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AbstractThe majority of existing studies of small business failure tend to focus upon either the symptoms arising from problems within the firm or upon the reasons cited for failure. Comparatively little analysis of the root cause has been undertaken.Failure and success are usually defined in rational terms which ignore stakeholder aspirations.Many owner‐managers pursue personal objectives which inhibit the probability of success if measured using these rational criteria.The root cause of small business failure is almost invariably a lack of management attention to strategic issues.Notwithstanding the fact that common skills and abilities are required, the management process in small firms is unique and cannot be considered to be the same as professional management in larger firms practised on a reduced scale.The multiplicity of roles expected of the owner‐manager often causes dissonance which enhances the probability of poor decision making and inappropriate action.Successful small firms practise strategic management either consciously and visibily or unconsciously and invisibly.

This work is framed in the research of business failure. We examine a method of analyzing the dynamics of financial failure. The authors examine a method of analyzing the dynamics of financial failure, because our goal is to analyze how the economic and financial indicators show the risk of failure in a group of companies. Using a sample of 163 companies declared bankrupt or dissolved, the authors show how to depict company trajectories of behavior and movement to terminal failure. They analyze these trajectories to find and describe empirical evidence of the different dynamics of bankruptcy. The authors also show that the estimation of failure risk is more accurate when these different failure trajectories are defined. In conclusion, the authors can see that there are different failure trajectories. One can use these different trajectories to identify more efficiently the indicators warning of the failure risk of the companies analyzed.

Case-based reasoning (CBR) is a problem-solving paradigm that uses past experiences to solve new problems. Nearest neighbor is a common CBR algorithm for retrieving similar cases, whose similarity function is sensitive to irrelevant attributes. Taking the relevancy of the attributes into account can reduce this sensitivity, leading to a more effective retrieval of similar cases. In this paper, statistical evaluation is used for assigning relative importance of the attributes. This approach is applied to predict business failures in Australia using financial data. The results in this study indicate it is an effective and competitive alternative to predict business failures in a comprehensible manner. This study also investigates the usefulness of non-financial data derived from auditor's and directors' reports for business failure prediction. The results suggest that the particular non-financial attributes identified are not as effective as the financial attributes in explaining business failures.

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Cooperatives all over the world are said to be imbued with inherent weaknesses and challenges, and therefore, steering these entities towards sustainability is seen as an uphill climb. This paper delves into the reasons why some cooperatives in the Philippines dissolve or stop operating. Specifically, the study aimed to review the literature on factors affecting cooperative business sustainability and failures, to present and analyze two cases of failed multipurpose cooperatives and offer recommendations on operating cooperatives for their continued sustainability. Data was gathered through key informant interviews and secondary sources, and analyzed using the case approach and descriptive analysis. Extant literature primarily pinpointed issues such as poor management, lack of capital, property rights, and portfolio problems as the culprits behind cooperative conversions, failures and restructurings. What made the two multipurpose cooperatives unsustainable were the insufficiency of funds needed to meet Cooperatives Development Authority (CDA) requirements, delinquency of members and their inactive participation in cooperative affairs, mismanagement of resources, absence of a viable marketing system and the lack of a capable financial manager. Cultivating managerial and leadership skills, improving governance, establishing private sector and government linkages and support, encouraging participatory membership, utilizing an effective marketing system, proper resource management and expanding financial knowhow are suggested to achieve cooperative sustainability.

Crisis management theory, developed through the study of industrial disasters and socio‐technical failures, is applied to three cases of business failure. The principle objective of the research reported in this paper was to identify whether or not successive failures could have been avoided through organizational learning from similar prior events and what factors might have contributed to or prevented learning. The research also aimed to establish whether or not theoretical frameworks for analyzing and understanding industrial disasters and socio‐technical failures are applicable to business failures.Using detailed case analyses of the failures of Johnson Matthey Bank, the Bank of Credit and Commerce International and Barings, the paper illustrates a series of remarkable similarities in these business failures. It also demonstrates an apparent inability of the management involved in the later failures to learn from what had happened before. Organizational culture is singled out as the main contributing factor in these failures. This paper, in part, proves the case for applying industrial crisis management theory to business failure.

The purpose of this study was to examine and evaluate SMEs' implementation of minimum accounting practices which are some of the real underlying symptoms that lead to small and medium-size (SMEs) business failures, especially in rural and semi-urban areas. The study was conducted in Thohoyandou, the Central Business District (CBD) of Thulamela Municipality in the Vhembe district in Limpopo province, South Africa. The study used data based on responses to a structured questionnaire from randomly selected SMEs in Thohoyandou, an area whose SME business environment is similar to the challenges and opportunities faced by many other rural and semi-urban areas in South Africa. Due to cost and time constraints, the study sample was limited to 40 SMEs. The study findings confirm that SMEs often fail to comply with fundamental accounting practices like maintaining complete accounting records, which limits business information vital for decision making, as they think there is no need to keep them and that it exposes their financial position. The relevance of the study is to show how non-adherence to adequate accounting practices can negatively affect SMEs financial performance which consequently contribute to their inevitable failure. The study recommends development of training policy guidelines to sensitize SMEs of the need to comply with relevant accounting practices including internal controls and the legal requirements.
Keywords: accounting practices, SMEs, symptoms, record keeping, failures. JEL Classification: M41

AbstractDespite a growing body of research on business failure and eco‐innovation, these two streams of research have developed in isolation, thus lacking an organizing framework to account for how businesses can utilize peer companies' failures as a source of eco‐innovation. This study addresses this gap in the current literature by advancing an integrated conceptual framework that illuminates failure as a catalyst for learning and the mechanisms through which organizations can enhance their environmental innovation efforts and competitiveness. The study proposes a multidimensional 2 × 2 typology encompassing dimensions of process and product eco‐innovation, alongside two underlying factors of business failure. These factors further elucidate the mechanisms through which organizations can learn from others' failures, ultimately becoming more resilient and adaptable in the face of new challenges. The implications of this analysis for future research and practice will be further examined, shedding light on promising domains for learning from failure and fostering innovation.