The moderating role of organizational environments on the relationship between inventory leanness and venture survival in Chinese manufacturing

Abstract

PurposeThe purpose of this paper is to investigate the relationship between inventory leanness and venture survival, and demonstrate the role of organizational environments in moderating this relationship from three dimensions: environmental complexity, dynamism and munificence.Design/methodology/approachUsing a large panel data of more than 150,000 new Chinese small- and medium-sized enterprises between 2000 and 2007 in the manufacturing sector, the authors employ the method of survival analysis via an accelerated failure time model to explore the non-linear relationship between inventory leanness and the likelihood of survival. Moreover, the moderation model is applied to examine the moderating role of organizational environments.FindingsAt its core, this paper demonstrates the inverted U-shaped relationship between inventory leanness and the likelihood of survival. Furthermore, the authors find that environmental complexity and dynamism can negatively moderate this relationship, whereas environmental munificence acts the exact opposite.Practical implicationsManagers need to realize the trade-off between inventory leanness and venture survival. Collectively, more than 90 percent of new Chinese ventures have great potential to improve the likelihood of survival by implementing inventory leanness management. In addition, firms ought to be fully aware of the internal management and the external environments.Originality/valueThis is the first study to confirm the inverted U-shaped relationship between inventory leanness and the likelihood of survival, and empirically verify the moderating role of environmental complexity, dynamism and munificence on this relationship.