Home⇛Psychology and Education: A Multidisciplinary Journal⇛vol. 49 no. 6 (2025)

The Relationship Between Working Capital Management Practices and Sustainability Among Barangay Micro Business Enterprises

Jerome Orillosa | Jayfunie Trance

Discipline: Education

 

Abstract:

This study examined the relationship between working capital management practices and sustainability among 105 Barangay Micro Business Enterprises (BMBEs) in Aleosan, Cotabato, using a descriptive-correlational research design. Results revealed that most BMBEs (63.8%) have operated for 1–5 years, with 72.4% engaged in merchandising and 100% operating as sole proprietorships. The overall level of working capital management practices was high (M = 3.51, SD = 1.05), with strong cash management (M = 3.71) and inventory management (M = 3.62), but moderate accounts receivable management (M = 3.20). Sustainability was also high (M = 4.15), with social (M = 4.53) and environmental (M = 4.15) aspects rated higher than economic sustainability (M = 3.76). Statistical analysis revealed a significant positive correlation between working capital management and sustainability (r = 0.541, p < 0.01), with results indicating that working capital management explains 29.3% of the variance in sustainability (R² = 0.293, F = 12.168, p = 0.000). The study concludes that adequate cash, inventory, and receivable management practices significantly enhance BMBE sustainability. Findings underscore the need for financial literacy programs and local government support to strengthen working capital systems, improve financial resilience, and promote sustainable enterprise growth.



References:

  1. Abor, J. Y. (2017). Working capital management: Entrepreneurial Finance for MSMEs (p.225 255). Springer.
  2. Adebayo, A., Afolabi, A., & Oyeniyi, O. (2021). Working capital management and sustainability of small and micro enterprises: Evidence from Nigeria. Journal of Small Business and Enterprise Development, 28(3), 439-456.
  3. Adebayo, O., Fadeyi, O., & Ilesanmi, A. (2021). Working capital management for MSME sustainability: Concepts and practices. Ibadan Academic Publishers.
  4. Adebayo, T. S., Oladipupo, S. D., Adeshola, I., & Rjoub, H. (2021). Working capital management and financial performance of Micro Business Enterprises (MBEs): Evidence from Nigeria. Journal of Economic and Administrative Sciences. Advance online publication.
  5. Afdal, Z., Siwi, M. K., Kurniawati, T., & Marwan. (2021). MSMEs business sustainability: A literature review. In Advances in Economics, Business and Management Research
  6. Ahamed, G. T., & Raju, S. A. A. (2023). A review of challenges and opportunities for MSMEs in India: A roadmap for success. International Journal of Advanced Research in Commerce, Management & Social Science (IJARCMSS), 6(1), 89–98.
  7. Ai-guo, T. (2016). Account receivable management. Commercial research, 9, 011.
  8. Akinlo, O. O., & Akinlo, T. (2019). Working capital management and performance of small and medium enterprises in Nigeria. Journal of Small Business & Entrepreneurship, 31(4), 321–336.
  9. Akinlo, R., & Akinlo, A. (2019). Liquidity and performance management in small enterprises. Lagos Business Publishing.
  10. Akinyomi, O. J. (2014). Effect of cash management on profitability of Nigerian manufacturing firms. International Journal of Marketing and Technology, 4(1), 129–140.
  11. Alera, A. I., Evangelista, J. H., & Cipriano, J. C. (2021). Impact of the Micro Business Enterprise Act on the growth and development of micro-entrepreneurs. International Journal of Applied Research in Tourism and Hospitality, 1(1), 1-29.
  12. Atrill, P., & McLaney, E. (2017). Accounting and finance for non-specialists (10th ed.). Pearson Education.
  13. Bandara, R and Rathnasiri, U. (2016). The Working Capital Management Practices of Small and Medium Enterprises (SMEs) in Sri Lanka. ICME 2016, Faculty of Management and Finance, University of Ruhuna.
  14. Barney, J. B., & Hesterly, W. S. (2019). Strategic management and competitive advantage (6th ed.). Pearson Education.
  15. Bersin, J. (2018). The Learning and Development Framework: Creating a Culture of Learning in Your Organization. Bersin by Deloitte.
  16. Bofah, E., & Wang, P. (2020). Regularly updating accounts receivable records: A critical approach for managing cash flows and minimizing bad debts. International Journal of Business and Management, 15(3), 45-58.
  17. Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of corporate finance (13th ed.). McGraw-Hill.
  18. Brigham, E. F., & Ehrhardt, M. C. (2022). Financial management: Theory & practice (16th ed.). Cengage Learning.
  19. Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Cengage Learning.
  20. Brynjolfsson, E., & McAfee, A. (2014). The second machine age: Work, progress, and prosperity in a time of brilliant technologies. W. W. Norton & Company.
  21. Carbon Trust. (2020). Reducing carbon emissions. Retrieved from https://www.carbontrust.com
  22. Chopra, S., & Meindl, P. (2016). Supply chain management: Strategy, planning, and operation (6th ed.). Pearson Education.
  23. Creswell, J. W., & Creswell, J. D. (2018). Research design: Qualitative, quantitative, and mixed methods approaches (5th ed.). SAGE Publications.
  24. Disney, S. M., Maltz, A., Wang, X., & Warburton, R. D. (2016). Inventory management for stochastic lead times with order crossovers. European Journal of Operational Research, 248(2), 473–486.
  25. Dobie, A. (2015). Debtors, creditors and financial management. In accounting at Durham Cathedral Priory (pp. 157–182). Springer.
  26. Dumont, W., & Jansen, J. (2021). The FIFO inventory management strategy: Enhancing efficiency and cost savings. Business & Management Journal, 45(3), 120-135.
  27. Etikan, I., Musa, S. A., & Alkassim, R. S. (2016). Comparison of convenience sampling and purposive sampling. American Journal of Theoretical and Applied Statistics, 5(1), 1-4.
  28. Galli, A., Weinzettel, J., Cranston, G., & Ercin, E. (2015). A Footprint Family extended MRIO model to support Europe's transition to a One Planet Economy. Science of the Total Environment.
  29. Geissdoerfer, M., Savaget, P., Bocken, N. M., & Hultink, E. J. (2017). The circular economy – A new sustainability paradigm? Journal of Cleaner Production, 143, 757–768.
  30. Gitman, L. J., & Zutter, C. J. (2015). Principles of managerial finance (14th ed.). Pearson Education.
  31. Gonzalez-Benito, J., & Gonzalez-Benito, O. (2016). Operations management and environmental sustainability: Evidence from the Spanish manufacturing industry. Journal of Operations Management, 44, 50-61.
  32. Global Reporting Initiative (GRI) (2016). Sustainability reporting standards. Global Reporting Initiative.
  33. Habib, A., Anwar, S., Hussain, W., & Fenyves, V. (2024). The role of sustainable investment practices in maintaining efficient working capital management. Journal of International Studies, 17(2), 206-219.
  34. Hafeez, K., Junaid, M., & Malick, F. (2014). A study of sustainable competitive advantage: The role of business strategy and sustainable capability. International Journal of Business and Management, 9(11), 1-12.
  35. Hassan, U., et. al. (2017). Effect of Working Capital Management on Firm' Financial Performance: A Survey of Water Processing Firms in Puntland. Journal of Economics and Sustainable Development, ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) 8(2).
  36. Hayes, R. (2014). Retail security and loss prevention (3rd ed.). CRC Press.
  37. Hazel, H. J. (2024). Sustainability strategies for micro, small, and medium enterprises located in the Organization of Eastern Caribbean States (Doctoral dissertation). Walden University.
  38. International Institute for Management Development (IMD). (2025). Economic sustainability: Principles for long-term success. Retrieved from https://www.imd.org/blog/sustainability/economic-sustainability/.
  39. Iskandar, Y., Ardhiyansyah, A., & Pahrijal, R. (2024). Key factors affecting business sustainability of MSMEs in Indonesia: The role of intellectual capital, social innovation, and social bricolage. The Eastasouth Management and Business, 2(2), 166–183.
  40. Kahn, B. E., & McGowan, J. (2015). The impact of inventory management practices on the performance of small and medium-sized enterprises. Journal of Business Research, 68(5), 1035-1041.
  41. Kangangi, L. K., & Omagwa, J. (2020). Working capital management practices and growth of small and medium-sized enterprises in Nyeri County, Kenya. International Journal of Economics, Business and Management Research, 4(11), 37.
  42. Kahn, W. A., & Byers, L. L. (2015). The role of communication in fostering positive workplace relationships. Journal of Organizational Behavior, 36(5), 678-695.
  43. Katz, H. C., Kochan, T. A., & Colvin, A. J. S. (2017). An introduction to collective bargaining and industrial relations (5th ed.). McGraw-Hill.
  44. Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Pearson Education.
  45. Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. (2019). Operations management: Processes and supply chains (12th ed.). Pearson Education.
  46. Lazear, E. P. (2018). Personnel economics: The economist's view of human resources. Journal of Economic Perspectives, 32(3), 91–114.
  47. Lee, K. H., & Min, J. (2015). The role of green supply chain management in the improvement of business sustainability in South Korea. Business Strategy and the Environment, 24(8), 775-786.
  48. Lehmann, M., Albrecht, A., & Hockerts, K. (2017). The energy efficiency gap in the firm: Evidence of a lack of environmental management. Journal of Cleaner Production, 142(4), 3346-3353.
  49. Li, Y., & Liu, X. (2018). Financial management challenges in Micro, Small, and Medium Enterprises (MSMEs): A case study of China. Journal of Small Business Management, 56(2), 251–273.
  50. Lovins, A. B. (2018). Reinventing fire: Bold business solutions for the new energy era. Chelsea Green Publishing.
  51. Lüdeke-Freund, F., Carroux, S., Joyce, A., Massa, L., & Breuer, H. (2018). The sustainable business model pattern taxonomy—45 patterns to support sustainability-oriented business model innovation. Sustainable Production and Consumption, 15, 145-162.
  52. Macatumbas-Corpuz, B.L. and Bool, N.C. (2021). Working capital management practices and sustainability of Barangay Micro Business Enterprises (BMBEs) in Ilocos Norte, Philippines. International Journal Of Research In Business And Social Science 10(2)(2021) 21-32. ISSN: 2147-4478.
  53. Madura, J. (2020). Financial markets and institutions (13th ed.). Cengage Learning.
  54. Markl, C., Salvatore, P., & Torres, M. (2023). Drivers of business sustainability in competitive markets: Insights from recent studies. Journal of Sustainable Business, 12(1), 45-61.
  55. Markl, E., Geyer-Klingeberg, J., & Rathgeber, A. W. (2023). Sustainable working capital management: Aligning financial practices with sustainability goals. Journal of Cleaner Production, 382, 135–147.
  56. Markl, J., Orrmell, S., & Chowdhury, F. A. (2023). Determinants of SMEs sustainable practice: A case study of a Swedish financial firm. Uppsala University.
  57. McKenzie, D., & Dyer, J. (2016). The importance of employee well-being: A comprehensive approach to enhancing productivity and job satisfaction. Journal of Business Management, 12(3), 45-60.
  58. McMillan, J. H., & Schumacher, S. (2020). Research in education: Evidence-based inquiry (8th ed.). Pearson.
  59. Missimer, M., Robèrt, K.-H., & Broman, G. (2017). A strategic approach to social sustainability—Part 1: Exploring the social system. Journal of Cleaner Production, 140, 32-41.
  60. Mostiero, J. T. (2022). Working capital management practices of microenterprises in Lipa City as predictors of business sustainability. International Journal of Research Publications, 104(1), 1216-1236.
  61. Mwachungile, R. A., & Makina, D. (2021). The inconsistent performance of bank reconciliations in SMEs: Implications for cash management practices. International Journal of Financial Management, 11(2), 55-68.
  62. Noe, R. A. (2020). Employee training and development (8th ed.). McGraw-Hill.
  63. Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2014). Fundamentals of human resource management (7th ed.). McGraw-Hill Education.
  64. Okafor, L. C., & John, N. C. (2018). Cash management and liquidity in small businesses: Evidence from Nigeria. Journal of Accounting and Management, 8(2), 34-41.
  65. Okwu, A., & Okwu, U. (2018). Sustainable practices in small business operations: A focus on working capital management. Abuja Press.
  66. Palinkas, L. A., Horwitz, S. M., Green, C. A., Wisdom, J. P., Duan, N., & Hoagwood, K. E. (2015). Purposeful sampling for qualitative data collection and analysis in mixed method implementation research. Administration and Policy in Mental Health and Mental Health Services Research, 42(5), 533-544.
  67. Pandey, I. M. (2015). Financial management (11th ed.). Vikas Publishing House.
  68. Piza, E. L., Welsh, B. C., Farrington, D. P., & Thomas, A. L. (2019). CCTV and crime prevention: A systematic review and meta-analysis. Journal of Experimental Criminology, 15(3), 289–311.
  69. Purvis, B., Mao, Y., & Robinson, D. (2019). Three pillars of sustainability: In search of conceptual origins. Sustainability Science, 14(3), 681-695.
  70. Schaltegger, S., & Wagner, M. (2017). Managing the business case for sustainability: The integration of social, environmental, and economic performance. Routledge.
  71. Schmidt, C., & Eickelpasch, A. (2014). Effective workforce management: Aligning workforce expansion with market demand and sustainability. Journal of Business Research, 67(1), 1288-1296.
  72. Smirat, B. (2016). Cash Management Practices and Financial Performance of Small and Medium Enterprises (SMEs) in Jordan. Research Journal of Finance and Accounting, 7(2).
  73. Smith, D. C. (2016). Real-time cash flow monitoring: Benefits and best practices. Journal of Business Strategy, 37(2), 12–19.
  74. Sorrell, S. (2015). Reducing energy demand: A review of issues, challenges, and approaches. Renewable and Sustainable Energy Reviews, 47, 74–82.
  75. Stevenson, W. J. (2020). Operations management (14th ed.). McGraw-Hill Education.
  76. Vazquez, D., & Villanueva, M. (2016). Corporate social responsibility in MSMEs: Impacts and implications. Business and Society Review, 121(2), 239–265.
  77. Zarif, M. R., & Rosman, R. (2020). The role of cash management practices in enhancing liquidity and performance of small and medium enterprises. International Journal of Business and Management, 15(3), 43-54.
  78. Zeithaml, V. A., Bitner, M. J., & Gremler, D. D. (2018). Services marketing: Integrating customer focus across the firm (7th ed.). McGraw-Hill Education.
  79. Zeng, Y. (2018). The relationship between sustainability initiatives and financial performance: Evidence from emerging markets. Journal of International Business Studies, 49(10), 1234-1253.
  80. Zhao, X., Wu, J., & Yang, H. (2019). Exploring energy management gaps in businesses with respect to sustainable practices: Challenges and future directions. Sustainability, 11(4), 1072.

Tools


Copyright © 2026  KITE Digital Educational Solutions |  Exclusively distributed by CE-Logic