Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach

Daovisan, Hanvedes; Shen, H. L.

doi:10.3390/su12072658

Open AccessArticle

Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach

by

Hanvedes Daovisan

^1,*

and

H. L. Shen

²

¹

Center for Research on Plurality in the Mekong Region, Faculty of Humanities and Social Sciences, Khon Kaen University, Khon Kaen 40002, Thailand

²

College of Management, National Taiwan University, Roosevelt Rd., Taipei City 106, Taiwan

^*

Author to whom correspondence should be addressed.

Sustainability 2020, 12(7), 2658; https://doi.org/10.3390/su12072658

Submission received: 19 February 2020 / Revised: 12 March 2020 / Accepted: 23 March 2020 / Published: 27 March 2020

(This article belongs to the Special Issue Financial Markets, Instruments and Intermediaries for Social, Environmental and Fiscal Sustainability)

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Abstract

Family firms are the backbone of the socialist transition to a market-oriented economy in Laos. Working capital is an important area of finance that has not been widely studied in relation to family firms’ decision-making. We hypothesize that working capital has a positive cross-lagged effect on decision-making. The hypotheses were tested on a sample of 779 Laotian family firms from 2016 to 2017 (

t_{1}

) and from 2018 to 2019 (

t_{2})

. The analysis was performed using a two-wave cross-lagged model under structural equation modelling. Our results confirm that working capital (access to finance, cash, debt financing, inventory, growth, and profitability) has a positive cross-lagged effect on decision-making. In addition, the findings also suggest that family firms’ early-debt financing could have a vital influence on decision-making. The practical implications of the results are discussed.

Keywords: working capital; decision making; family firms; two-wave cross-lagged model; Laos

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MDPI and ACS Style

Daovisan, H.; Shen, H.L. Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach. Sustainability 2020, 12, 2658. https://doi.org/10.3390/su12072658

AMA Style

Daovisan H, Shen HL. Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach. Sustainability. 2020; 12(7):2658. https://doi.org/10.3390/su12072658

Chicago/Turabian Style

Daovisan, Hanvedes, and H. L. Shen. 2020. "Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach" Sustainability 12, no. 7: 2658. https://doi.org/10.3390/su12072658

APA Style

Daovisan, H., & Shen, H. L. (2020). Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach. Sustainability, 12(7), 2658. https://doi.org/10.3390/su12072658

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Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach

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