Determinants of Business Insolvencies During Economic Growth and Recession in Latvia

Arnis Sauka and Friederike Welter

Journal of Baltic Studies, 2014, vol. 45, issue 3, 375-396

Abstract: Considering the importance of context in exploring the entrepreneurship phenomenon, this explorative paper addresses patterns of business insolvencies during economic growth as compared to the economic recession within the context of an advanced transition economy. Empirically, the paper draws on 15 face-to-face interviews with insolvency administrators in Latvia conducted in 2007, and a repeated survey of the same respondents conducted in 2009. Our findings suggest that apart from reasons influencing business insolvency in well-established market economies, such as company size and age, education, previous management experience and access to finance, specific environmental factors play an important role in determining companies’ insolvency within a transition setting. These include, but are not limited to, illegal and unethical forms of behavior. Findings also reveal some important aspects of the nature of entrepreneurial behavior as influenced by the changes within the context.

Date: 2014
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DOI: 10.1080/01629778.2013.848372

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