A review of trade credit literature: Opportunities for research in operations
01 Dec 2013-European Journal of Operational Research (Working Paper, EPFL)-Vol. 231, Iss: 2, pp 245-256
TL;DR: An integrative review of the existing literature on trade credit motives, order quantity decisions, credit term decisions, and settlement period decisions is provided and a detailed agenda for future research in these areas is derived.
About: This article is published in European Journal of Operational Research.The article was published on 2013-12-01. It has received 301 citations till now. The article focuses on the topics: Trade credit & Credit history.
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TL;DR: Wang et al. as discussed by the authors adopted a systematic literature review methodology combined with bibliometric, network and content analysis based on 348 papers identified from mainstream academic databases, which provided insights not previously fully captured or evaluated by other reviews on this topic, including key authors, key journals and the prestige of the reviewed papers.
361 citations
TL;DR: In this paper, the authors classify the research to-date on supply chain finance according to the main themes and methods, and propose directions for future research, and identify the most important issues that need to be addressed in future research.
Abstract: The purpose of this paper is twofold: to classify the research to-date on Supply Chain Finance (SCF) according to the main themes and methods, and to propose directions for future research.,The review is based on 119 papers mainly published from 2000 to 2014 in international peer-reviewed journals and in the proceedings of international conferences.,The articles that provide a definition of SCF reflect two major perspectives: the ‘finance oriented’ perspective - focused on short-term solutions provided by financial institutions, addressing accounts payable and receivable - and the ‘supply chain oriented’ perspective - which might not involve a financial institution, and is focused on working capital optimisation in terms of accounts payable, receivable, inventories, and sometimes even on fixed asset financing.,While efforts were made to be all-inclusive, significant research efforts may have been inadvertently omitted. However, the authors believe that this review is an accurate representation of the body of research on SCF published during the specified timeframe, and feel that confidence may be placed on the resulting assessments.,The paper presents a comprehensive summary of previous research on this topic and identifies the most important issues that need to be addressed in future research. On the basis of the identified gaps in the literature, four key issues have been highlighted which should be addressed in future research.
285 citations
TL;DR: This paper investigates the existing literature pertaining to prescriptive analytics and prominent methods for its implementation, provides clarity on the research field of prescriptives, synthesizes the literature review in order to identify the existing research challenges, and outlines directions for future research.
232 citations
TL;DR: An economic order quantity model for the retailer is proposed where the retailer’s optimal credit period and cycle time not only exist but also are unique and several special cases are discussed including for non-deteriorating items.
190 citations
TL;DR: In this article, a reference framework that links together the objectives leading to the adoption of supply chain finance (SCF) solutions and several moderating variables is presented. But the authors focus on the adoption process of different SCF solutions.
Abstract: Purpose
Recently, in response to the credit crunch and the increased costs of financing, new solutions for supporting the financial management of supply chains, known as supply chain finance (SCF), have been developed. They exploit the strengths of supply chain links to optimise working capital. The purpose of this paper is to provide a reference framework that links together the objectives leading to the adoption of SCF solutions and several moderating variables.
Design/methodology/approach
This paper adopts a multiple case study methodology, analysing 14 cases of the application of SCF solutions among Italian companies.
Findings
The main findings are the identification of the different objectives leading to the adoption of SCF; the analysis of the impact of moderating variables (the level of inter- and intra-firm collaboration, the level of the trade process digitalisation and the bargaining power and financial strength of the leading firm) on SCF adoption; and the formulation of a reference framework supporting the effective adoption of SCF solutions.
Research limitations/implications
This contribution is exploratory in nature; theory-testing contributions should be the focus of further research. Also, the sample is limited to Italian companies. Finally, the service provider’s point of view has been marginally taken into consideration in this study.
Originality/value
The article addresses the need for more empirical research on SCF. It provides a reference framework focused on the objectives and moderating variables leading to effective SCF adoption, providing a theory-building contribution on the general topic of SCF and on the specific topic of the adoption process of different SCF solutions.
172 citations
Cites background from "A review of trade credit literature..."
..., 2013b), including deterministic demand or infinite and instantaneous replenishments, especially when it comes to supply chain collaboration (SCC), which is often based on the absence of opportunism or availability of complete information (Seifert et al., 2013)....
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...…are often unrealistic (Wuttke et al., 2013b), including deterministic demand or infinite and instantaneous replenishments, especially when it comes to supply chain collaboration (SCC), which is often based on the absence of opportunism or availability of complete information (Seifert et al., 2013)....
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...For example, a common topic in the trade credit literature is the joint analysis of inventory policy and trade credit decisions (Seifert et al., 2013), which dates back to (Goyal, 1985)....
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References
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Posted Content•
TL;DR: The extent to which the process of systematic review can be applied to the management field in order to produce a reliable knowledge stock and enhanced practice by developing context-sensitive research is evaluated.
Abstract: Undertaking a review of the literature is an important part of any research project. The researcher both maps and assesses the relevant intellectual territory in order to specify a research question which will further develop the knowledge base. However, traditional 'narrative' reviews frequently lack thoroughness, and in many cases are not undertaken as genuine pieces of investigatory science. Consequently they can lack a means for making sense of what the collection of studies is saying. These reviews can be biased by the researcher and often lack rigour. Furthermore, the use of reviews of the available evidence to provide insights and guidance for intervention into operational needs of practitioners and policymakers has largely been of secondary importance. For practitioners, making sense of a mass of often-contradictory evidence has become progressively harder. The quality of evidence underpinning decision-making and action has been questioned, for inadequate or incomplete evidence seriously impedes policy formulation and implementation. In exploring ways in which evidence-informed management reviews might be achieved, the authors evaluate the process of systematic review used in the medical sciences. Over the last fifteen years, medical science has attempted to improve the review process by synthesizing research in a systematic, transparent, and reproducible manner with the twin aims of enhancing the knowledge base and informing policymaking and practice. This paper evaluates the extent to which the process of systematic review can be applied to the management field in order to produce a reliable knowledge stock and enhanced practice by developing context-sensitive research. The paper highlights the challenges in developing an appropriate methodology.
7,368 citations
"A review of trade credit literature..." refers methods in this paper
...In order to ensure a comprehens ive accumulation of literature sources we began with the identification of the search terms and keywords, as suggested by Tranfield et al. (2003)....
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...In order to ensure a comprehens ive accumulation of literature sources we began with the identification of the search terms and keywords, as suggested by Tranfield et al. (2003). Our aim was to showcase the range of the existing knowledge base by drawing from a significant sample of articles....
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TL;DR: In this article, the authors evaluate the process of systematic review used in the medical sciences to produce a reliable knowledge stock and enhanced practice by developing context-sensitive research and highlight the challenges in developing an appropriate methodology.
Abstract: Undertaking a review of the literature is an important part of any research project. The researcher both maps and assesses the relevant intellectual territory in order to specify a research question which will further develop the knowledge hase. However, traditional 'narrative' reviews frequently lack thoroughness, and in many cases are not undertaken as genuine pieces of investigatory science. Consequently they can lack a means for making sense of what the collection of studies is saying. These reviews can he hiased by the researcher and often lack rigour. Furthermore, the use of reviews of the available evidence to provide insights and guidance for intervention into operational needs of practitioners and policymakers has largely been of secondary importance. For practitioners, making sense of a mass of often-contrad ictory evidence has hecome progressively harder. The quality of evidence underpinning decision-making and action has heen questioned, for inadequate or incomplete evidence seriously impedes policy formulation and implementation. In exploring ways in which evidence-informed management reviews might be achieved, the authors evaluate the process of systematic review used in the medical sciences. Over the last fifteen years, medical science has attempted to improve the review process hy synthesizing research in a systematic, transparent, and reproducihie manner with the twin aims of enhancing the knowledge hase and informing policymaking and practice. This paper evaluates the extent to which the process of systematic review can be applied to the management field in order to produce a reliable knowledge stock and enhanced practice by developing context-sensitive research. The paper highlights the challenges in developing an appropriate methodology.
7,020 citations
Posted Content•
TL;DR: In this paper, the authors investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries and find that factors identified by previous studies as important in determining the cross-section of the capital structure in the U.S. affect firm leverage in other countries as well.
Abstract: We investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries. At an aggregate level, firm leverage is fairly similar across the G-7 countries. We find that factors identified by previous studies as important in determining the cross- section of capital structure in the U.S. affect firm leverage in other countries as well. However, a deeper examination of the U.S. and foreign evidence suggests that the theoretical underpinnings of the observed correlations are still largely unresolved.
5,935 citations
TL;DR: In this paper, the authors investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries and find that factors identified by previous studies as correlated in the cross-section with firm leverage in the United States, are similarly correlated in other countries as well.
Abstract: We investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries. At an aggregate level, firm leverage is fairly similar across the G-7 countries. We find that factors identified by previous studies as correlated in the cross-section with firm leverage in the United States, are similarly correlated in other countries as well. However, a deeper examination of the U.S. and foreign evidence suggests that the theoretical underpinnings of the observed correlations are still largely unresolved.
5,127 citations
TL;DR: In this article, the authors focus on small firms whose access to capital markets may be limited and find evidence suggesting that firms use more trade credit when credit from financial institutions is unavailable, because they have a comparative advantage in getting information about buyers, they can liquidate assets more efficiently, and they have an implicit equity stake in the firms.
Abstract: Firms may be financed by their suppliers rather than by financial institutions. There are many theories of trade credit, but few comprehensive empirical tests. This article attempts to fill the gap. We focus on small firms whose access to capital markets may be limited and find evidence suggesting that firms use more trade credit when credit from financial institutions is unavailable. Suppliers lend to constrained firms because they have a comparative advantage in getting information about buyers, they can liquidate assets more efficiently, and they have an implicit equity stake in the firms. Finally, firms with better access to credit offer more trade credit. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.
1,604 citations