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The Business Failure Process. An Integrative Model of the Literature

Author

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  • N. Crutzen
  • D. Van Caille

Abstract

Considering the fragmented literature related to business failure prevention and considering the need for a unifying conceptual framework on how and why companies fail, the current paper proposes an integration of the multiple similar, complementary or supplementary findings of previous preventive contributions, i.e. the studies focused on the identification of failure factors and of failure paths. An in-depth analysis of the existing literature and of its limitations leads us to the elaboration of an original integrative model on how and why companies fail. It is founded on a resource- based view of the firm (Wernerfelt, 1984) and it represents, in a deterministic perspective, the different general phases which a failing firm goes through until it eventually exits the failure process.

Suggested Citation

  • N. Crutzen & D. Van Caille, 2008. "The Business Failure Process. An Integrative Model of the Literature," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(3), pages 287-316.
    • Handle: RePEc:ete:revbec:20080304
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    Citations

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    Cited by:

    1. Oliver Lukason & Art Andresson, 2019. "Tax Arrears Versus Financial Ratios in Bankruptcy Prediction," JRFM, MDPI, vol. 12(4), pages 1-13, December.
    2. Lukason, Oliver & Laitinen, Erkki K., 2019. "Firm failure processes and components of failure risk: An analysis of European bankrupt firms," Journal of Business Research, Elsevier, vol. 98(C), pages 380-390.
    3. Theodore Metaxas & Athanasios Romanopoulos, 2023. "A Literature Review on the Financial Determinants of Hotel Default," JRFM, MDPI, vol. 16(7), pages 1-19, July.
    4. Khelil, Nabil, 2016. "The many faces of entrepreneurial failure: Insights from an empirical taxonomy," Journal of Business Venturing, Elsevier, vol. 31(1), pages 72-94.
    5. Zhichao Luo & Pingyu Hsu & Ni Xu, 2020. "SME Default Prediction Framework with the Effective Use of External Public Credit Data," Sustainability, MDPI, vol. 12(18), pages 1-18, September.
    6. Alexander Kücher & Stefan Mayr & Christine Mitter & Christine Duller & Birgit Feldbauer-Durstmüller, 2020. "Firm age dynamics and causes of corporate bankruptcy: age dependent explanations for business failure," Review of Managerial Science, Springer, vol. 14(3), pages 633-661, June.

    More about this item

    Keywords

    Failure; causes and symptoms of failure; dynamics of failure; failure path(s);
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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