Abstract

Purpose – the purpose of the research paper is to observe and analyse how major companies in the the Baltic States behave during the last business cycle in terms of inventory management in order to identify different inventory management strategies. Research methodology – statistical analysis from year 2007 to year 2012 encompassing 1387 largest businesses in the Baltics by their operating revenue. In the research paper clustering and mainly comparison methods are applied. Findings – research paper shows that major companies in Baltic States mainly behave cyclically and there has been little evidence of industries behaving counter-cyclically during anticipation of recession however there has been some indication of industries that increase inventories in anticipation of recovery mainly in Latvia. Research limitations – time, geography and scope limitations in terms of financial indicator that in the future research by the author needs to be addressed in order to provide a holistic view on the issue. Research implications – research paper demonstrates that various industries adapt different strategies during the business cycle and there are differences both on country and industry levels. Originality – first paper that analyses in-scope major Baltic state companies behaviours during the last business cycle on both country and industry level.

Highlights

  • Global economic crisis from 2008 onwards is considered one of the worst financial crises since 1930 Great depression which had overwhelming effect on every country poor and wealthy (Ma, Yiu, & Zhou, 2014; Bristow & Healy, 2018; Cuadrado-Roura, Martin, & Rodríguez-Pose, 2016; Koser, 2016; Hausman & Johnston, 2014; Helleiner, 2014; Sherman, 1991)

  • Data analysed differs between all three Baltic States – Estonia, Latvia and Lithuania. When it comes to the inventory turnover habits in Estonia, Lithuania and Latvia during the highest point of economics, it was more common in the sectors to increase inventories

  • The three sectors, which applied to cut inventories in Latvia, were: Construction; Public administration and defence; compulsory social security; Water supply; sewerage; waste management and remediation activities. As it can be seen from the research results section overall inventory habits within the Baltic States do seem similar there are some slight differences

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Summary

Introduction

Global economic crisis from 2008 onwards is considered one of the worst financial crises since 1930 Great depression which had overwhelming effect on every country poor and wealthy (Ma, Yiu, & Zhou, 2014; Bristow & Healy, 2018; Cuadrado-Roura, Martin, & Rodríguez-Pose, 2016; Koser, 2016; Hausman & Johnston, 2014; Helleiner, 2014; Sherman, 1991). Due to major implications globally, academia has paid more attention to the business cycle management area since it’s a very complex issue and there are many points of views how to look at the last business cycle from 2007–2012 Meaning in this period of time there has been expansion in 2007, peak in 2008, trough in 2009 (recession for Latvia in 2009 and trough in 2010) and again expansions from 2010 onwards. Taking into account topicality aim of this research paper is to analyse how major companies in the Baltic States manage their inventories during different business cycle phases, to be more specific, during peak, recession, trough and expansion on industry level and country level (for illustration please see Figure 1) (Belongia & Ireland, 2016; Johnson, Scholes, & Whittington, 2007; Johnson, 2011). The hypothesis does originate from the literature review analysis that has been performed by Sarnovičs and Iesalnieks (2016) where current hypothesis is one of the planned series to analyse several aspects of the business cycle phase related factors by carrying out the statistical analysis

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