Predicting viability of small businesses on the edge of failure

Han Dieperink, Jan Adriaanse and Mark Dechesne

Journal of Small Business Management, 2025, vol. 63, issue 5, 2422-2454

Abstract: This study challenges traditional small business failure prediction models, which, while effective in categorizing bankruptcy in stable conditions, falter in predicting outcomes once firms are in a state of financial distress. Building on insights from small and medium-sized enterprises (SME) failure prediction, business turnaround, and entrepreneurial resilience, our analysis underscores the pivotal yet often neglected role of entrepreneurial traits in business failure and survival. By analyzing 520 viability audits of distressed businesses, we demonstrate that incorporating entrepreneurial characteristics refines the predictive accuracy of these models. Our findings challenge the static nature of traditional approaches, advocating for models that incorporate dynamic, non-financial variables to better capture the complexities of distressed businesses. This research calls for a shift in failure prediction methodologies to fully recognize the influence of entrepreneurial traits, capabilities, and behavior, offering a nuanced understanding crucial for stakeholders in the small business ecosystem.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00472778.2024.2435506 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ujbmxx:v:63:y:2025:i:5:p:2422-2454

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/ujbm20

DOI: 10.1080/00472778.2024.2435506

Access Statistics for this article

Journal of Small Business Management is currently edited by Eric Liguori

More articles in Journal of Small Business Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().