Why Business Fail? A Thematic Review Analysis on SMEs (original) (raw)

Strategies to Decrease Business Failure in Small and Medium-Sized Enterprises

2018

Strategies to Decrease Business Failure in Small and Medium-Sized Enterprises by Pantiva Navamarat MS, Golden Gate University, 2012 BA, The University of the Thai Chamber of Commerce, 2004 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University August 2018 Abstract In Southeast Asia, many small and medium-sized enterprises (SMEs) fail each year; in 2010, SME failure rate exceeded 50%. The purpose of this multiple case study was to explore strategies that some SME business leaders use to decrease the failure rate of SMEs in Southeast Asia. The target population consisted of 5 SME business leaders in Southeast Asia who demonstrated success in using strategies to decrease the failure rate of SMEs. The conceptual framework for this study was the Ulrich model, which supports the notion that a human resource manager needs to be involved in overall organizational decision making as a strategic partner, admini...

A Taxonomy of Distinctive Explanatory Business Failure Patterns amongst Small Firms : A Qualitative Approach

Cahier De Recherche Du Cepe, 2010

Whereas it is obvious that the failure process can vary from one firm to another (Argenti, 1976; D'Aveni, 1989; Laitinen, 1991), to date, few researchers have worked on the detection of several (explanatory or subsequent) failure patterns. In addition, none of the reviewed research really focuses on small firms while their failure is important and particular (Haswell and Holmes, 1989). Considering these observation and on the basis of an abductive and qualitative analysis (ThiƩtart, 2003), this paper identifies, among a sample of 208 small distressed firms, a taxonomy of five explanatory business failure patterns, i.e. five homogenous groups of small firms on the basis of the reasons for their failure. As the detection of the fundamental explanatory failure factors is the basis of failure prevention (Argenti, 1976), the identification of these patterns is of crucial importance for a better understanding and for a better prevention of this phenomenon amongst small businesses.

Small Business Failures : A study of the top-managers contribution to the failure

2008

The economical importance and value of small businesses is today recognized by scholars as well as government institutes. The small business does not only contribute with a great amount of entrepreneurial activity and innovations but also as a significant tool in creating jobs. The statistics are however displaying a negative trend in the development of small businesses with over 350.000-400.000 business closures every year in UK. In Sweden 35,000 new enterprises entered the market in 2001 but only 62% were still active in 2004. There are two major factors from which all other explanations are derived from when discussing why a company fails which is the external and internal factor. From the failure model created by Sharma and Mahajan and supported by other researchers, it is known that the problem initiating the failure may have been caused by uncontrollable factors. However the most significant factor behind a failure is derived from insufficient and ineffective management in the strategic process.

The Origins of Small Business Failure: A Grounded Typology

Whereas many authors have stated that the failure process can vary from one firm to another D'Aveni, 1989;, relatively few researchers have searched to detect several explanatory failure patterns, especially in small firms . Out of a sample of 208 small distressed firms placed under follow-up by a Court of Commerce and by using simultaneously a cluster analysis and a correspondence analysis applied to data collected directly from these firms, this paper identifies a taxonomy of five explanatory business failure patterns, i.e. five homogeneous groups of small firms presenting similarities in the dominant reasons explaining their failure. These five patterns may be respectively characterized as being dominated by shocked firms hurted by an abrupt event, firms serving other interests than the pure societal ones, apathetic firms that are no longer able to compete in a turbulent environment, firms that fail after a punctual managerial error and recurrently badly-managed firms. These results are consistent with previous literature and add-on a new insight on the understanding of the reasons explaining small business failure.

Investigation of the Factors Influencing SME Failure as a Function of Its Prevention and Fast Recovery after Failure

Entrepreneurship Research Journal

This paper presents a conceptual framework for investigation of the factors influencing the failure of small and medium enterprises (SMEs) as well as the level of their recovery. Based on the review of literature, all the factors are classified either as individual characteristics of entrepreneurs or non-individual characteristics, that is, characteristics related to SMEs. Having in mind various factors identified by different researchers in their studies, the authors of this paper formed a basic hypothetical framework as well as a qualitative framework for evaluation of the most significant factors influencing SME failure and recovery. Accordingly, a preliminary questionnaire was designed in order to collect the attitudes of entrepreneurs regarding the impact of particular factors. The results of the survey were used for further quantitative analysis and as a base for the formation of a structural equation model for testing the proposed hypotheses. Using the structural equation mod...

The Reasons for SME's Failure, Comparative Analysis and Research

2015

This manuscript is presenting the preliminary results of research of the factors which are influencing the failure of SMEs. The manuscript is just the starting base for the larger research that will address the analysis of the most important factors that lead to closure of SMEs in different regions of the Europe. Basic factors of interest, which can be segmented as the individual characteristics of the entrepreneur or non-individual characteristics of the SMEs, based on wide literature review, were used to define the measuring scale for assessment of the most important factors which can lead to failure of SMEs, in previous research [1]. Such defined initial questionnaire form was used, in a pilot test research, to assess the opinion of the real entrepreneurs who suffered the failure of their previous businesses in Serbia. The idea of the research is to develop adequate measuring scale, which will be used to measure the potential failure of the existing SMEs, based on the rates devel...

STUDY ON FACTORS THAT CONTRIBUTE TO THE SUCCESS AND FAILURE OF SMEs

The current study was commissioned by PUNB 1 (Perbadanan Usahawan Nasional Berhad). PUNB's business operations are focused on providing integrated entrepreneur development packages to assist Bumiputera 2 entrepreneurs in Retail and Small and Medium sized Enterprise (SME) sectors. The slow rate of progress by Bumiputera entrepreneurs and the plummeting of their enterprises has become a pressing concern to the stakeholders especially the political constituent.

Causes and Symptoms of Small and Medium Enterprises (SMEs) Business Failure in Nigeria

2014

The issue of business failure has been a major concern to various stakeholders in the developed and developing economies as the importance of Small and Medium Enterprises (SMEs) cannot be overemphasized in economic development. This study appraised critically the causes and symptoms of organizational failure of small and medium enterprise in Nigeria by examining how SME survival is connected to the demise of the owner and also determine if the less-competitiveness of the SME is caused by a poor organizational structure which leads to failure. The data required for this study was gotten through the instrument of questionnaire. Three hundred (300) copies of questionnaire were administered out of which two hundred and eighty two (282) were retrieved for analysis. Two hypotheses were formulated from the structure of research questions. Regression analysis was used to test the hypotheses through the statistical package for Social Sciences (SPSS 18.0). The result showed that the demise of the owner has a significant effect on the survival of major SMEs in Nigeria (R2 = 0.155, at P < 0.05) and that the less-competitiveness of the SMEs is caused by a poor organizational structure which leads to failure (R2 = 0.512, at P < 0.05). The study therefore recommends among others that managers should have strategic succession plans for organizational perpetuity and also work on their organizational structuring to stay competitive in business. Keywords. Business Failure; SMEs survival; Owner-Manager Demise; Strategic Plans.

An exploratory study of factors affecting the failure of local small and medium enterprises

Asia Pacific Journal of Management, 1996

There is" increasing recognition of the potential contribution of local small and medium enterprises (SMEs) towards employment and economic growth in Singapore. Unfortunately, SMEs tend to have a high mortality rate. A survey was conducted among owners or managers of local SMEs to identify factors perceived as important in affecting business failures. The research results indicate that endogenous fa.ctors were viewed by respondents as more critical in causing SME faiIures than exogenous factors. Important exogenous and endogenous factors in specific areas were identified.

Modeling and Analysis of Business Failures: Application to Moroccan SMEs

2019

Business failure is undoubtedly one of the most raised issues in the field of business management. Small and medium-sized enterprises (SMEs) play an important economic role in many countries, especially in developing countries. In Morocco, for example, they make up more than 90% of Moroccan companies and contribute around 50% to job creation and considerably to value-added. But despite this, most of them are at risk of default and there is very little research and empirical research on this topic in Morocco, as in many developing countries. This work aims to contribute to the understanding of the determinants of business failure using the chi-square independence test. The goal is to explain but also to explain a methodology that can be applied to explain business failures by determining their internal factors. Our empirical results seem to support the claim that the main cause of such failures lies in the absence of a strategic vision and managerial knowledge and culture among SME m...