Introducing entrepreneurial resilience in small business failure prediction
Year: 2025
Type: article
Abstract: In an era when small business failure can ripple through economies, understanding and predicting business viability amid financial distress is not just academic—it’s crucial for policy makers and practitioners. The findings of our recent study challenge 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. Our analysis underscores the pivotal yet often neglected role of entrepreneurial traits in business failure and survival. By analyzing 520 viability audits of distressed small businesses, including micro-businesses, we demonstrated that incorporating entrepreneurial characteristics refines the predictive accuracy of these models. We also advocate for a new approach to modeling that incorporates dynamic, nonfinancial variables to capture the complexities of distressed businesses. Our recent research calls for a shift in failure prediction practices, recognizing the influence of entrepreneurial resilience and temporal dynamics on the ability of small businesses bouncing back from a state of distress.
Authors: Han Dieperink, Jan Adriaanse, Mark Dechesne
Institution: Leiden University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4408525994