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A Cross Section Analysis of Small Business Failure

A Cross Section Analysis of Small Business Failure American Journal of Small Business, Volume I, Number 1, July, 1976 A Cross Section Analysis of Small Business Failure J. ERIC FRED LAND, United States Naval Academy CLAIR E. MORRIS, United States Naval Academy In the United States annually, an estimated 350 thousand businesses are discon· tinued. A small fraction of this number, under 10,000 in 1974 are involved in bankruptcy proceedings or otherwise close with losses to creditors. While the financial difficulties of a few large corporations make headlines, the economic and personal hardship involved in less spectacular cases of extreme business difficulty also concern policy makers interested in improving the economic environment. The considerable Federal assistance available for "small" business is in large measure justified by the alleged disadvantages faced by small firms competing in the marketplace against larger, more diversified finns. In this paper, we examine empirically a cross section of busi­ ness failures and non-failures, studying the relationship between failure and finn size, along with other characteristics. It should be emphasized that we do not and cannot isolate the "causes" of failure. Indeed, any attempt to do so is, at bottom, a futile exercise. TI1e first section discusses the nature and causes of business failure; http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Journal of Small Business SAGE

A Cross Section Analysis of Small Business Failure

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Publisher
SAGE
Copyright
© 1976 SAGE Publications
ISSN
0363-9428
eISSN
1540-6520
DOI
10.1177/104225877600100102
Publisher site
See Article on Publisher Site

Abstract

American Journal of Small Business, Volume I, Number 1, July, 1976 A Cross Section Analysis of Small Business Failure J. ERIC FRED LAND, United States Naval Academy CLAIR E. MORRIS, United States Naval Academy In the United States annually, an estimated 350 thousand businesses are discon· tinued. A small fraction of this number, under 10,000 in 1974 are involved in bankruptcy proceedings or otherwise close with losses to creditors. While the financial difficulties of a few large corporations make headlines, the economic and personal hardship involved in less spectacular cases of extreme business difficulty also concern policy makers interested in improving the economic environment. The considerable Federal assistance available for "small" business is in large measure justified by the alleged disadvantages faced by small firms competing in the marketplace against larger, more diversified finns. In this paper, we examine empirically a cross section of busi­ ness failures and non-failures, studying the relationship between failure and finn size, along with other characteristics. It should be emphasized that we do not and cannot isolate the "causes" of failure. Indeed, any attempt to do so is, at bottom, a futile exercise. TI1e first section discusses the nature and causes of business failure;

Journal

American Journal of Small BusinessSAGE

Published: Jul 1, 1976

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