A critical investigation into the internal factors that influence the requirements of working capital management (WCM) and its components: a case study of UK small food restaurants.

Purpose- This purpose of this study is to critically investigate the internal factors that influencethe requirements of working capital management (WCM) of small food restaurants in the UK.A few research studies have investigatedWCMin the context of the UK, yet to the researcher’sknowledge no research has yet been conducted in relation to the firm’s internal factorsinfluencing the requirements of WCM in the sector. Accordingly, investigation of the factorscontributing towards working capital investment from the UK perspective is the mainmotivating factor for this study.Design/methodology- In this research, an embedded mixed methods approach was followedby combining Likert scale and open-ended questions. Data were collected by following asimple random method from 72 small food restaurants in the UK. The quantitative data fromthe survey questionnaire were collected from August 2019 to March 2020 in the UK. Based onthe literature review, the conceptual framework is developed in chapter three. To achieve theresearch objectives and the answers to the research questions, hypotheses H1, H2, H3 and H4were developed. For quantitative data analysis, this study used Pearson correlation, Spearman’srho and regression analysis and chi-square. The researcher adopted thematic analysis forqualitative data, using NVivo 12 software.Findings- The first theme revealed that external factors such as inflation, competition andtaxation can impact WCM. The second theme identified that employees are another importantfactor of WCM. Further, the regression analysis indicates management competencies (69.9%),size (19.9%), leverage (6%) and profitability (10.1%) have a positive impact on therequirement of WCM. The integration of qualitative and quantitative findings shows bothexternal factors, and internal factors influences WCM in small restaurants in the UK.Practical implications- The study suggested a conceptual framework of the internal factorsimpacting the requirements ofWCM. This framework can be used by owner-managers of smallrestaurants for optimizing the underlying endogenous factors influencing effective WCM andcash flow. These findings could help managers to make strategic decisions and cash forecastsfor potential economic uncertainty, and negative impacts may result from both internal andexternal factors of WCM. Further, results could be used by UK small restaurants to enhanceknowledge inWC, most importantly management competencies. This research would be a vitaltool for government, business policymakers, trade associations, small business minister, andother interested parties, such as academic practitioners, for advancing theoretical understandingaround the WC practice of the small business, workforce planning and monitoring managerialcompetencies. Additionally, they can plan account strategy with a focus on the opportunitiesand future threats that may be caused due to Covid-19 pandemic and macroeconomic factors.Originality/value- This study is unique as no research has yet followed mixed approaches touncover the underlying endogenous factors effecting the level of WC investment by small foodrestaurants in the context of the UK. In particular, the resultant conceptual framework containsfour firm-level determinants and shows a link with the requirement of WC for small businessesthat operate in the restaurant sector.