Degree of knowledge and adoption of working capital management procedures in small and medium enterprises

The Micro and Small Enterprises (MSEs) are important are important contributors to the Brazilian economy, generating jobs and being an alternative to the informal job market. However, high mortality rates are an uncomfortable reality; in Brazil approximately 40% of MPEs end their activities before the second year of activity. A critical factor of MSEs is the working capital (WC) management, the generation of revenues and the payment of short-term financial commitments. In this article the objective is to analyze the extent to which a degree of knowledge WC management influences in the adoption of management procedures. We investigated 318 managers and owners of Brazilian MSEs through an electronically applied survey. We analyzed the data by modeling structural equations using the Partial Least Squares (PLS) method. The results indicate a positive relation between time of business activity and degree of knowledge of the manager, and between the degree of knowledge and the level of adoption of management procedures. We found evidence of low deficiencies in manager training over time, indicating a need for investments in this field.