2011). Cash conversion cycle and firm’s performance of Japanese firms. Asian Review of Accounting, 19(2), 147–156. https:// doi.org/10.1108/13217341111181078. Padachi, K. (2006), Trends in Working Capital Management and its Impact on Firms’ Performance: An Analysis of Mauritian Small Manufacturing Firms. International Review of Business Research Papers, 2(2), 45–48. Peng, J., & Zhou, Z. (2019). Working capital optimization in a supply chain perspec- tive. European Journal of Operational Research, 277(3), 846–856. https://doi. org/10.1016/j.ejor.2019.03.022. Raheman, A., & Nasr, M. (2007). Working capital management and profitability – case of Pakistani firms. International Review of Business Research Papers, 3(1), 279–300. Raza, A., Tursoy, T., Shaikh, E., & Shaikh, A. (2024). Investigating the Symmetric Effects of Working Capital on Profitability in Turkish Banking: An ARDL Empirical Analysis. Studia Universitatis “Vasile Goldis” Arad – Economics Series, 34, 74–97. https://doi.org/ 10.2478/sues-2024-0004. Riehmann, P., Hanfler, M., & Froehlich, B. (2005). Interactive Sankey diagrams. Proceedings – IEEE Symposium on Information Visualization, INFO VIS, Minneapolis, Minnesota, United States, 233–240. https://doi.org/10.1109/INFVIS.2005.1532152. Ross, A. (2002). A multi-dimensional empirical exploration of technology investment, coor- dination and firm performance. International Journal of Physical Distribution & Logistics Management, 32(7), 591–609. https://doi.org/10.1108/09600030210442603. Sah, N.B., Banerjee, A., Malm, J., & Rahman, A. (2022). A good name is better than riches: Family firms and working capital management. Journal of Behavioral and Experimental Finance, 33, 100599. https://doi.org/10.1016/j.jbef.2021.100599. Seth H., Chadha S., Ruparel N., Arora P.K., Sharma S.K. (2020), Assessing working capi- tal management efficiency of Indian manufacturing exporters. Managerial Finance, 46(8), 1061–1079. https://doi.org/10.1108/MF-02-2019-0076. Shin, H.H., & Soenen, L. (1998). Efficiency of Working Capital Management and Corporate Profitability. Financial Practice and Education, 8, 37–45. Smith, K.V. (1973). State of the art of working capital management. Financial Management, 2(3), 50–55. https://doi.org/10.2307/3664987. https://doi.org/10.2478/sues-2024-0004 https://doi.org/10.2478/sues-2024-0004 Amola Bhatt, Bhoomi Mehta, Avani Raval, Nisarg Joshi2828 Tauringana, V., & Afrifa, G.A. (2013). The Relative Importance of Working Capital Management and Its Components to SMEs’ Profitability. Journal of Small Business and Enterprise Development, 20(3), 453–469. https://doi.org/10.1108/JSBED-12-2011-0029. Vural, G., Sokmen, A.G., & Çetenak, E.H. (2012). Effects of Working Capital Management on Firm’s Performance: Evidence from Turkey. International Journal of Economics and Financial Issues, 2(4), 488–495. Wang, Z., Akbar, M., & Akbar, A. (2020). The interplay between working capital management and a firm’s financial performance across the corporate life cycle. Sustainability, 12(4), 1661. https://doi.org/10.3390/su12041661. Wu, J., & Wu, T. (2012). Sustainability indicators and indices: An overview. In C.N. Madu & C. Kuei (Eds.). Handbook of Sustainability Management, London: Imperial College Press. https://doi.org/10.1142/9789814354820_0004. Yousaf, M., & Bris, P. (2021). Effects of working capital management on firm perfor- mance: Evidence from the EFQM certified firms. Cogent Economics & Finance, 9(1), 1958504. https://doi.org/10.1080/23322039.2021.1958504.