Risk Of Business Failure Research Articles

Approaches on Correlation between Board of Directors and Risk Management in Resilient Economies

The recent financial crisis highlighted the need for a strong emphasis on the effectiveness of board risk oversight practices. Good corporate governance upholds effective risk management, which in turn ensures the flexibility to reply to unpredicted threats and take benefit of opportunities. Thus, risk management affords corporate resilience that engenders competitive advantage due to the capacity to circumvent, deter, defend, react, and adjust to any kind of disturbance, besides recovering quickly. Guaranteeing that the board is prepared and adequately resilient to deal with a crisis circumstance is a crucial part of good governance. By employing a data set of companies listed in Romania, this paper analyzes whether boards of directors influence risk management. We measure boards by means of size, independence, diversity, establishment of Consultative Committees, as well as CEO duality, gender, age, and tenure. Based on ten financial ratios, we develop two risk indicators regarding shareholders’ wealth and short-term risk, alongside a global business failure risk tool, by means of principal component analysis. Furthermore, the output of the multivariate regression analysis show that CEO gender, the size of the board, and Audit Committee negatively influence business failure risk.

Does Family Involvement in Management Reduce the Risk of Business Failure? The Moderating Role of Entrepreneurial Orientation

This study explores the question of whether—and under which circumstances—family involvement helps avoid business failure. We hypothesize that it is family involvement in management, rather than ownership, which reduces the risk of failure during economic downturns; however, this effect is negatively affected by the firm’s entrepreneurial orientation (EO). We argue that EO hinders reaching consensuses on and commitment to family-centered goals, which are focused on long-term survival. We analyze 369 manufacturing firms in Spain from 2007 to 2013, and find that family involvement in management reduces the risk of business failure, but this effect decreases as EO increases.

Role of Financial Agencies in Integrating Small Farmers into a Sustainable Value Chain:A Synthesis-Based on Successful Value Chain Financing Efforts

With changing agricultural business environment, the conventional direct marketing method is becoming a less feasible option for small and marginal farmers due to emergence of supermarkets, increasing consumers' preference for value-added food products, high production and marketing cost associated with small scale of operations and increasing consumers' emphasis on quality, safety and appearance of the product. Hence farmers must enter into a value chain in order to adapt to the changing business environment. Capital investment on production and processing aspects is a prerequisite in order to achieve and authenticate the quality, safety and attractiveness standards. Small and marginal farmers are least preferred financing clientele due to lack of strong collateral security and low risk-bearing ability. But, they form the major chunk of the population dependent on agriculture, contributing more than half of total agricultural production. Hence we need alternative approaches that can either reduce the financial risks associated with production and marketing process at the farmers' level, or approaches which can shift the farmers' financial risk entirely onto the other stakeholders in the value chain. Approaches like contract-based financing and cascade financing increase the possibility of success in business and reduce farmers' business failure risk. Joint liability group financing increases the financial risk-bearing ability of the farmers with reduction of defaulter risk and increase in creditworthiness of the individual farmer. Interdependence financing increases the small farmers' access to credit services. Indirect supplier financing shifts the farmers' financial risk on the other stakeholders in the value chain.

KAJIAN BAURAN PEMASARAN DAN MANAJEMEN PENGETAHUAN DALAM INOVASI KABUTO INSTAN

Kabuto instant is a product innovation of cassava flour is dried after fermentation originSoutheast Sulawesi. New product Kabuto instant need to touch the marketing mix and knowledgemanagement (KM) in order to have a competitive edge. The concept of the marketing mix (4P) andKM, both focus on how attempts were made to support the business activities of Kabuto instantproducts to gain a competitive edge. Focus on managing the marketing mix marketing in 4 elements:(1) Product, (2) Promotion, (3) Place, and (4) Price. Management of the marketing mix will increasethe interest of consumers against products Kabuto instant. KM see the knowledge available to abusiness Kabuto instant as a major factor of success. Through knowledge of the company superiorresults can be achieved faster, cheaper and with higher quality than their competitors.Knowledge about customers, target market and other factors that may influence the likelihoodthat a faster utilization of opportunities and a more flexible response to the threat. From theperspective of a marketing mix and KM promising positive impact on the cost structure and revenuestream Kabuto instant. This paper demonstrates the advantages of using the marketing mix and theKM approach that can increase and reduce the risk of business failure by integrating bothapproaches. Management of the marketing mix requires knowledge to manage consumers, consumerknowledge and knowledge of the consumer. KM took on the role as a service provider for theconsumer, managing four (4P) in product innovation Kabuto instant. This study is based on literaturestudies.

The influence of geographical concentration and structural characteristics on the survival chance of textile firms

PurposeThe purpose of this paper is to evaluate the contribution of location (geographical concentration) and firm structure (age and subsector) to the risk of business failure.Design/methodology/approachThe Markov's regression analysis was made for a sample of over 11,700 Spanish textile‐clothing firms.FindingsThe results obtained from the analysis suggest that the risk of business failure is increased by some risk factors relative to the structural characteristics of the firms (younger firms and specialization in low‐tech activities), and under determined locational circumstances.Research limitations/implicationsOur conclusions have been obtained starting from a sample of manufacturing firms in the Spanish textile sector. An extension of this work would be to test its robustness in other countries (for example, Italy or Portugal) and/or for other industries such as footwear and furniture.Practical implicationsExplaining the different levels of risk business failure shown by firms in an industry.Originality/valueWork that has studied the failure of the textile firms within this location‐subsector relationship is still scarce. Given that the viability of clusters and of European textile have been put into question, our work evidences that the risk of failure related to the firm's location and structure needs to be tested jointly, so that the way in which the firm addresses environmental changes can be appraised.

Utilisation of budgets in clothing small medium and micro enterprises (SMMEs) within the Cape Metropole

According to popular literature, the risk of business failure is described as high amongst small medium and micro enterprises (SMMEs), especially considering that businesses constantly deal with future uncertainties. These uncertainties are amplified by the constant threat of yet another recession looming in the future. Considering that each business owner’s main objective is to generate profits for growth, failure to plan for future endeavours may compromise the goals of the business; which often leads to financial disaster. Budgeting, however, is an important factor for consistency and growth in any business, however, the perception was formed that SMMEs do not make adequate use of budgets in order to make effective decisions. The main objective of this study was to determine to what extent SMMEs make adequate use of budgets to make effective business decisions. This empirical research study was regarded as descriptive research and fell within the ambit of the positivistic research paradigm. The study was also regarded as quantitative in nature and data was collected by means of distributing 30 questionnaires to owners and/or managers of clothing SMMEs in the Cape Metropole. The sampling method chosen was non-random sampling, specifically purposive sampling, with the main intention to obtain rich data. All respondents were assured of confidentiality and anonymity, and all responses were voluntary in nature. Relevant findings were made from descriptive statistics, which were followed by recommendations, which aimed to mitigate and/or solve the identified research problem. A final conclusion was also drawn on the aforementioned phenomenon. Key words: Small and medium micro finance (SMME), budgets, planning tools, business failure, performance measures.

Correlation coefficients of hesitant fuzzy sets and their applications to clustering analysis

Hesitant fuzzy sets (HFSs), which allow the membership degree of an element to a set represented by several possible values, can be considered as a powerful tool to express uncertain information in the process of group decision making. We derive some correlation coefficient formulas for HFSs and apply them to clustering analysis under hesitant fuzzy environments. Two real world examples, i.e. software evaluation and classification as well as the assessment of business failure risk, are employed to illustrate the actual need of the clustering algorithm based on HFSs, which can incorporate the difference of evaluation information provided by different experts in clustering processes. In order to extend the application domain of the clustering algorithm in the framework of HFSs, we develop the interval-valued HFSs and the corresponding correlation coefficient formulas, and then demonstrate their application in clustering with interval-valued hesitant fuzzy information through a specific numerical example.

Business challenges and strategies for development of Small- and Medium-sized Enterprises (SMEs) in Malaysia

Despite their significant role in both the developed and the developing economies, Small-and Medium-sized Enterprises (SMEs) are faced with the greater risk of business failure with past statistics indicating that over half of all new ventures will not enjoy long-term success. They face various types of difficulties and business challenges. This paper attempts to examine the issues, and explain how the business owners of SMEs in Malaysia strategise their operation to overcome the failure. The study highlighted several challenges faced by the firms, and to overcome these issues, SMEs have followed numerous strategies. The study revealed that business success is a result of implementing a mix of business, operation and management strategies. The paper concludes with the possible remedies, recommendations and future enhancements.

Developing a business failure prediction model via RST, GRA and CBR

The prediction of business failure is an important and challenging issue that has served as the impetus for many academic studies over the past three decades. The widely applied methods to predict the risk of business failure were the classic statistical methods, data mining techniques and machine learning techniques. In addition to diagnosis and classification, Case Based-Reasoning (CBR) is an inductive machine learning method that can be applied to replace statistical models. Concerning the fact that the attribute extraction and weighting approach could enable CBR to retrieve the most similar case correctly and effectively, this paper proposes a Hybrid Failure Prediction (HFP) model by applying Rough Set Theory (RST) and Grey Relational Analysis (GRA) as data preprocessors to strengthen the effectiveness of CBR predicting capability. After exploring the data from TEJ database and comparing it with three models, CBR, RST-CBR, and HFP, the results show that our model is the most accurate and effective model in predicting business failure.

Risk and economic sustainability of crop farming systems

In economic terms, resilience in farming has to do with the capacity of a farm business to survive various risks and other shocks. Despite its importance, resilience has seldom been directly considered in evaluations of economic sustainability. A whole-farm stochastic simulation model over a 6-year planning horizon was used to analyse organic and conventional cropping systems using a model of a representative farm in Eastern Norway. The relative economic sustainability of alternative systems under changing assumptions about future technology and price regimes was examined in terms of financial survival to the end of the planning period. The same alternatives were also compared in terms of stochastic efficiency. To model the risk of business failure adequately there is a need to deal with the risk of bankruptcy, and a modification of traditional analysis was used for that purpose. The organic farming system was found to be somewhat less economically sustainable than the conventional system, especially if the organic price premiums and the organic area payments were to be phased out. The results illustrate possible conflicts between pursuit of risk efficiency and economic sustainability. The model developed could be used to support farmers’ choices between farming systems as well as to help policy makers develop more sharply targeted policies.

From Scooters to Choppers: Product Portfolio Change and Organizational Failure: Evidence from the UK Motorcycle Industry 1895 to 1993

This article explores the conditions under which organizational change increases the risk of organizational failure. To reach this goal, we examine the pros and cons of flexibility and inertia arguments. Empirically, we measure the survival consequences of product portfolio expansion in the British motorcycle industry during the period from 1895 to 1993. A key finding is that the correlation of product portfolio expansion with increased risk of business failure is moderated by the organization's portfolio width, which we interpret as a proxy of the firm's capabilities. Whilst narrow portfolio organizations face an increased risk of failure after a portfolio expansion, their broad portfolio counterparts enhance their survival chances by engaging in further expansions. We conclude that although organizational change is risky, it may provide long-term rewards, especially for broad-portfolio organizations leveraging their developed capabilities. Managerial insights include considerations of the point when portfolio expansion moves from being too risky to becoming an advantageous strategy for a firm.

Ethics beyond the code of conduct ‐ understanding the ethical dilemmas of entrepreneurs

Entrepreneurs choose a particular way of life with the dual aim of maximising profit and gaining a sense of self‐satisfaction. In these endeavours, entrepreneurs typically live with the threat of competition and the risk of business failure, while attempting to do their best within the limitations of their resources. This qualitative study first examines existing theories of ethics and ways of applying business ethics and thereafter investigates entrepreneurs’ actual experiences by means of in‐depth interviews and the use of phenomenology. It finds that entrepreneurs are not guided by any specific code of conduct, and must decide for themselves what is right. It describes the entrepreneurial business ethic, some of the types of dilemmas that they experience and the methods that they have developed to deal with the dilemmas.

Rough approximation by dominance relations

In this article we are considering a multicriteria classification that differs from usual classification problems since it takes into account preference orders in the description of objects by condition and decision attributes. To deal with multicriteria classification we propose to use a dominance-based rough set approach (DRSA). This approach is different from the classic rough set approach (CRSA) because it takes into account preference orders in the domains of attributes and in the set of decision classes. Given a set of objects partitioned into pre-defined and preference-ordered classes, the new rough set approach is able to approximate this partition by means of dominance relations (instead of indiscernibility relations used in the CRSA). The rough approximation of this partition is a starting point for induction of if-then decision rules. The syntax of these rules is adapted to represent preference orders. The DRSA keeps the best properties of the CRSA: it analyses only facts present in data, and possible inconsistencies are not corrected. Moreover, the new approach does not need any prior discretization of continuous-valued attributes. In this article we characterize the DRSA as well as decision rules induced from these approximations. The usefulness of the DRSA and its advantages over the CRSA are presented in a real study of evaluation of the risk of business failure. © 2002 John Wiley & Sons, Inc.

Start-Up Investment with Scarce Venture Capital Support

Start-up entrepreneurs are often commercially inexperienced. In giving managerial advice, venture capitalists can importantly enhance the success of innovative but highly risky ventures. The supply of experienced venture capitalists is not easily increased, however. When the rate of business formation accelerates, the incumbent venture capitalists tend to include more firms in their portfolio which dilutes the quality of advice, making project risks excessively high in the short-run. The supply of advisory capacity eventually becomes more elastic as new venture capitalists are attracted to the industry. Company portfolios then tend to become more focused again, the quality of advice is restored and the risk of business failure declines.

Business failure of new firms: an empirical analysis using a multiplicative hazards model

This paper investigates business failure of new firms. Using a multiplicative hazards model, we estimate the determinants of business failure among new manufacturing firms in Tokyo during the period 1986 to 1994. It is found that a new firm without sufficient capital or a sufficient size has a higher risk of business failure. It is also found that the new firm tends to have more difficulty surviving in an industry characterized by a high entry rate. With respect to the timing of entry, the new firm that entered just before or after the collapse of the so-called bubble economy has been more likely to fail. Furthermore, we estimate a regression model based not only on age but also on calendar time. By using a regression model based on calendar time, it is found that the firm's age has been related to business failure.

Risk reduction in fisheries management

Abstract A crucial issue in fisheries management is the extent to which management strategy should be designed to reduce risk: risk of depleting the resource and risk of business failure for the fishermen and processors. Fishery management requires that data be assimilated from a wide variety of sources into a coherent scheme for allocating fish. Many sources of risk, which can be measured as the probability of an event's occurrence, affect the objectives and outcomes of fishery management strategies. Fishery management decisions are also made in the face of uncertainty, some of which cannot be alleviated by additional information. Four general sources of risk are considered here: the resource and its changing environment; scientific research; markets for the products and factors of production; and management measures. The complexity of fishery management is illustrated through descriptions of interconnected sources of risk, and recommendations for dealing with risk and uncertainty are suggested.

A Quantitative Measure of the Risk Factor in Investment Decisions

Abstract Investment theory has traditionally divided risk into two parts: (1) the risk of business failure and (2) the uncertainty associated with cash flow prediction. Analysis then proceeds to disregard attrition as a variable and to focus on cash flow forecasting. Though high attrition may be typical in the pattern of industry growth, it is certainly an attribute of structural development that has not been investigated extensively. This article explores the character of attrition and develops an analytical device that may be used to adjust separately estimated cash flows for the risk of failure.

A Quantitative Measure of the Risk Factor in Investment Decisions

Abstract Investment theory has traditionally divided risk into two parts: (1) the risk of business failure and (2) the uncertainty associated with cash flow prediction. Analysis then proceeds to disregard attrition as a variable and to focus on cash flow forecasting. Though high attrition may be typical in the pattern of industry growth, it is certainly an attribute of structural development that has not been investigated extensively. This article explores the character of attrition and develops an analytical device that may be used to adjust separately estimated cash flows for the risk of failure.