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1. Introduction
Working capital management is fundamental to assure the survival and growth of small and medium-sized enterprises (SMEs) (Lyngstadaas and Berg, 2016; Nyeadi et al., 2018). The working capital corresponds to the difference between the firm's total current assets and total current liabilities. Working capital management is particularly important for small firms to provide adequate liquidity for the firm survival and operations, as well as to fulfil the financial obligations (Ajao and Alu, 2012; Lyngstadaas and Berg, 2016; Tahir and Anuar, 2016; Alarussi and Alhaderi, 2018). SMEs must avoid liquidity failure due to the risk of not being able to fulfil their commitments with third parties, namely their creditors. Furthermore, small firms have a high amount of current assets with a low degree of liquidity (Peel et al., 2000; García-Teruel and Martínez-Solano, 2007), presenting high cash flows volatility and depending on current liabilities to fund their needs. Therefore, small firms are prone to present a low level of working capital that may imply liquidity shortfalls and, consequently, the impossibility to fulfil the commitments with third parties. An inefficient working capital (WCap) management can increase the probability of firm bankruptcy (Shin and Soenen, 1998; Tahir and Anuar, 2016). A firm that is not able to meet its financial obligations can face financial distress costs associated with a financing imbalance that may signalise firm financial distress (Pindado et al., 2006; Yazdanfar and Öhman, 2020a).
Various studies have analysed the determinants of working capital in the context of SMEs: Howorth and Westhead (2003): UK SMEs; Banos-Caballero et al. (2010): Spanish SMEs; and Singh and Kumar (2017) analysed micro, small and medium-sized firms in India. The specific characteristics of unlisted SMEs may impact on working capital management, namely their restrictions in accessing long-term external finance sources (Petersen and Rajan, 1997; Nobanee and Abraham, 2015), implying a strong dependence on short-term finance, which increases the difficulty of ensuring long-term growth, profitability and survival (Lyngstadaas and Berg, 2016). Therefore, SMEs manage working capital requirements exposed to restrictions in accessing external funding. Furthermore, SMEs face a high probability of financial distress, needing to manage the working capital to accomplish their obligations with creditors in order to renegotiate the credit with favourable terms. In this context, it is...