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Because entrepreneurship entails uncertainty, business failure is a common outcome for entrepreneurs. When entrepreneurs encounter business failure, they carry a financial, social, and emotional burden associated with the failure. However, the magnitude of this burden differs by institutions, influencing entrepreneurial decisions and behaviors. Although institutions governing the rules of business failure are a topic for a rapidly growing field of research, research on this topic is highly fragmented. Therefore, the purpose of this systematic review is to unpack the relationships between institutions—governing the rules of business failure—and entrepreneurial decisions/behaviors. The paper provides a fine-grained and comprehensive review of the relevant literature and develops an agenda to guide future research. [ABSTRACT FROM AUTHOR]

This paper argues that public sector organizational failure may be best understood from a perspective of collective denial. The rise of this phenomenon is examined using testimony from a Public Inquiry into the downfall of a UK hospital, where falling organizational standards led to unethical decision making and an unacceptable number of patient deaths. In this paper, we show how collective denial, over time, became a process that resided within the fabric of organizational life. To explore the organizational processes associated with collective denial, and how and why it occurs, we identify the influence of a 'narrative of silence.' This narrative allows ever more serious failings to be justified as organizational members lose contact with reality entering a downward spiral with no recovery. The combined impact of assumptions about leadership capability, enculturated professional identities, and organizational loyalty create an environment where a narrative of silence can develop. [ABSTRACT FROM AUTHOR]

Today’s business entities face an ever-growing number of laws and regulations due to recent high profile business scandals and failures. Small and medium scale enterprises (SMSE) in developing countries do not have an efficient compliance checking mechanism to make their business processes compliant with these regulatory standards. This checking mechanism is needed to give the enterprises full assurance of complete adherence to regulatory standards, bodies, or Service Level Agreements. Therefore, a structured and efficient compliance management model is needed to aid SMSE in launching their businesses safely and to ensure business processes fit into the classical regulatory standards. This paper presents a business rules compliance checking model and architecture for SMSEs in developing countries to verify and monitor their business process models at design time and at run time. It involves a systematic compliance requirements classification and analysis that employs a goal based requirement engineering approach prior to design time verification. It also introduces the idea and demonstration of network analysis for runtime business processes monitoring. The business process model will be verified at design time using a Simple PROMELA Interpreter model checker through Linear Temporal Logic rules. The approaches were tested on a financial institution in Nigeria, a developing nation in Africa at the time of this research. In order to ensure that the choice of the requirements analysis approach was efficient, a number of standard metrics for evaluating requirements engineering techniques were used and promising results were obtained. We also carried out a comparative analysis of the proposed approach in this paper with the approaches of previous research papers. This approach proved to be effective in terms of clarity, simplicity, flexibility and expressiveness while reducing incomplete adherence of business processes and enhancing the correctness of the business process. [ABSTRACT FROM AUTHOR]

Bankruptcy prediction is one of the most important business decision-making problems. Intelligent techniques have been employed in order to develop models capable of predicting business failure cases. The present article provides a systematic literature review of the field. As opposed to previous reviews which concentrate on the classification methods, this study adopts a much broader approach to the bankruptcy prediction problem. The survey is articulated around six major axes which cover all the range of issues related to bankruptcy prediction. These axes are the definition of main research objectives, the employed classification methods, performance metrics issues, the input data and data sets, feature selection and input vectors and finally, the interpretation of the models and the extraction of domain knowledge. The findings and employed methodologies of the collected papers are categorized, presented and assessed according to these axes. The ultimate goal is to detect weaknesses and omissions and to highlight research opportunities. We hope that future researchers will find this survey useful in their attempt to orientate their efforts and to locate interesting topics for further research. [ABSTRACT FROM AUTHOR]

The purpose of the paper is to propose two new procedures that deal with overfitting problem using neural techniques for variable selection and business failure prediction. The first procedure, called HVS-AUC, is based simultaneously on (i) the backward search, (ii) the HVS measure (Heuristic for Variable Selection), and (iii) the AUC criterion (Area Under Curve). The second procedure, called forward-AUC, is based on (i) the forward search and (ii) the AUC criterion. Using a sample of bankrupt and non-bankrupt firms in France, the implementation of the procedures using neural networks shows that the profitability, the repayment capacity, the taxation, and the importance of investment have a strong explanatory power in bankruptcy prediction. These procedures also provide more parsimonious and more efficient models compared to Linear Discriminant Analysis. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of activism on a large, powerful corporation in Tasmania. Gunns Ltd was a large woodchip processor in Tasmania that fought a long-running battle with environmental activists regarding Gunns' logging and processing activities. The study focuses on events in 2004-2005, when Gunns applied to build a pulp mill in rural northern Tasmania and began a legal case against activists. The research question is whether there is clear statistical evidence that these events were important, as is widely believed, in the ultimate failure of Gunns in (Annual Report 2011, Gunns Ltd, Tasmania, available from: http://www.asx.com.au [11/04/14]), just 6 years after being the largest and one of the most financially successful Tasmanian companies. We use a mixed methods approach that combines a detailed narrative informed by theory, to examine issues of corporate social responsibility (CSR) and ethical behaviour, with an econometric time series analysis of the impact of activism on the market value of Gunns. Our analysis supports the contention that the events in 2004-2005 played a significant part in the decline of the long-run market value of Gunns over the subsequent period, through to its failure in 2011. We discuss the underlying causes for Gunns' failure in terms of agency, stakeholder, legitimacy and leadership theories. Research frequently assesses effects such as those in the Gunns' case through solely qualitative means. This paper integrates a quantitative analysis into a detailed qualitative narrative and theoretical interpretation of events, to provide additional precision to its findings. It contributes to research in CSR and the impact of activism. [ABSTRACT FROM AUTHOR]

In this paper, we study how the support of heterogeneous venture capital firms (VCs), that is: independent venture capital firms (IVCs), bank-affiliated venture capital firms (BVCs), and corporate venture capital firms (CVCs), shapes the delisting route of companies through business failure and merger and acquisitions (M&As), while distinguishing between European M&As and extra-EU M&As after the initial public offering (IPO). We find that the influence of the VCs in the firms' post-IPO delisting varies according to the mode of delisting and the type of venture capitalist. In particular, we find that the presence of leading IVC and BVC investments before IPO is related to a lower likelihood of exiting the stock market through business failure but does not significantly affect the likelihood of M&As. In contrast, the presence of CVC investors is related to a higher likelihood of delisting through extra-EU M&As. [ABSTRACT FROM AUTHOR]

State aid policy to banks has developed extensively throughout the financial crisis. After outlining the main features of State aid policy in the banking sector, this article analyses the Kotnik and Dowling judgments where the application of burden sharing arrangements was assessed. In particular, the paper looks at the impact of these judgments on the approach of the Commission on State aid policy and examines the nature of burden sharing arrangements set out in State aid policy. In this context, the paper discusses more generally the relationship between burden sharing arrangements and fundamental rights, in particular the right of property. Then, the article shows that State aid policy to banks still remains highly relevant and controversial in the Banking Union framework where, under certain conditions, Member States can still grant State support measures. This is for instance the case of precautionary recapitalisation as State aid aimed at preventing a bank from going under resolution. Furthermore, the Banking Union framework raises questions such as how burden sharing is related to the Bank Recovery and Resolution Directive (BRRD) and what the relation is between burden sharing and bail-in. [ABSTRACT FROM AUTHOR]

This paper illustrates the importance of referring to a dynamic approach when forecasting firms bankruptcies, paying a particular attention to French SMEs. Based on Shummay’s (J Bus 74:101–124, 2001), we build a duration model and extend it by incorporating unobservable heterogeneity. Moreover, we resort to a dynamic dichotomous specification in which “right side” censored data are taken into account. We emphasize the complexity of the calculations of integrals that must be implemented and show how to overcome this challenge by applying the Geweke, Hajivassiliou and Keane algorithm which involves the technique of the simulated maximum likelihood. The findings prove that our dynamic approach, which integrates macroeconomic variables and takes account of both random effects and exogenous shocks, provides credible results. Besides, our method provides the predictive content of macroeconomic variables and the unobservable heterogeneity, which is helpful in forecasting firms bankruptcies. [ABSTRACT FROM AUTHOR]

This paper explores the role of entrepreneurial human capital in the post-entry performance of firms in high- and low-tech sectors. Using a dataset from the Japanese manufacturing industry, we examine the determinants of new-firm survival, taking into account exit routes to differentiate 'failure' (bankruptcy) and 'nonfailure' (voluntary liquidation and merger) outcomes. Our results show that entrepreneurial human capital, measured as educational background, is important in reducing the probability of bankruptcy in high-tech sectors, although it does not help significantly in this regard in low-tech sectors. By contrast, we provide evidence that entrepreneurs with high levels of human capital are more likely to voluntarily close businesses both in high- and low-tech sectors. Furthermore, we find that firms managed by entrepreneurs with high levels of human capital are more likely to exit via merger than others, particularly in high-tech sectors. We provide evidence that entrepreneurs with scientific backgrounds are less likely to voluntarily exit than those with humanistic backgrounds, particularly in low-tech sectors. [ABSTRACT FROM AUTHOR]

Insolvency law used to be a set of rules that govern the way a debtor is treated once he became insolvent and stopped trading. Certain mechanisms respond to this incident in order to safeguard a fair treatment of all creditors and other stakeholders with the aim of minimizing the damage. Modern insolvency laws do more. They have been endowed with tools that shall allow for a restructuring of the business of the failing debtor, often combining the common tools of insolvency law, e.g. a collective stay, with new tools to facilitate a restructuring agreement. But why wait until a debtor is insolvent? The idea of early redress to a business failure has led to a number of legislative pre-insolvency initiatives that make such tools available to debtors that are not yet insolvent. The result is a mixture of insolvency and restructuring law that has grown guided by practical needs rather than doctrinal approaches. In this paper, a doctrinal approach is proposed that offers a clear distinction between insolvency and restructuring law. Based on the description of the debt cancellation effect as the common function of all insolvency and restructuring proceedings, the different mechanisms that both types of procedures use lead to a clear categorization of insolvency and restructuring proceedings and their governing law and principles. [ABSTRACT FROM AUTHOR]

How does a social enterprise pursue its ethical mandate of social impact growth while navigating the perils of the most vulnerable stage in a venture's life—scaling up? We observe a small inclusivity social enterprise attempting to scale up rapidly to create equality for people with disabilities throughout the world. Our embedded, ethnographic study is terminated with the venture's unfortunate demise after their dramatic effort to scale up failed. By examining scaling decision-making and conflicts around creation reasoning longitudinally, our study identifies over-use of effectual logic—a creation reasoning type considered more ethical and more appropriate for high-innovativeness contexts than causal logic—as a major factor in the venture's failure. From this insight, we extend the parameters of effectuation theory to scaling up and dimensionalize its ethical implications. Guidance for social entrepreneurs to scale up successfully while maintaining ethical integrity is also provided. [ABSTRACT FROM AUTHOR]

While the study of international entrepreneurship has been dominated by studies of international new ventures, the study of comparative international entrepreneurship has received relatively little attention. We argue that since such international differences are often the underlying drivers for entrepreneurship that crosses borders, this area of research has a rich potential to improve our understanding of international entrepreneurship. In this paper, we develop a theoretical framework to examine the effects of the external business environment (the soil) on the entrepreneurial entry by individuals (the seeds). This leads us to fundamental predictions regarding differences in the extent of entrepreneurship in different national contexts. While in developed economies business ventures are more likely to be launched when the turnover rate of incumbent firms is high, the opposite is true in developing economies. Estimates generated using a large-scale data set provide empirical support for our theoretical predictions. Our findings suggest important avenues for new research regarding the role of factors such as the liability of newness and the stigma of failure in different national contexts, as well as the manner in which entrepreneurial dynamics evolve over time. [ABSTRACT FROM AUTHOR]

The growth and failure of small and medium enterprises has been a topic of discussions world over among policymakers and researchers. This study was guided by the following objectives: to examine the contributions of small medium enterprises (SMEs), to determine the challenges affecting small medium enterprises, to examine how financial inclusiveness supports the growth of small medium enterprises, and to establish the relationship between financial inclusion and growth of small medium enterprises. The study used a cross-sectional research design. Descriptive design was used and supplemented by inferential statistics. Correlation and regression analysis were adopted. The study revealed that financial inclusion is significant in supporting SME growth. The study further also revealed that the cost of acquiring and servicing financial services is high; there is also difficulty in using some of the financial services, and the way financial providers treat financial users, some lacked some degree of respect and dignity. The study recommends that financial providers should continue sensitizing the public on the available financial services beyond credit services, which are common and known. Digital financial service providers should encourage their clientele to use digitalized financial services which are cheap, secure, and risk averse. The cost of capital should also be reduced to encourage borrowing while SMEs should innovatively produce goods that can be competitive at both domestic and international markets. [ABSTRACT FROM AUTHOR]

The assessment of financial credit risk is an important and challenging research topic in the area of accounting and finance. Numerous efforts have been devoted into this field since the first attempt last century. Today the study of financial credit risk assessment attracts increasing attentions in the face of one of the most severe financial crisis ever observed in the world. The accurate assessment of financial credit risk and prediction of business failure play an essential role both on economics and society. For this reason, more and more methods and algorithms were proposed in the past years. From this point, it is of crucial importance to review the nowadays methods applied to financial credit risk assessment. In this paper, we summarize the traditional statistical models and state-of-the-art intelligent methods for financial distress forecasting, with the emphasis on the most recent achievements as the promising trend in this area. [ABSTRACT FROM AUTHOR]

In this paper, a classic and seminal contribution of Williamson (J Polit Econ 75:123-138, ), 'Hierarchical control and optimum firm size', is revisited so as to remove two of its restrictive assumptions. The introduction of the dynamics of the quality of vertical communication into Williamson's static model and the development of a simulation to analyze these dynamics provide the opportunity to demonstrate the plausibility of a new conjecture: in each and every hierarchically structured organization, irreversible organizational uncontrollability is ultimately bound to arise, even in a completely stable environment. This is our main contribution. Moreover, we demonstrate that this conjecture is also valid for non-hierarchically structured organizations. [ABSTRACT FROM AUTHOR]

Two events are currently changing the landscape for business restructurings in the European Union: the 'Restructuring Recommendation' (RR) of the European Commission, issued in 2014, and the 2015 recast of the European Insolvency Regulation (EIR). In this paper, we critically review the RR and put it into the context of the reform of the EIR. We find that the recast EIR and the RR do not dovetail perfectly-a restructuring proceeding as proposed by the RR would not necessarily be within the scope of the recast EIR; we also suggest that, in any case, the EIR is not optimally designed to facilitate restructurings, given its treatment of secured creditors. Regarding the regulatory approach pursued in the RR, the Commission rightly pushes towards harmonisation with respect to Member States' restructuring regimes-regulatory competition is not a sensible regulatory alternative in this area. However, we criticise both the methodology and scope of the harmonisation proposal of the RR: sketchy minimum harmonisation of restructuring rules leaves huge potential for residual diversity in Member States' restructuring laws, and the Commission's narrow focus on restructuring proceedings ignores several aspects of the complicated interaction between the Member States' formal insolvency laws and the restructuring mechanism proposed. Further, we disagree with the substantive recommendations for Member States' restructuring laws suggested by the RR: they wrongly require financial difficulties or a likelihood of insolvency as an entry test for the recommended restructuring proceeding, and the process appears susceptible to abuse by sophisticated financial investors-it does not provide for the mandatory appointment of a supervisor and allows significant curtailments of creditor rights without sufficient safeguards in place. Instead, we propose an efficient debtor-in-possession (DIP) regime as an alternative that could be initiated regardless of a firm's solvency, provided that it is economically viable and that the filing is not abusive. [ABSTRACT FROM AUTHOR]

This paper introduces a large-scale administrative panel data set on corporate bankruptcy in Germany that allows for an econometric analysis of involuntary exits where previous studies mixed voluntary and involuntary exits. Approximately 83 % of all bankruptcies occur in plants with not more than 10 employees, and 61 % of all bankrupt plants are not older than 5 years. The descriptive statistics and regression analysis indicate substantial negative age dependence with respect to bankruptcy risk but confirm negative size dependence for mature plants only. Our results corroborate hypotheses stressing increasing capabilities and positional advantage, both predicting negative age dependence with respect to bankruptcy risk due to productivity improvements. The results are not consistent with the theories explaining age dependence via imprinting or structural inertia. [ABSTRACT FROM AUTHOR]

In the era of Industry 4.0, online entrepreneurship is gradually seen as an essential tool that brings innovative values to the integration and development of a country. The rapid failure of nascent businesses stemming from a lack of human capital directed this study to explore the role of students' knowledge and technological innovativeness in motivating students to form e-entrepreneurial intentions. Information collected from 405 students from universities in Vietnam via online questionnaires was analysed using SmartPLS 4 to test the relationships among seven factors proposed in the research model. The results show that entrepreneurial education and prior experiences are the foundation for improving students' perceived feasibility and usefulness, forming their entrepreneurial motivation. Next, entrepreneurial motivation becomes an important premise for promoting students' entrepreneurial intentions more effectively. Furthermore, the study found that students' technological innovativeness moderated the relationship between their entrepreneurial motivation and intention to set up a digital business. [ABSTRACT FROM AUTHOR]

We examine the issue of entrepreneurial gender bias by focusing on the underlying mechanisms that impact the likelihood of receiving external venture-capital financing. We claim that gender bias negatively affects socially attributed dimensions (such as the stigma ascribed to entrepreneurs who have previously suffered a failure), while it has no effect on objective dimensions (such as the experience gained by entrepreneurs). Our results, based on 2088 US firms, show that female entrepreneurs are less likely to attract external funds if they have previously encountered failure. This negative effect becomes less impactful when novel or serial successful entrepreneurs are considered. Consequently, novel or serial successful entrepreneurs are expected to suffer less from gender bias if compared to peers who experienced a failure during their entrepreneurial career. [ABSTRACT FROM AUTHOR]

This work contributes to disaster research by exploring the impact on new firm creation of the COVID-19 pandemic and the pandemic-related policies. We develop hypotheses on the individual and combined effects of pandemic severity and public policies aimed at controlling the spread of the disease (shutdown policies) or protecting the economy from its negative consequences (demand stimulus and firm support policies). Then, we test these hypotheses using data on Italy in the first and second 2020 pandemic waves. Results show that pandemic severity negatively affected new firm creation during the first wave. Shutdown policies had negative effects too, especially in the regions where the pandemic was less severe. The effects of demand stimulus policies were positive and stronger the less severe the pandemic was while the impact of firm support policies was negative in the regions where the pandemic was more severe. All these effects vanished in the second wave. Plain English Summary: Disasters cause slowdowns in new firm creation that disaster recovery policies may aggravate or alleviate. Our analysis of the effects of the COVID-19 pandemic in Italy reveals that this major disaster resulted in a large drop in new firm creation rates. During the first pandemic wave, the drop was concentrated in the regions where the pandemic was more severe. Examining the effects of the shutdown policies implemented to contain the spread of the disease and the measures designed to protect the economy provides useful guidelines for policymakers. First, we show that shutdown policies inhibit new firm creation. Policymakers can however alleviate this negative effect by implementing less strict measures in the areas not severely affected by the disaster. Second, despite we understand that policymakers need to provide relief to existing firms in the most affected industries to avoid business failures, we indicate they should simultaneously invest in stimulating demand in these industries to sustain also new firm creation. [ABSTRACT FROM AUTHOR]

We study claims problems with indivisible goods. Due to indivisibilities, in certain situations, two agents with equal claims may have to receive unequal amounts. Our main goal is to find rules that deal with these situations in a consistent way. We propose three 'systematic favorability' properties. We define a subfamily of up (down) rules studied in Moulin and Stong (Math Oper Res 27:1-30, ). We show that the subfamily are the only rules satisfying our first systematic favorability property, composition up, and bilateral consistency. Another family of rules we study are the sequential priority rules. Given a priority order over agents, we satisfy their claims one agent at a time until the resource runs out. These rules are the only ones that satisfy our second systematic favorability property, composition down, and bilateral consistency. Using duality, we also provide another characterization of the sequential priority rules, with our third systematic favorability property. Besides, we provide an alternative characterization of the rules studied in Herrero and Martinez (Soc Choice Welf 30:603-617, ). [ABSTRACT FROM AUTHOR]

The future revision of capital requirements and a market-consistent valuation of non-hedgeable liabilities lead to an increasing attention on forecasting longevity trends. In this field, many methodologies focus on either modeling mortality or pricing mortality-linked securities (as longevity bonds). Following Lee-Carter method (proposed in 1992), actuarial literature has provided several extensions in order to consider different trends observed in European data set (e.g., the cohort effect). The purpose of the paper is to compare the features of main mortality models proposed over the years. Model selection became indeed a primary task with the aim to identify the ' best' model. What is meant by best is controversial, but good selection techniques are usually based on a good balance between goodness of fit and simplicity. In this regard, different criteria, mainly based on residual and projected rates analysis, are here used. For the sake of comparison, main forecasting methods have been applied to deaths and exposures to risk of male Italian population. Weaknesses and strengths have been emphasized, by underlying how various models provide a different goodness of fit according to different data sets. At the same time, the quality and the variability of forecasted rates have been compared by evaluating the effect on annuity values. Results confirm that some models perform better than others, but no single model can be defined as the best method. [ABSTRACT FROM AUTHOR]

Using MSA-level data over 1994–2014, we study the effect of bank failures on local business dynamics, in the form of net business formation and net job creation. We find that at least one bank failure in the metropolitan statistical area (MSA) with the mean population prevents approximately 475 net businesses from forming in that area, compared with MSAs that experience no bank failures, ceteris paribus. The equivalent effect on net job creation is 16,433 net job losses. Our results are even stronger for small businesses, which are usually more dependent on bank-firm relationships. These effects point to significant welfare losses stemming from bank failures, highlighting an important role for government intervention. We show that the Troubled Asset Relief Program (TARP) is effective in reducing the negative effects of bank failures on local business dynamics. This positive effect of TARP is quite uniform across small and large firms. [ABSTRACT FROM AUTHOR]

The fact that personal data is de facto owned by internet companies and that the corresponding legal codifications of raw data have been willingly implemented by courts in the US and elsewhere, is compared by Pistor with the English feudal lords' violent seizure of land through "enclosures" ("We are now in danger of losing access to our own data"). Other authors, such as North and Thomas' "The Rise of the Western World", emphasise that this development triggered a surge in land and labour productivity through increased arable farming, which enabled the generation of a large agricultural surplus beyond levels of self-consumption within the agricultural sector itself and hence could feed a rapidly growing urban population.[10] These authors point out that countries such as Spain, in which the Crown was heavily dependent on the revenues of a "slaughter tax" and in which peasants' traditional rights to the land (commons) were protected and the land was prohibited from being converted into agricultural farm land, became relatively impoverished and that such countries were faced with an economic decline. However, as Pistor explains, it was accompanied by the activity of lawyers who carried out a recoding of land ownership rights and gradually shifted them towards the landed aristocracy, via court decisions, largely in the form of individual property as an absolute right. When Pistor writes about wealth via the recoding of legal norms, she does not distinguish clearly enough between (1) wealth in a patronage economy, which can only be established via redistribution and by making society as a whole stagnant or poorer, (2) increased wealth from institutions, that advance a country economically but can be detrimental by not compensating the losers from institutional changes, and (3) increased wealth without losers, which is beneficial to society at large, but at the same time increases inequality. [Extracted from the article]

COVID-19 placed a special role on fiscal policy in rescuing companies short of liquidity from insolvency. In the first months of the crisis, SMEs as the backbone of Germany's economy benefited from large and mainly indiscriminate aid measures. Avoiding business failures in a whatever-it-takes fashion contrasts, however, with the cleansing mechanism of economic crises: a mechanism which forces unviable firms out of the market, thereby reallocating resources efficiently. By focusing on firms' pre-crisis financial standing, we estimate the extent to which the policy response induced an insolvency gap and analyze whether the gap is characterized by firms which were already struggling before the pandemic. With the policy measures being focused on smaller firms, we also examine whether this insolvency gap differs with respect to firm size. Our results show that the COVID-19 policy response in Germany has triggered a backlog of insolvencies that is particularly pronounced among financially weak, small firms, having potential long-term implications on entrepreneurship and economic recovery. Plain English Summary This study analyzes the extent to which the strong policy support to companies in the early phase of the COVID-19 crisis has prevented a large wave of corporate insolvencies. Using data of about 1.5 million German companies, it is shown that it was mainly smaller firms that experienced strong financial distress and would have gone bankrupt without policy assistance. In times of crises, insolvencies usually allow for a reallocation of employees and capital to more efficient firms. However, the analysis reveals that this 'cleansing effect' is hampered in the current crisis as the largely indiscriminate granting of liquidity subsidies and the temporary suspension of the duty to file for insolvency have caused an insolvency gap that is driven by firms which were already in a weak financial position before the crisis. Overall, the insolvency gap is estimated to affect around 25,000 companies, a substantial number compared to the around 16,300 actual insolvencies in 2020. In the ongoing crisis, policy makers should prefer instruments favoring entrepreneurs who respond innovatively to the pandemic instead of prolonging the survival of near-insolvent firms. [ABSTRACT FROM AUTHOR]

We explore how involuntary and voluntary exits from self-employment affect life and health satisfaction. To that end, we use rich longitudinal data from the German Socio-Economic Panel from 1985 to 2017 and a difference-in-differences estimator. We find that while transitioning from self-employment to salaried employment brings small improvements in health and life satisfaction, the negative psychological costs of business failure (i.e., switching from self-employment to unemployment) are substantial and exceed the costs of involuntarily losing a salaried job. Meanwhile, leaving self-employment has no consequences for self-reported physical health and behaviors such as smoking and drinking, implying that the costs of losing self-employment are mainly psychological. Moreover, former business owners fail to adapt to an involuntary self-employment exit even 2 or more years after this traumatic event. Our findings imply that policies encouraging entrepreneurship should also carefully consider the nonmonetary implications of business failure. [ABSTRACT FROM AUTHOR]

We provide the first analysis of management turnover and ownership change as determinants of post-bankruptcy failure of small businesses. Examining micro-level data on Slovenian firms that attempted bankruptcy reorganization and utilizing multiple empirical approaches, we find that changes prior to completed reorganization proceedings never reduce, and in the case of foreign incoming owners or insider incoming managers in fact increase, prospects of firm liquidation. Firm liquidation prospects robustly decrease only with changes that occur after completed proceedings, involve ownership transfer, and feature domestic incoming owners. These results continue to hold under an alternative conceptualization of firm failure. Our findings are consistent with the importance of disruption costs in the process of turning around ailing small businesses. Our analysis casts novel light on the ongoing debate about the consequences of debtor-in-possession rule in bankruptcy and the relevance of successor origin in management turnover and ownership change for firm outcomes. [ABSTRACT FROM AUTHOR]

Knowledge management tools and technology are the main factors bringing competitive advantage to organisations. This study extends the depth of study on small business entrepreneurs by examining the effect of knowledge acquisition, in particular financial knowledge that leads to the need for knowledge acquisition tools and technology. There is evidence to support that a lower level of existing financial knowledge in small business entrepreneurs encourages them to acquire more financial knowledge since they tend to be responsible for all tasks related to business survival. This finding is not consistent with several other previous studies. In addition, relevant knowledge on how to raise adequate capital to establish their business and the accurate calculation of cost are the two most important aspects of financial knowledge for encouraging small business entrepreneurs to seek effective knowledge acquisition tools and technology. The evidence provides insight for the government authorities supporting small businesses to provide financial knowledge to small business entrepreneurs during the pre-start-up phase and thereafter by providing the relevant knowledge on financing and cost calculation to strengthen and sustain these businesses. This will ultimately lead to an improvement in small business failure and increase the country's economic growth. [ABSTRACT FROM AUTHOR]

This study sheds light on the following fundamental gaps in the current literature. First, formulated by the increasing problem of the family's controls of executive position, and the circumstances of "divided powers" and "gap power" in the Vietnamese corporate governance mechanism, this research can contribute in a very fresh view of family analysis in the new context of an emergent Asian country, so-called Vietnam. Second, in terms of "prospect theory", illustrated by the situation of the "risk aversion" attitude, it is undeniable to clarify the interaction between volatility and family ownership on Vietnamese firm performance. Third, lean on the "risk-adverse" reaction, this study will provide the new aspect of volatility since it can re-direct the main effect of family ownership on performance. Finally, specifying the "reinforcements of family powers" and the increasing presence of family's power on Vietnamese firms, this study provides the profound evidence of indirect effects of specific risk on corporate performance. Regarding a sample of 289 listed firm Vietnam's stock exchange in 2013, we confirmed the adverse effects of family ownership toward performance again. It reveals the phenomenon of the extensive existence of family ownership, their sharing responsibility, and the issue of "divided powers" and "gap power" among the administrative level. However, it is surprised then that there is a positive link to the return, as there is the interaction between family ownership and volatility. What is more, this reveals that the higher level of specific risk can foresee the likelihood of the existence of family members, who hold the executive positions, leading to exacerbate the business failure. [ABSTRACT FROM AUTHOR]

Building on the properties of emerging markets, we investigate how a firm should align its service recovery strategies with different types of service failure to reduce customer churn in an emerging market. Using resource exchange theory and a multi-method approach, we show that the conventional wisdom related to service recovery needs to be reevaluated in emerging markets. Our results show that process failures lead to a higher likelihood of customer churn compared to outcome failures in emerging markets. Investigating service recovery mechanisms, we find that compensation is more effective in recovering from process failures than in recovering from outcome failures in emerging markets. Similarly, employee behavior has a stronger impact on mitigating the ill effects of process failures than those of outcome failures. The study contributes to the literature on service recovery and resource exchange theory and provides managerial insights for the effective management of customer churn due to service failures in emerging markets. [ABSTRACT FROM AUTHOR]

We conduct a laboratory experiment in Kenya in which we elicit time and risk preference parameters from 494 participants, using convex time budgets and tightly controlling for transaction costs. Using the Kenyan mobile money system M-Pesa to make real-time transfers to subjects' phones , we vary whether same-day payments are made immediately after the experimental session or at the close of the business day. We find strong evidence of present bias, with estimates of the present bias parameter ranging from 0.902 to 0.924—but only when same-day payments are made immediately after the experiment. [ABSTRACT FROM AUTHOR]

The article discusses corporate insolvency in the Czech Republic, including insolvency proceedings and the state of bankruptcy as defined in the country's laws. Topics discussed include two ways to solve corporate insolvency in the Czech Republic, social arguments for reorganization presented by proponents of the rehabilitative method, and high expectations over reorganization as a method to address corporate bankruptcy.

Despite the significant role played by serial entrepreneurs in the entrepreneurial process, we know little about group differences in reentry decisions after business failure. Using an ecosystem framework and stigma theory, we investigate the variance in gender gaps related to the reentry decisions of 8171 entrepreneurs from 35 countries who experienced business failures. We find evidence of persisting gender gaps that vary across ecosystem framework conditions of public stigma of business failure and public fear of business failure. Our findings shed new light on ecosystem inefficiencies that arise from multiple interactions between entrepreneurs and institutions. [ABSTRACT FROM AUTHOR]

How does the age of serial entrepreneurs influence re-venture speed after a business failure? The prevailing notion is that the older the entrepreneur, the lower the likelihood of starting a re-venture. However, in real-world practice, many older entrepreneurs start to re-venture quickly after a business failure, and this phenomenon still cannot be explained by present research on the subject. This study takes the age of serial entrepreneurs, the failure loss and family support as the antecedent variables that affect re-venture speed. The direct impact of an entrepreneur's age is also moderated by failure loss and family support. A total of 268 serial entrepreneurs with business failure experience located in the Bohai Economic Rim of China were included in the study. The results showed that the older the serial entrepreneur, the longer the time taken to start a venture again. Additionally, the larger the failure loss, the slower the re-venture speed. Finally, the relationship between a serial entrepreneur's age and re-venture speed strengthens when the failure loss is large and weakens when family support is strong. [ABSTRACT FROM AUTHOR]

Previous studies on financial distress prediction have chiefly used financial indicators which derived from financial statements as explanatory variables, so some potentially useful information that contained in the financial network was not considered. The listed companies can be represented as a complex financial network which the firms are regarded as nodes and the links account for stock returns correlation. The purpose of this study is to investigate whether network-based variables can improve the predictive power of financial distress prediction. Therefore, this study proposed a genetic algorithm (GA) approach to parameter selection in gradient boosting decision tree and integrated network-based variables for financial distress prediction. In order to verify the prediction capability of network-based variables and GA-based gradient boosting method in financial distress prediction, empirical study based on Chinese listed firms' real data is employed, and comparative analysis is conducted. The experiment results indicate that the introduction of network-based variables and GA-based gradient boosting method for financial distress prediction can enhance predictive performance in terms of accuracy, recall, precision, F-score, type I error, and type II error. [ABSTRACT FROM AUTHOR]

Despite much research on 'distance', little attention has been paid to the effect of divergence of managers' perceptions of distance from reality (i.e. distance divergence) and its implications for firm performance. This knowledge is highly important since managerial perceptions of the firm's environment do not always coincide with the actual environmental characteristics. Consequently, strategies based on inaccurate data may result in erroneous forecasts, missed opportunities and business failure. Using survey data from senior managers of Swedish exporters and corresponding objective data, this study is one of the first attempts to explore the ex-post performance implications of 'distance divergence' when expanding into foreign markets. Our results demonstrate that the larger the divergence between managers' perceptions of cultural distance and corresponding 'objective' distance, the lower the performance expressed in companies' sales. However, over/underestimation of cultural distance does not have differential effects on firm performance. [ABSTRACT FROM AUTHOR]

In the decade since the onset of the 2007-2008 financial crisis, there have been numerous calls for the directors of failed or rescued banks to be held liable for the significant losses that these collapses inflicted on investors and the general public. In the UK, the high-profile RBS Rights Issue Litigation has come to represent something of a fulcrum of domestic concerns in this regard. Notwithstanding their mixed results, securities law actions alleging disclosure failure have been a fairly popular avenue of attempted redress for investors who were burned in the crisis, as exemplified most pertinently by the successful US litigation emanating from the implosion of Citigroup in 2008. By contrast, directors' duties actions premised on alleged risk oversight failure in collapsed banks have enjoyed only limited success in the United States, and no real success whatsoever in the UK. This is a remarkable fact, given that the director's corporate law duty of care would prima facie seem the most direct and overt means of redressing investor losses in such instances. The implication is that in UK (as in US) listed companies today, the duty of care is being progressively usurped in this regard by alternative securities law mechanisms, rendering corporate law increasingly redundant as a meaningful lever of director accountability. [ABSTRACT FROM AUTHOR]

In order to mitigate the effects of the contraction in demand during economic crises, firms face the need to reduce the number of facilities in their networks. This reduction must be conducted taking into consideration both the possible actions of their rival firms and the reaction of the affected customers, so that the loss of market share is minimised. In this article, we analyse the facility closing problem of two firms operating in a duopolistic market. The problem is modelled as a non-cooperative game over a binary integer programming formulation of the firms' delocation problem. The possible outcome of the game is analysed for three different competitive scenarios: Myopic behaviour, Cournot conjectures, and Stackelberg strategies. These scenarios are analysed under the assumption that customers show certain level of loyalty to the firm that they initially resorted to. This assumption entitles us to establish the existence of Nash equilibria in the delocation game by means of the introduction of a social planner. Moreover, this social planner provides a mechanism for computing the Nash equilibrium in the Cournot delocation game. Additionally, we develop an algorithmic approach that provides a simple mechanism for finding equilibria under Stackelberg strategies. Experimental results indicate that for small reductions in the network size the solution under myopic behaviour is often an equilibrium. For large reductions, evidence has been found that there is a first mover advantage in the Stackelberg delocation game. [ABSTRACT FROM AUTHOR]

We examine three tools that can enhance coordination success in a repeated multiple-choice coordination game. Gradualism means that the game starts as an easy coordination problem and moves gradually to a more difficult one. The Endogenous Ascending mechanism implies that a gradual increase in the upper bound of coordination occurs only if coordination with the Pareto superior equilibrium in a stage game is attained. The Endogenous Descending mechanism requires that when the game's participants fail to coordinate, the level of the next coordination game be adjusted such that the game becomes simpler. We show that gradualism may not always work, but in such instances, its effect can be reinforced by endogeneity. Our laboratory experiment provides evidence that a mechanism that combines three tools, herein termed the 'Gradualism with Endogenous Ascending and Descending (GEAD)' mechanism, works well. We discuss how the GEAD mechanism can be applied to real-life situations that suffer from coordination failure. [ABSTRACT FROM AUTHOR]

This study focuses on the impact of information technology on the survival rate of small and medium enterprises (SMEs) in the manufacturing sector in Malaysia. It analyses the effects of information technology on survival of SMEs in 2000 and 2005, based on two separate groups of firms. It sets out to show that information technology has positive and significant effect on survival of the firms, besides other factors such as minimum efficient size, market and firms attributes, transaction cost, uncertainty, opportunism, information asymmetry and atmosphere, profitability and learning have impact on the survival of SMEs. With using Cox proportional hazard regression model, we found that factors such as profits, R&D, location, ownership, market size, entry rate, industry growth and capital-labor ratio affect the survival of SMEs. Of equal importance is the expenditure on information technology, which is said to have an impact on the viability of firms. The results further demonstrate that being in certain stage of maturity of firms could be important in the effect of information technology on survival of SMEs. [ABSTRACT FROM AUTHOR]

We examine how failure ascriptions (how the core causal characteristics of a failure are identified) impact perceptions of learning, defined here as the ability to transfer knowledge from a failed venture to a subsequently started new venture. Our findings are consistent with prior work in that internal unstable failure ascriptions are associated with greater perceived learning, while external stable ascriptions are associated with less perceived learning. Inconsistent with prior work, however, we find that starting a new venture more quickly after failure enhances perceived learning for entrepreneurs who made internal unstable ascriptions. Further, entrepreneurs with external stable ascriptions have even less perceived learning when they abandon their previous domain in their new venture. Implications for research on failure, ascriptions, and perceived learning for future ventures are discussed. [ABSTRACT FROM AUTHOR]

The article discusses a study which examined the potential benefits of the rescue plan for a company facing difficulties at the European level. Roughly 99 percent of economic activity is attributed to small- and medium-sized enterprises in the European Union which makes them an important player in the region's economy. Small companies from the Amadeus database covering the period 2006-2015 were examined using empirical analysis.

There is need for Kenyan small and medium enterprises (SMEs) in particular to focus concern on the orientation of business strategy toward global market strategy, market research geared at obtaining foreign market intelligence, innovation and technology, product adaptation, service orientation, collaborative ventures, and long-range vision as critical factors in making them successful in the international market. They also need to interact effectively with other firms in more or less tightly connected networks of shared production and innovation if they are to succeed in the current wave of globalization. The purpose of this study was to investigate the role of global market strategy on the global expansion of Kenyan firms. The research study used descriptive and inferential design as a chosen design. The researcher used multiple/multivariate regression analysis to determine the functional relationship between the independent variables and the dependent variable. The global market strategy variables considered include the following: market strategy incorporating: global advertising and promotion, external advisory services, foreign market specialization, competitive pricing strategies, and focus on quality products/services; foreign market intelligence on locating markets, trade restrictions, competition overseas, and market and investment opportunities; and logistics and distribution incorporating: handling of documentation, distribution coordination, warehousing, arranging transportation, and collaboration with large firms. A random sample of 205 firms was drawn out of 440 members of Kenya Association of Manufacturers, based in Nairobi, from the Kenya Association of Manufacturers and Exporters Directory of 2012. The senior management of selected firms was surveyed and 175 firms responded making a response rate of 85 percent. The key finding from the research is that there is a functional relationship between global market strategy and global expansion of SMEs. The implication for practice and policy is that there is a need for collaboration between industry and government in pursuing policies for global expansion and among SMEs and large enterprises particularly in developing capacity and collaboration in global marketing strategy, market intelligence gathering, export promotion and strengthening of foreign trade missions. An early-warning system to alert firms of changes that may lead to potential failure in their global business activities can be developed. [ABSTRACT FROM AUTHOR]