Working Capital Management and National Culture : a Cross Country Study

Sammanfattning: Earlier research illustrates that national culture influences financial decision making. In working capital management, the research has been limited and the various results regarding this relationship have been ambiguous. However research has been limited and the results can differ. Therefore, this study concentrates on the relationship between the difference on national cultural dimensions and working capital practices, using the sample of eight culturally differing countries with the total of 240 observations for the year 2014. The national cultural dimensions are based on Hofstede’s framework. By using multiple regression models, the connection between national cultural dimensions and working capital is verified and relationships are detected. Individualism versus collectivism, uncertainty avoidance and masculinity versus femininity provide proof of an existing relationship between national cultural dimensions and working capital practices and efficiency, namely cash conversion cycle. The results of this study suggest that national cultural cause differences to working capital management practices between countries. The length of the cash conversion cycle seems to change depending on the national cultural score of the country. Managers need to take this cultural impact into consideration when operating in international business environment and when developing working capital practices.