Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
open access

Published: 05 August 2019

The Effect of Working Capital Management on the Export Performance of Small and Medium Export Enterprises: Evidence from Export Manufacturing Sector in Sri Lanka

D. T. K. Bernard, A. Almeida, S. Perera, H. Jayarathna, A. A. S. N. Munasighe

Sri Lanka Institute of Information Technology, Malabe, Sri Lanka

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf



Pages: 660-675

Keywords: SMEs, WCM, Export Performance, Manufacturing Sector


Small and Medium Enterprises (SMEs) are critical for the development of the economy in any country and known as the backbone of industrial development in both developing and developed countries. SMEs play a key role in the economy in terms of their contribution to the national output, employment, and the number of firms operating in the country. Effective management of working capital management is necessary for a firm’s survival as well as the success of a business. It is essential to maintain a healthy working capital of Small and Medium Scale Enterprises to keep the solvency and liquidity of SMEs. The problem identified in the research was that, in Sri Lanka, 82% of SMEs are export enterprises which are expected to provide a substantial contribution to the total exports of the country, however, at present, it only contributes approximately 5% of total exports. Therefore, the main objective of the study, was to identify whether there is an effect of working capital management (WCM) practices towards the export performance of the SMEs. The respondents were chosen through a systematic sampling technique, and the responses were analyzed using SPSS version 21 to discover impact of WCM on export performance of the company. The results of the study showed that Receivable management, Inventory management, and Payable management significantly affect export performance while cash management does not have a significant effect. Findings concluded that there is a positive relationship between WCM practices and export performance of SMEs. Hence, in order to enhance the export performance, SMEs should also consider their working capital practices among other requirements.


  1. Aaby, N. E. & Slater, S. F., 1989.       Managerial Influences on Export Performance: A review of the Empirical Literature. International Marketing Review, 6(1), pp. 22-30.

  2. Abel.M, 2008. The Impact of Working Capital Management on Cash Holdings. A Quantitative Study of Swedish Manufacturing SMEs, 1(1), p. 84.

  3. Ackah, J. & Vuvor, S., 2010. The Challenges Faced by Small & Medium Enterprises (SMEs) in Obtaining Credit in Ghana. Journal of Small Business Management, 38(3), pp. 55-66.

  4. Agyei-Mensah, B. K., 2011. Financial Management Practices of Small Firms in Ghana. African Journal of Business Management, 5(10), pp. 3781-3793.

  5. Akinyomi, O., 2014. Effect of Cash Mangement on Profitability of Nigerian Manufacturing firms. International Journal of Marketing and Technology, 4(10), pp. 129-140.

  6. Amoako, G., 2013. Accounting Practices of SMEs: A Case Study of Kumasi Metropolis in Ghana. International Journal of Business and Management, 13(8), pp. 73-83.

  7. Arnold, G., 2008. Corporate Financial Management. Harlow: Financial Times Prentice Hall.

  8. Ayob, A. H., Gudmundsson, S. V. & Yaacob, H. M., 2014. Financial Influences on Export Status of Small and Medium-Sized. International Journal of Entrepreneurship and Small Business, 24(3), pp. 433-454.

  9. Bagchi, B. & Khamrui, B., 2012. Relationship Between Working Capital Management and Profitability: A Study of Selected Companies in India, s.l.: Business and Economics Journal.

  10. Bandara, R. & Rathnasiri, U., 2016. The working capital management practices of small and medium enterprises in Sri Lanka. [Online] Available at:

  11. [Accessed 17 March 2018].

  12. Bellouma, M., 2011. The Impact of Working Capital Management on Profitability: The Case of Small and Medium Sized Export Companies in Tunisia. Management International, 15(1), pp. 71-88.

  13. Bizfiling, 2015. The Relationship Between Accounts Payables and Cash Flow. [Online] Available at:

  14. [Accessed 20 June 2018].

  15. Caballero, S., Teruel, P. & Solano, P., 2010. Working capital management in SMEs. Accounts and finance, 1(1), pp. 511-527.

  16. Cavusgil, T. S. & Zou, S., 1994. Marketing Strategy Performance Relationship: An Investigation of the Empirical Link in Export Market Ventures. Journal of Marketing, 58(1), pp. 1-12.

  17. Commerce, M. o. I. a., 2015. National Policy Framework for Small & Medium Enterprises Development. s.l.:s.n.

  18. Deloof, M., 2003. Does working capital management affect profitability of Belgian firms?. Journal of Busines Finance and Accounting, 30(3,4), pp. 573-587.

  19. Eljelly, A. M. A., 2004. Liquidity ‐ profitability tradeoff: An empirical investigation in an emerging market. International Journal of Commerce and Management, 14(2), pp. 48-61.

  20. Friedman, M., 2006. Free Markets and the End of History. San Fransico: s.n.

  21. Geoffrey, P. C. & Elliot, B., 1969. Management of Money and Finance. New York: Gower Press.

  22. Hamza, K., Mutala, Z. & Antwi, S. K., 2015. Cash management practices and financial performance of small and medium enterprises (SMEs) in the northern region of Ghana. International Journal of Economics, Commerce and Management, 3(7), pp. 456-480.

  23. Harris, A., 2005. Working Capital Management: Difficult, but Rewarding. Financial Executive, 21(4), p. 52.

  24. Hewaliyanage, R., 2001. Export Orientation for Small and Medium Enterprises’ Policies, Strategies and Programmes. Tokyo: Asian Productivity Organisation.

  25. Huda, S. N., 2013. Export Barriers for SMEs. A Case Study of Bangladeshi Small and Medium Sized Shrimp Exporting Companies to the European Market. [Online] Available at: [Accessed 24 March 2018].

  26. Katsikeas, C., Leonidou, L. & Morgan, N., 2000. Firm-level export performance assessment: review evaluation, and development. Journal of the Academy of Marketing Science, 28(4), pp. 493-511.

  27. Koste, L. L. & Malhotra, M. K., 1999. A Theoretical Framework for Analysing the Dimensions of Manufacturing Flexibility. Journal of Operations Management, 18(1), pp. 75-93.

  28. Mclaney, E. J., 2000. Business Finance Theory and Practice. 5 ed. London: Financial Times Prentice Hall.

  29. Mudalige, D. M., 2017. Export Behavior of Small and Medium Scale Enterprises (SMEs) in Sri Lanka: The Role of the Entrepreneur and the Moderation Role of Industry Context. Colombo, APIIT Business & Technology Conference.

  30. Ogee, A. et al., 2013. The Minitab Blog. [Online] Available at:

  31. [Accessed 14 11 2018].

  32. Padachi, K., 2006. Trends in Working Capital Management and Its Impact on Firm's Performance: An Analysis of Mauritian Small and Manufacturing Firms. International Review of Business Research Papers, 2(2), pp. 45-58.

  33. Pell, M. & Wilson, N., 1996. Working Capital and Financial Management Practices in the Small Firm Sector. International Small Business Journal, 4(1), pp. 52-68.

  34. Rathnasiri, U., 2015. The Finacial Practices of Small and Medium Enterprises in Sri-Lanka. Global Journal of Contemporary Research in Accounting, Auditing, and Business Ethics, 1(2), pp. 374-399.

  35. Robinson, R. B., Logan, J. E. & Salem, M. Y., 1986. Strategic versus operational planning in small retail firms. American Journal of Small Business, 10(3), pp. 7-16.

  36. Siringoringo, H., Prihandoko, Tintri, D. & Kowanda, A., 2009. Problems Faced By Small and Medium Business. Delhi Business Review, 10(2), pp. 49-56.

  37. Smirat, A. L. & Yousef, B., 2016. Cash Management Practices and Financial Performance of Small and Medium Enterprises (SMEs) in Jordan. Research Journal of Finance and Accounting, Volume 7.

  38. Task Force for SME sector program, 2002. National Strategy for Small and Medium Enterprise Sector Development in Sri Lanka White Paper, Colombo: Ministry of Enterprise Development and Investment Promotion.

  39. Tookey, D. A., 1964. Factors Associated With Success in Exporting. Journal of Management Studies, 1(1), pp. 48-66.

  40. Yoshino, N. & Taghizadeh-Hesary, F., 2016. Major Challenges Facing Small and Medium-sized Enterprises in Asia and Solutions for Mitigating Them, Tokyo: ADBI Working Paper Series,

  41. Zou, S., Taylor, R. C. & Osland, E. G., 1998. The EXPERF Scale: A Cross-National Generalized Export Performance Measure. Journal of International Marketing, 6(3), pp. 37-58.