Business process digitalization and efficiency of corporate working capital management

Abstract

The turbulence in the global economy and trade environment has increased uncertainty for firms, making effective working capital management (WCM) crucial for navigating these challenges. Digital technology has fundamentally transformed traditional value creation processes in organizations. In light of this, the study focuses on business process digitalization (BPD), and its impact on corporate WCM. Specifically, it seeks to answer how BPD influences firms’ management of working capital. This research examines the effect of BPD on WCM in the Chinese capital market using textual analysis to measure BPD levels. The findings indicate that BPD enhances WCM by improving data accuracy, automating routine tasks, and fostering operational synergies. Additionally, BPD helps alleviate financial constraints and strengthens firms’ bargaining power within the supply chain, further optimizing WCM. The study also identifies industry competition, capital allocation efficiency, and default risk as key moderating factors that influence the BPD-WCM relationship.