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Cited by 58Supply Chain and Inventory ManagementWorking Capital and Financial PerformanceQuality and Supply Management

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Reexamining the relationship between inventory management and firm performance: An organizational life cycle perspective

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Elsayed, Khaled, Wahba, Hayam·2016·Future Business Journal
DOI 10.1016/j.fbj.2016.05.001
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Abstract

Existing evidence regarding inventory-performance relationship is inconclusive. A perspective that this paper stresses in considering this relationship is that it might depend on organizational life cycle stage. The underlying assumptions of this argument are that organization’s strategies and relationships vary with its life cycle stage, organizations develop their own strategies to fit between inventory system and organizational settings, and design of inventory system is not a linear process, rather it is a dynamic process that emerges and evolves in response to the power and interests of the stakeholders. Econometric analysis provides support for this argument. Specifically, the results show that while inventory to sales ratio affects organization performance negatively in the initial growth stage and the maturity stage, it exerts a positive and significant coefficient on performance in either the rapid growth stage or the revival stage. An implication of these findings is that existing perspectives might need to be treated as complementary viewpoints, each of which comprises a part of the whole picture because depending on just one single perspective is likely to result in misleading conclusions about the whole structure.

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  • Shorter inventory days are often associated with higher profitability, though this relationship weakens in contexts of market volatility or fluctuating demand.

    “Elsayed and Wahba (2016) extended this discussion by showing that shorter inventory days are often associated with higher profitability, though this relationship weakens in contexts of market volatility or fluctuating demand, similar to some other studies, such as Chuang et al. (2019), Rumyantsev and Netessine (2007), and Gołaś (2020).”

    From Business growth and management costs as moderators of the inventory-performance link: Evidence from Vietnamese manufacturing firms (2025) · cites this paper as Elsayed and Wahba, 2016

    The literature review (§2.1; page unavailable) reports an association between fewer inventory days and higher profitability. The paper’s own multivariate analysis (§6.2; page unavailable) finds that the inventory–performance relationship varies by organizational life-cycle stage, sometimes reversing direction. It does not show that market volatility or fluctuating demand specifically weakens the relationship; its hypothesis development (§4) describes fluctuating demand in the initial-growth stage, where greater inventory is associated with worse performance. (LLM, conf=0.85)

    Experimental — accuracy not yet measured

  • The negative association between average inventory days and ROA is consistent with earlier studies by Demeter (2003), Fullerton et al. (2003), and Elsayed and Wahba (2016).

    “This is consistent with earlier studies by Demeter (2003), Fullerton et al. (2003), and Elsayed and Wahba (2016)”

    From Business growth and management costs as moderators of the inventory-performance link: Evidence from Vietnamese manufacturing firms (2025) · cites this paper as Elsayed and Wahba (2016)

    Section 6.2 reports a negative association between inventory-to-sales ratio and ROA in a model that omits life-cycle stages, consistent with the claim’s general direction. But the paper measures inventory-to-sales ratio, not average inventory days; Section 6.2 also finds that the association varies by organizational life-cycle stage. No page numbers are available in our copy. (LLM, conf=0.86)

    Experimental — accuracy not yet measured

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Metadata

Authors
Elsayed, K., & Wahba, H.
Affiliations
Ain Shams University (EG)
Corresponding author
Elsayed, Khaled
ORCID
Venue
Future Business Journal
Publisher
Springer Science and Business Media LLC
Published
2016-06
Volume
2
Issue
1
Pages
65-80
ISSN
  • 2314-7202 (ISSN-L)
  • 2314-7210
DOI
10.1016/j.fbj.2016.05.001
OpenAlex
W2443475922
Cited by
58
References
4
Citations by year
2026: 3 · 2025: 6 · 2024: 8 · 2023: 8 · 2022: 10 · 2021: 5 · 2020: 5 · 2019: 4 · 2018: 6 · 2017: 1 · 2016: 1
FWCI
6.49
Type
journal article
Language
en
Open access
Licence
Locations
  • Future Business Journal (publishedVersion, cc-by-nc-nd)
  • DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
  • Econstor (Econstor) (submittedVersion, cc-by-nc-nd)
Topics
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Supply Chain and Inventory Management
  • Social Sciences › Business, Management and Accounting › Accounting › Working Capital and Financial Performance
  • Social Sciences › Business, Management and Accounting › Management Information Systems › Quality and Supply Management
Keywords
inventory management, firm performance, organizational life cycle, inventories-to-sales ratio, inventory strategy, stakeholder power, inventory system design

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