Frontiers of Entrepreneurship
AN EXAMINATION OF THE NATURE OF BUSINESS CLOSINGS: ARE THEY REALLY FAILURES?
Julio O. De Castro, University of Colorado/Boulder
Sharon A. Alvarez, University of Colorado/Boulder
James D. Blasick, University of Colorado/Boulder
Marina Ortiz, Fondomicro. Santo Domingo, Dominican Republic
LITERATURE AND THEORETICAL BACKGROUND
Entrepreneurship studies typically identify small business closures as business failures. Existing research is problematic because of the current definition of failures and the way failures have been measured in the past. This paper differentiates between failures and closures, and examines the characteristics of each using a national sample of micro enterprises in the Dominican Republic. Our findings revealed that 50% of the closed businesses should not be classified as failures. Using a discriminant analysis, we find that the occupation taken after firm disappearance, is the most significant predictor distinguishing between outright failure and other forms of closure.
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Last Updated 03/20/98