THE STRATEGIC DILEMMA OF LIQUIDITY VERSUS PROFITABILITY: AN INTEGRATIVE CONCEPTUAL MODEL OF WORKING CAPITAL MANAGEMENT AND CORPORATE FINANCIAL RESILIENCE IN EMERGING MARKETS

Abstract

Working capital management, traditionally approached as an operational activity, is also central to strategic liquidity, financing and business-continuity decisions, particularly in settings of credit constraints and macroeconomic volatility. This study proposes an Integrative Conceptual Model of Working Capital Management (ICM-WCM), connecting the liquidity–profitability trade-off with financing conditions, the development of management controls, organizational life-cycle stages and risk governance. A qualitative, critical-conceptual integrative review is conducted using identifiable classical and empirical sources. The analysis discusses the Fleuriet framework, cash conversion cycle, debt structure heterogeneity and recent Brazilian evidence, while distinguishing published empirical findings from the authors’ own theoretical propositions. The contribution consists of five testable propositions and a managerial decision matrix combining treasury positions and working capital requirement trends. No universal solution to the liquidity–profitability trade-off is assumed: managerial decisions depend on operational, financial and institutional conditions, and direct empirical validation remains a task for future research.