This section revisits the main findings, and ultimately highlights the essence of the study. Fundamentally, the study identifies five determining perspectives believed to influence how the managerial team manage working capital components. In other words, it is essential for managers and academicians to appraise the circumstances of five determining perspectives in order to enhance the adaptability of working capital strategy in current business environment.
First, the degree (high vs. low) of PEU influences how managers make decisions related to working capital. The evidence (presented in chapter 5) suggested that high PEU is associated with hostile markets comprised of major challenges, such as unpredictable demands, sensitive to economic conditions, highly depended on financing, and heavily governed by local authorities. In such conditions, managers are more externally focused on surrounding environment in most decisions. While managers in low PEU condition, market conditions are relatively stable, there is a lower sensitivity to economic conditions, less dependence on financing, and loosely governed by government regulation. In these circumstances, managers are more internally focused; and improving internal process to increase productivity or push organizational capabilities.
Second, the influence of budgetary control has on managerial approach to WCM. It is evident that budgetary control is influenced by the used of budget and utilisation of WCM components. In companies, where profit orientation is adopted, managers are given clear financial targets and they are responsible to achieve those targets. Hence, the management
148 team normally use budgets (top down approach) to control subordinates to maximize profitability. In terms of WCM policies, profit orientation is synonym with ‘squeezing’ WCM policies to again maximize profitability. In contrast, the learning orientation approach encourages managers to continuously share information (ongoing planning) in speculating (forecasting accuracy) market movements; hence reliance on budget is minimal compared to profit orientation. In addition, WCM policies are more flexible as establishing long-term relationship with stakeholders (suppliers/retailers/clients) is beneficial to improve business attractiveness and enhance adaptability in response to market changes.
Third, this study finds organizational structural designs, particularly vertical and horizontal structures, influence working capital activities, especially information flow and decision authority. To establish an agile enterprise, managers are encouraged to interact freely and initiate learning ingenuity about various aspects to prepare them in decision making process. In such situations, horizontal structure is associated with horizontal information flow and WCM decisions are made in consensus manner. On the other hand, top management is well aware of what it takes to improve profitability; hence all information regarding working capital is vertically shared. On top of that, the CFO is most influential, and most working capital decisions are made at the top management level.
Fourth, the level of complexity (simple vs. complex) in business process influences the degree of ERP dependency and interdependency between business units, including working capital activities. It is apparent that a complex business process requires intensive compromises between managers in order to synchronize different business units to meet market changes. Therefore, ERP dependency is high as complex process requires a systematic approach to integrate various business processes. In contrast, managers, in simple process, are familiar with working capital activities; hence they are more focus on individual tasks. In terms of ERP dependency, the evidence (presented in chapter 5) suggested that ERP is mainly used for data management, it is not a crucial part of working capital.
149 Fifth, the study identified a significant influence of organizational culture to WCM practices. The evidence suggested that company with an embedded bureaucratic culture whereby managers have shown high consistency level (familiarity with working capital process) and having result orientation. Furthermore, managers are very familiar with working capital daily routines, and focused on achieving specified targets (result driven). In contrast, companies with an embedded adaptability culture whereby managers display innovative efforts (initiate improvement) and sense making capabilities. In other words, managers are interested in seeking new ideas or ways to improve working capital performance, while making sense from broad range of information is also imperative to speculate about market directions.
It is obvious that within each determining perspective, there are variations that offered insights into different WCM practices. An alternative view (presented in chapter 5) of determining perspectives showed replication of patterns between cases which enabled this research to observe the similarities and differences.
In reviewing the results of five determining perspectives vertically (presented the patterns of each determining perspective across the cases) and horizontally (shown the patterns of each case across the five determining perspectives) reveals two distinctly differing WCM approaches: integrated and non-integrated. An assessment of data, using conceptually ordered matrices, together with interpretations of the extant literature, facilitated the development of a WCM conceptual framework which constituted the major outcome of this study (presented in chapter 6). The following points briefly explain the characteristics of the two WCM approaches;
1. Integrated WCM Approach – managers are more focused on external variables in the decision making process, associated with a high PEU, learning orientation, horizontal structure, more complex processes, and an adaptability culture. As a consequence, working capital components are managed in a more integrated manner.
150 2. Non-integrated WCM approach – managers are to strengthen internal processes
associated with a low PEU, profit orientation, vertical structure, simple process, and a bureaucratic culture; therefore, WCM components are managed in a more non- integrated manner.