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The Scientific World Journal
Volume 2014, Article ID 953945, 15 pages
http://dx.doi.org/10.1155/2014/953945
Research Article

Working Capital Management, Corporate Performance, and Strategic Choices of the Wholesale and Retail Industry in China

Business School of Hunan University, Changsha 410082, China

Received 11 March 2014; Revised 18 June 2014; Accepted 19 June 2014; Published 8 July 2014

Academic Editor: Tiaojun Xiao

Copyright © 2014 Chuan-guo Li et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

We examine the influence of strategic choice on working capital configurations and observe how the relationship between working capital ratio and operational performance differs depending on strategy. By clustering the strategic factors of the wholesale and retail industry, we find three categories of strategies: terminal market strategy, middle market strategy, and hybrid strategy. Using the panel data of the listed companies of the wholesale and retail industry as our sample, we analyze the differences in the ways companies configure working capital, the speed with which working capital adjusts to its target, and the effects of working capital on performance for companies that make different strategic choices. The empirical results suggest that working capital is configured and adjusted to its target in different ways under different competitive strategic choices. This effect is finally transferred to influence the relationship between working capital configuration and operational performance.