Stakeholders and Long-Term Sustainability of SMEs. Who Really Matters in Crisis Contexts, and When

Montserrat Manzaneque-Lizano, Esteban Alfaro-Cortés and Alba María Priego de la Cruz
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Montserrat Manzaneque-Lizano: Department of Business Administration, External and Internal Information Systems of Organizations: Corporate and Management Information (GISEIO), Castilla-La Mancha University, 16071 Cuenca, Spain
Esteban Alfaro-Cortés: Faculty of Economics and Business, Quantitative Methods and Socio-economic Development Group, Institute for Regional Development (IDR), Castilla-La Mancha University, Plaza de la Universidad, 1, 02071 Albacete, Spain
Alba María Priego de la Cruz: Department of Financial Economics, Accounting and Operations Management, Huelva University, 21002 Huelva, Spain

Sustainability, 2019, vol. 11, issue 23, 1-27

Abstract: The impact of crises on the long-term sustainability of small and medium-sized enterprises (SMEs) has been attracting growing interest in the literature and from governments due to the significance of such companies with respect to economic growth, innovation, and employment. Although failure prediction models have been proposed based on accounting and other qualitative information, little is known regarding the influence of stakeholders on the failure process of SMEs. From the perspective of long-term sustainability, this article analyzes the role of the financial influence of stakeholders on the likelihood of business failure. An empirical study was carried out on a sample of 2352 Spanish SMEs, examining the differences between failed and non-failed SMEs and using a classification tree methodology to investigate the role played by each type of stakeholder in overcoming crisis events. The study provides empirical evidence regarding the relative importance of stakeholders to SMEs under conditions of financial distress, and proposes their categorization on the basis of their control over firms’ financial resources. Specifically, the analysis reveals that the capacity of the firm to generate sustainable wealth over time and to overcome critical situations is dependent on the most critical stakeholders. Workers, customers, and suppliers are the most important in ensuring the long-term sustainability of SMEs during the first stages of a crisis. Following the initial operational problems, other creditors (financial institutions) become relevant. In this sense, the results of this study encourage firms and governments to develop cooperation strategies with stakeholders (co-responsibility) in line with the proposed conceptual models of business sustainability.

Keywords: small and medium-sized enterprises; stakeholder; business failure prediction; classification trees (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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