Business failure: incidence of stakeholders’ behavior

Priego, Alba María; Lizano, Montserrat Manzaneque; Madrid, Elena Merino

doi:10.1108/arla-12-2013-0188

Cited by 11 publications

(8 citation statements)

References 13 publications

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“…Moreover, the results highlight the need to consider the contribution made by customer sales to the value added because they increase the probabilities of firm survival. These results are consistent with some works which argue the positive effects of firm-customers relationship on financial performance (Berman et al, 1999) and on reducing the likelihood of financial distress (Priego et al, 2014). For this reason, firms should develop strategies focused on securing the long-term loyalty of customers through understanding customers' need and behaviours (Campbell, 2003;Harrison et al, 2010) and setting quality and safety product policies (Berman et al, 1999), since they are a key stakeholder in helping to prevent business failure situations.…”

Section: Variablessupporting

confidence: 87%

“…In so doing, these harm stakeholder relationships may have irreversible negative effect on the performance of firms with economic and financial difficulties (Hambrick & D'Aveni, 1988;Platt et al, 2011). And, finally, there is a study which shows evidences of how stakeholders' behaviours impact on the likelihood of business failure through their participations in the generation and distribution in the firm's added value (Priego et al, 2014). These findings support the belief that a stakeholder management perspective helps to prevent a business failure situation.…”

Section: Literature Reviewmentioning

confidence: 52%

“…Second, some variables have been also taken to measure the generation and distribution of value added by stakeholders which are involved in the firms' goals and, thus, survival (see table 2) (Altman, 1984;Lizárraga, 1997;Van Hemmen, 2000;Goxens & Gay, 2005). In this vein, the value added is one of the most important economic indicators to analyse firms' behaviour towards its stakeholders and relationships with them (Priego et al, 2014).…”

Section: Value Added To Equitymentioning

confidence: 99%

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Understanding the stakeholders’ role in a business failure situation: An empirical boosting approach

Cruz

Alfaro

Lizano

2020

RC-SAR

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Este estudio investiga el rol de los stakeholders en situaciones de fracaso empresarial. En concreto, analiza qué stakeholders primarios tienen impacto en la probabilidad de fracaso de una empresa y cómo lo ejercen. También propone un orden de priorización de los stakeholders primarios con la finalidad de ofrecer a los gestores empresariales información útil para que, ante situaciones de crisis financiera, orienten sus decisiones a reducir la aparición de conflictos de intereses que pueden afectar a la sostenibilidad de la empresa a largo plazo. De esta forma, se ha tomado una muestra de 2.352 pymes españolas, 1.176 empresas sanas emparejadas con 1.176 empresas fracasadas, de las que se han extraído datos económico-financieros de sus cuentas anuales y a los que se han aplicado las metodologías de regresión logística y boosting. Los resultados obtenidos indican que los stakeholders primarios tienen efecto estadísticamente significativo en la probabilidad de fracaso empresarial. Además, los resultados presentan un ranking de stakeholders primarios en relación con su impacto en la probabilidad de fracaso empresarial ante contextos de crisis financiera. De esta forma, este estudio propone una guía útil para los gestores mostrando los roles de los stakeholders primarios y su orden de prioridad ante una situación de fracaso empresarial. We investigate the stakeholders’ role in a business failure situation. In particular, we analyse which primary stakeholders have an impact on the business failure, and how. This work also proposes an order of prioritization of primary stakeholders with the purpose of showing business managers useful information which guides their decisions to reduce the emergence of conflicts of interest that may affect the sustainability of firms long-term in financial crisis situations. We have taken a sample of 2,352 Spanish SMEs, 1,176 non-failed firms matched with 1,176 failed firms, from which economic and financial data are been extracted from their financial reporting. In this vein, logistic regression and boosting methodologies have been applied. The findings indicate that the primary stakeholders have a statistically significant effect on the likelihood of business failure. Furthermore, the results present a ranking of primary stakeholders related to their impact on the likelihood of business failure in contexts of financial crisis. Thus, our study provides a useful guide to managers seeking to understand the primary stakeholders’ roles and their relative priority in business failure.

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Section: Variablessupporting

confidence: 87%

Section: Literature Reviewmentioning

confidence: 52%

Section: Value Added To Equitymentioning

confidence: 99%

See 1 more Smart Citation

Understanding the stakeholders’ role in a business failure situation: An empirical boosting approach

Cruz

Alfaro

Lizano

2020

RC-SAR

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“…It is, therefore, valuable to understand stakeholder influence in the success and failure of business rescue. Priego, Lizano and Madrid (2014) argue that stakeholders may contribute significantly to reduce the prospect of business failure. In addition, Tangpong, Abebe and Li (2015) acknowledge external stakeholder support as valuable when stabilising a corporate during the corporate decline phase.…”

Section: Introductionmentioning

confidence: 99%

“…Furthermore, Benedettini, Neely and Swink (2015) identify the business environment incorporating stakeholders as a factor that contributes to business failure. These researchers (Benedettini et al, 2015;Priego et al, 2014;Tangpong et al, 2015) show that stakeholders play a prominent role in an organisation's failure and turnaround processes. Smith and Graves (2005) note that it is unclear precisely what role stakeholder support plays within the decline and turnaround process of an organisation.…”

Section: Introductionmentioning

confidence: 99%

Role of stakeholders in business rescue

Lusinga

Fairhurst

2020

South African Journal of Business Management

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Purpose: It is widely accepted that stakeholders play a role in the turnaround of an organisation. However, the exact role is unclear. This study set out to investigate the roles of stakeholders in the success of business rescue through the lens of stakeholder theory.Design/methodology/approach: The study research design is qualitative following an exploratory approach. The choice of technique for the study was semi-structured interviews.Findings/results: The findings indicate that key stakeholders go beyond affected parties as described by Chapter 6 of the Companies Act. Creditors are considered the most influential stakeholders due to their ability to vote on the business rescue plan, followed by post-commencement funders and employees, to ensure business continuity. Customers were given the same level of importance by the business rescue practitioners as other affected parties. Due to the dynamic nature of business rescue, business rescue practitioners prioritise resourceful stakeholders when managing the process. A simplified framework illustrating roles of stakeholders during business rescue is presented.Practical implications: Stakeholder management should be recognised as a valuable exercise that must be allocated time and resources. Business rescue practitioners should recognise stakeholder influences at different stages of the business rescue process.

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