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Article
Publication date: 28 February 2019

Bernardí Cabrer-Borrás, Paz Rico Belda and Dolores Botella Carrubi

The purpose of this paper is to analyse the determinants of the survival of Spanish companies.

Abstract

Purpose

The purpose of this paper is to analyse the determinants of the survival of Spanish companies.

Design/methodology/approach

Two approaches are used and they are complementary. The first approach analyses the determinants of survival probability. For this purpose, a binary choice model is built and estimated using a sample of companies from the main economic sectors taken from the SABI database. Likewise, the Blinder–Oaxaca decomposition is applied to quantify the difference between companies with employees and without employees and the proportion of this difference that owes to observed factors or unobserved factors. Finally, the second approach is a survival analysis carried out through the Cox proportional hazard model that identifies the determinants of the duration of business activity.

Findings

The results of the empirical analysis show that companies without employees present less favourable conditions for survival at all stages of their evolution than companies with employees.

Originality/value

The contribution of this study to the empirical literature consists in analysing the difference between companies with and without employees. Due to the structure of Spanish companies, this aspect and the determinants of such difference are essential for policymakers to increase the survival for companies.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 25 no. 8
Type: Research Article
ISSN: 1355-2554

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Book part
Publication date: 9 December 2013

Joseph Blasi, Douglas Kruse and Dan Weltmann

Using a population study, we provide evidence on the important but understudied issue of company survival under employee ownership, as well as on the performance effects…

Abstract

Purpose

Using a population study, we provide evidence on the important but understudied issue of company survival under employee ownership, as well as on the performance effects of employee ownership and the issue of whether employee ownership substitutes for other pension benefits.

Design/methodology/approach

Company survival and pension benefits are assessed using a unique dataset from Dun & Bradstreet of privately held Employee Stock Ownership Plan (ESOP) companies over the 1988–1999 period, matched to non-ESOP companies in the same industry. Performance is assessed using pre/post-comparisons of ESOP adopters in the 1988–1994 period.

Findings

Privately held ESOP companies in 1988 were only half as likely as non-ESOP firms to go bankrupt or close over the 1988–1999 period, and only three-fifths as likely to disappear for any reason. The ESOP companies had significantly higher post-adoption annual employment and sales growth, along with higher sales per employee. ESOP companies are four times more likely than their non-ESOP pairs to have defined benefit pension plan and other forms of defined contribution plans.

Research implications

The greater survival was not explained by higher productivity, or by greater compensation flexibility. The higher survival may instead be tied to complementary policies adopted along with ESOPs to create a more committed and engaged workforce that contributes ideas to enhance survival and is more flexible when economic difficulties arise. The pension results are consistent with other studies on compensation under employee ownership, suggesting that employee ownership is generally used as a form of efficiency wage to provide above-market compensation.

Social implications

Higher survival among ESOP companies could result in lower job loss and unemployment, potentially providing a public policy rationale for support of employee ownership.

Originality/value

The chapter provides the first examination of company survival in privately held ESOP companies, and one of the few examinations of how ESOPs relate to other pension benefits.

Details

Sharing Ownership, Profits, and Decision-Making in the 21st Century
Type: Book
ISBN: 978-1-78190-750-4

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Article
Publication date: 10 April 2017

Sophie Pommet

The purpose of this paper is to analyze the impact of venture capital (VC) involvement on the survival rate of French initial public offerings (IPOs) during the period…

Abstract

Purpose

The purpose of this paper is to analyze the impact of venture capital (VC) involvement on the survival rate of French initial public offerings (IPOs) during the period 1996-2006. The paper examines the link between the survival rates of IPO companies, and several proxies for the quality of venture capitalist financing and monitoring.

Design/methodology/approach

To analyze the impact of the involvement of VC on both long and short run post-IPO survival, two methods are used: survival analysis (the Cox proportional hazard), and a logit model.

Findings

This paper shows that the quality of venture capitalist monitoring, measured by the duration of their investment before the IPO, is positively correlated with company survival rates. However, the author does not find the expected result when the author considers the experience of venture capitalists measured by their age.

Research limitations/implications

The findings are limited to a sample of VC-backed companies that went public.

Practical implications

The findings have implications for entrepreneurs. When analyzing the advantages and disadvantages linked to the presence of VC firms in the capital of their companies, entrepreneurs should consider that certain types of venture capitalists might be more or less able to be involved in the monitoring and value adding process.

Originality/value

To date, there is no comprehensive study on the French IPO market analyzing both long and short run post-IPO survival of VC-backed companies. This paper fills this gap.

Details

Managerial Finance, vol. 43 no. 4
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 6 July 2004

Rhokeun Park, Douglas Kruse and James Sesil

Research on employee ownership has focused on questions of productivity, profitability, and employee attitudes and behavior, while there has been little attention to the…

Abstract

Research on employee ownership has focused on questions of productivity, profitability, and employee attitudes and behavior, while there has been little attention to the most basic measure of performance: survival of the company. This study uses data on all U.S. public companies as of 1988, following them through 2001 to examine how employee ownership is related to survival. Estimation using Weibull survival models shows that companies with employee ownership stakes of 5% or more were only 76% as likely as firms without employee ownership to disappear in this period, compared both to all other public companies and to a closely matched sample without employee ownership. While employee ownership is associated with higher productivity, the greater survival rate of these companies is not explained by higher productivity, financial strength, or compensation flexibility. Rather, the higher survival is linked to their greater employment stability, suggesting that employee ownership companies may provide greater employment security as part of an effort to build a more cooperative culture, which can increase employee commitment, training, and willingness to make adjustments when economic difficulties occur. These results indicate that employee ownership may have an important role to play in increasing job and income security, and decreasing levels of unemployment. Given the fundamental importance of these issues for economic well being, further research on the role of employee ownership would be especially valuable.

Details

Employee Participation, Firm Performance and Survival
Type: Book
ISBN: 978-0-76231-114-9

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Article
Publication date: 21 March 2016

Scott Dellana and David West

The purpose of this paper is to apply survival analysis, using Cox proportional hazards regression (CPHR), to the problem of predicting if and when supply chain (SC…

Abstract

Purpose

The purpose of this paper is to apply survival analysis, using Cox proportional hazards regression (CPHR), to the problem of predicting if and when supply chain (SC) customers or suppliers might file a petition for bankruptcy so that proactive steps may be taken to avoid a SC disruption.

Design/methodology/approach

CPHR is first compared to multiple discriminant analysis (MDA) and logistic regression (LR) to assess its suitability and accuracy to SC applications using three years of financial quarterly data for 69 non-bankrupt and 74 bankrupt organizations. A k-means clustering approach is then applied to the survival curves of all 143 organizations to explore heuristics for predicting the timing of bankruptcy petitions.

Findings

CPHR makes bankruptcy predictions at least as accurately as MDA and LR. The survival function also provides valuable information on when bankruptcy might occur. This information allows SC members to be prioritized into three groups: financially healthy companies of no immediate risk, companies with imminent risk of bankruptcy and companies with intermediate levels of risk that need monitoring.

Originality/value

The current paper proposes a new analytical approach to scanning and assessing the financial risk of SC members (suppliers or customers). Traditional models are able to predict if but not when a financial failure will occur. Lacking this information, it is impossible for SC managers to prioritize risk mitigation activities. A simple decision rule is developed to guide SC managers in setting these priorities.

Details

The Journal of Risk Finance, vol. 17 no. 2
Type: Research Article
ISSN: 1526-5943

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Article
Publication date: 1 February 2000

Ingrid Bonn

Reports the results of an empirical study investigating the key factors that affected the survival of large manufacturing organizations between 1982 and 1993 in Australia…

Abstract

Reports the results of an empirical study investigating the key factors that affected the survival of large manufacturing organizations between 1982 and 1993 in Australia. Four broad categories of variables were examined: environmental variables, organizational variables, company strategies and ownership characteristics. Using logistic regression analysis, it was found that the following variables were significant for company survival: size, planning system, corporate direction, research and development and ownership characteristics.

Details

Journal of Organizational Change Management, vol. 13 no. 1
Type: Research Article
ISSN: 0953-4814

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Article
Publication date: 25 November 2020

Gianluca Oricchio, Stefania Zanda, Gian Luca Gregori and Luca Marinelli

The purpose of this paper is to present and discuss a model to evaluate the top management quality and its impact on the default probability/survival probability of…

Abstract

Purpose

The purpose of this paper is to present and discuss a model to evaluate the top management quality and its impact on the default probability/survival probability of companies operating in the Italian food and beverage industry. The focus is on SMEs and private companies (ie. companies with no external or public rating). The general aim of this paper is to initiate a new field of research enjoying the fast and growing number of information underlying the development of the private lending market (both banking channel and private debt channel) and the recent developments in assessing the managerial styles of leadership.

Design/methodology/approach

The methodology used in the research is a mixed method based on quantitative and qualitative analysis. The authors have followed the sequential mixed methods design (Creswell and Plano Clark, 2007; Almalki, 2016) belonging to a practice perspective (Tashakkori and Creswell, 2007). The two components (quantitative and qualitative) are integrated in the combined approach: a final proposed evaluation model is explained and discussed.

Findings

According to the experience (and private market best practice) the leadership style has a material impact on the survival probability of a company (and, on the contrary, on the default probability of a company). In other words, the leadership style – other variables be equal – can provide significant information to investors about the future evolution of the financial performance and related credit risk. In the paper, the authors provide a useful model (and tool) in order to capture the above mentioned relationship to support investment decisions in food and beverage industry.

Research limitations/implications

While a positive relationship between a participative style of leadership and the financial performance is widely accepted in the literature; there is no published research on the relationship between managerial styles of leadership and default probability/survival probability. There are several workstreams to be performed in future research in order (1) to provide more business evidence and (2) to extent the analysis to further industries (other than food and beverage). The first step is to collect more data and company information on managerial styles of leadership and to start to track, to measure and monitor the evolution of the credit risk over time in each of the four clusters identified in the combined model.

Practical implications

The practical implication is to provide a methodological contribution to develop an evaluation model of top management quality to be used for the certification of the quality system. The proposed evaluation model is intended to support both (1) the ISO quality management system certifiers and (2) financial analysts and auditors in order to assess the going concern and the business sustainability and (3) the credit risk assessment and evolution in investment decisions.

Social implications

The authors believe that a more deep understanding on the effectiveness of managerial styles of leadership on credit risk can improve the credit and investment allocation and to enhance the borrowing capabilities of the food and beverage industry (with relevant implications on number of employees and size of new investments).

Originality/value

This is the first applied research on the link between the default probability/company survival probability and the quality of management in the Italian food and beverage industry.

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Article
Publication date: 3 June 2021

John F. Blattner, William P. Karmia and Thomas J. Walter

The purpose of this case study is to investigate how a small catering company has coped with the current Covid-19 pandemic. Initial research was performed in 2014 and…

Abstract

Purpose

The purpose of this case study is to investigate how a small catering company has coped with the current Covid-19 pandemic. Initial research was performed in 2014 and repeated in 2018. Given the far reaching business challenges of the pandemic, the authors examined the viability of the organization within the current climate.

Design/methodology/approach

Embedded organizational components of culture, leadership and engagement are explored as key elements in the sustainability of the company during the pandemic crisis. Prior research data using the organizational culture inventory is used to assess organizational culture over a four-year period. Employee data and interview analysis within company structure is used to determine how leadership and employee engagement is impacted. Culture research is examined to determine the influence of company culture upon organizational survival.

Findings

This paper identifies workplace culture elements that contribute to company sustainability. Embedded core value systems, strong employee engagement mechanisms and focused leadership styles were observed to be critical influences upon company survival during the pandemic.

Originality/value

This research would assist industry professionals and practitioners in understanding the active workplace culture mechanisms found to be effective for organizational survival during periods of crisis. Companies that adopt similar practices may acquire sustainability advantage during the pandemic.

Details

Strategic HR Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1475-4398

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Article
Publication date: 27 March 2020

Eva Cristina Manotas and Maria Alejandra Gonzalez-Perez

This paper aims to introduce the use of hazards functions for studying the relationship between internationalization and performance in small and medium-sized enterprises…

Abstract

Purpose

This paper aims to introduce the use of hazards functions for studying the relationship between internationalization and performance in small and medium-sized enterprises (SMEs) from emerging economies.

Design/methodology/approach

Hazards functions analysis is applied to a sample of 64 companies, previously grouped into two subsets of manufacturing SMEs from an emerging economy. The first group contains firms that have attained an accelerated internationalization. And the second one those that have followed a sequential internationalization.

Findings

The results show strong evidence that internationalization positively affects the probability of a better performance, and therefore more competitiveness of SMEs.

Practical implications

The proposed methodology is an invitation to use models other than linear regression to explain the relationship between internationalization and performance, studying the risk function of poor performance, whose characterization in the lifetime of SMEs. The result of this study clearly illustrates how internationalization affects the performance of SMEs for both those SMEs with accelerated internationalization and those with a sequential process of internationalization.

Social implications

The implementation of quantitative methodologies, such as the analysis of hazards, has implications in the social practice of research in international business, by inviting the return of data from primary sources, obtained from direct sources, which, although they are not large samples, they are representative, and therefore the results of the well-applied methodology offer powerful and high-reliability information. Irreproducible and non-replicable research results threaten the credibility, usefulness and the very basis of all scientific fields. Studies in entrepreneurship, management and in international business are not exempt from this problem that affects the ethics and credibility of research works.

Originality/value

A literature review is presented exposing the disadvantages of the use of traditional correlation methodologies and proposes the methodology traditionally used in industrial engineering studies of hazard functions as a simple option, free of previous assumptions about the relation between internationalization and performance. Finally, the methodology is subjected to triple testing of conceptualization and measurement of internationalization, performance and the relation between internationalization and performance.

Details

Competitiveness Review: An International Business Journal , vol. 30 no. 5
Type: Research Article
ISSN: 1059-5422

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Article
Publication date: 1 June 2015

Torbjörn Tagesson and Peter Öhman

This paper aims to chart Swedish auditors’ likelihood of issuing going concern warnings (GCWs), and to investigate the relationship between formal auditor competence…

Abstract

Purpose

This paper aims to chart Swedish auditors’ likelihood of issuing going concern warnings (GCWs), and to investigate the relationship between formal auditor competence, audit fees and audit firm, respectively, and the likelihood of issuing GCWs.

Design/methodology/approach

The empirical data are based on annual reports and audit reports for 2,547 limited companies that went bankrupt in 2010 in the wake of the financial crisis and had filed a financial statement in the year before the bankruptcy.

Findings

The findings indicate that Swedish auditors seldom issue GCWs. Moreover, there is a positive relationship between audit fee level and the likelihood of issuing GCWs, and Big 4 auditors being more likely to issue such warnings than other auditors. However, the analyses identify differences between audit firms (within the group of Big 4 firms and within the group of other audit firms) in terms of their predictions of client bankruptcies. This suggests a need for further investigation of firm-specific differences. Contrary to what was predicted, authorized auditors are not more likely to issue GCWs than approved auditors.

Research limitations/implications

This paper did not investigate the impact of audit experience and tenure or the possibility that auditors may signal survival problems by resigning.

Practical implications

Levying appropriate audit fees creates opportunities for thorough audits, but auditors’ formal competence based on training and qualification is not a factor that enforces audit quality. Based on the findings, the authors also suggest some clarifications of existing standards to reduce ambiguity regarding the reporting of survival problems.

Originality/value

The Swedish setting is a context in which most companies are small, creditor interest in accounting and auditing is strong and auditors must issue a modified audit opinion if half of the shareholders’ equity is spent. This setting offers a unique research opportunity because the formal competence differs between Sweden’s two categories of certified auditors, and it allows exploration beyond the dichotomy of Big 4 versus other audit firms.

Details

Journal of Accounting & Organizational Change, vol. 11 no. 2
Type: Research Article
ISSN: 1832-5912

Keywords

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