From failure to corporate bankruptcy: a review

Abstract

Prior to being a simple concept, the entrepreneurial failure is a multidimensional phenomenon. To contribute to its comprehension, this paper proposes to develop a synthetic vision of failure in order to escape a behavioral and partial approach from the phenomenon while taking account of the context, the characteristics of the company, and the profile of the entrepreneur. We point out the various theories which insist upon the crucial role of the context and underline the relationships between the performance (or failure) of companies and some environmental variables. We also introduce a dynamic view of insolvency which, instead of being a clear-cut situation is better handled as a process. As a key element taken into account by potential creditors to make their decision, the final section proposes a survey of the different methods used to forecast this event.