IDEAS home Printed from https://ideas.repec.org/p/bic/tpaper/7.html
   My bibliography  Save this paper

Business Insolvencies in Latvia

Author

Listed:
  • Arnis Sauka

    (Stockholm School of Economics in Riga)

  • Friederike Welter

    (Jönköping International Business School)

Abstract

Performance and growth of firms have been topics of increasing interest among entrepreneurship researchers for the past two decades (e.g. Davidsson, 2004). Only recently, however, have entrepreneurship scholars started to pay attention to factors determining the failure of firms, which comes as a surprise considering the fact that a high proportion of both new and already established companies choose or are forced to exit business activity every year (e.g. Shepherd, 2004; Schror, 2005). Moreover, the long term survival of new ventures has been acknowledged to be one of the biggest challenges for entrepreneurs (e.g. Simon, 1996). In this light, it is thus reasonable to believe that much can be learned from firms that exit businesses in order to increase the chance of survival and growth of other companies (Pasanen, 2005). Although the topic has recently gained interest in entrepreneurship research, still no comprehensive explanation of what constitutes business failure exists (e.g. Pasanen, 2005; Ciavarella et al. 2004). The complexity of the failure process, involving various internal and external factors which are often difficult to identify and understand by the entrepreneurs themselves as well as a lack of appropriate data because ex-entrepreneurs are often reluctant to discuss ‘their’ failure are among the main challenges in this regard.In the small business and management literature, business failure is defined in a number of ways, including closure, exit, insolvency, bankruptcy and discontinuance (e.g. Storey, 1994). Pointing to the overlap between these terms as well as different interpretations in various countries, the literature suggests distinguishing between companies which do not continue their business activities as a result of failure (for example, bankruptcy or insolvency) and firms which exit entrepreneurship deliberately (for example, in cases where the business is sold) (Pasanen, 2005). This explorative study focuses on firms that exit the market as a result of insolvency, that is they are unable to pay their debts3. The rest of the paper is structured as follows: Chapter 2 introduces the topic by reviewing reasons for business failure. In Chapter 3, the methodology and datasets are briefly introduced. Section 4 explores business insolvencies in Latvia drawing on existing official statistics. More specifically, by providing an overview of the legal framework for business insolvencies in Latvia, topics such as liabilities of smallness and newness and regional differences are covered there. The results from in-depth (2007) and phone interviews (2009) with insolvency administrators in Latvia are further presented and discussed in Section 5. The report concludes with conclusions and implications.

Suggested Citation

  • Arnis Sauka & Friederike Welter, 2010. "Business Insolvencies in Latvia," TeliaSonera Institute Discussion papers 7, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
  • Handle: RePEc:bic:tpaper:7
    as

    Download full text from publisher

    File URL: https://biceps.org/wp-content/uploads/2022/02/rea_brosura_7.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Friederike Welter, 2006. "Exploring Entrepreneurship and SME Development in a Post Soviet Context," TeliaSonera Institute Discussion papers 5, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    2. Davidsson, Per & Honig, Benson, 2003. "The role of social and human capital among nascent entrepreneurs," Journal of Business Venturing, Elsevier, vol. 18(3), pages 301-331, May.
    3. Cooper, Arnold C. & Woo, Carolyn Y. & Dunkelberg, William C., 1988. "Entrepreneurs' perceived chances for success," Journal of Business Venturing, Elsevier, vol. 3(2), pages 97-108.
    4. Per Davidsson, 2004. "Researching Entrepreneurship," International Studies in Entrepreneurship, Springer, number 978-0-387-23054-2, December.
    5. Aidis, Ruta & van Praag, Mirjam, 2007. "Illegal entrepreneurship experience: Does it make a difference for business performance and motivation?," Journal of Business Venturing, Elsevier, vol. 22(2), pages 283-310, March.
    6. David Smallbone & Friederike Welter, 2006. "Conceptualising entrepreneurship in a transition context," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 3(2), pages 190-206.
    7. Bruce, Donald, 2002. "Taxes and Entrepreneurial Endurance: Evidence From the Self-Employed," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(1), pages 5-24, March.
    8. Ciavarella, Mark A. & Buchholtz, Ann K. & Riordan, Christine M. & Gatewood, Robert D. & Stokes, Garnett S., 2004. "The Big Five and venture survival: Is there a linkage?," Journal of Business Venturing, Elsevier, vol. 19(4), pages 465-483, July.
    9. Forbes, Daniel P., 2005. "Are some entrepreneurs more overconfident than others?," Journal of Business Venturing, Elsevier, vol. 20(5), pages 623-640, September.
    10. C. Mirjam van Praag, 2003. "Business Survival and Success of Young Small Business Owners," Tinbergen Institute Discussion Papers 03-050/3, Tinbergen Institute.
    11. Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.
    12. Bruce, Donald, 2002. "Taxes and Entrepreneurial Endurance: Evidence from the Self-Employed," National Tax Journal, National Tax Association, vol. 55(N. 1), pages 5-24, March.
    13. Smallbone, David & Welter, Friederike, 2001. "The Distinctiveness of Entrepreneurship in Transition Economies," Small Business Economics, Springer, vol. 16(4), pages 249-262, June.
    14. Blanchflower, David G & Meyer, Bruce D, 1994. "A Longitudinal Analysis of the Young Self-Employed in Australia and the United States," Small Business Economics, Springer, vol. 6(1), pages 1-19, February.
    15. Baron, Robert A., 2004. "The cognitive perspective: a valuable tool for answering entrepreneurship's basic "why" questions," Journal of Business Venturing, Elsevier, vol. 19(2), pages 221-239, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erik Stam & Roy Thurik & Peter van der Zwan, 2010. "Entrepreneurial exit in real and imagined markets," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(4), pages 1109-1139, August.
    2. Unger, Jens M. & Rauch, Andreas & Frese, Michael & Rosenbusch, Nina, 2011. "Human capital and entrepreneurial success: A meta-analytical review," Journal of Business Venturing, Elsevier, vol. 26(3), pages 341-358, May.
    3. Megan K. Haller & Eric W. Welch, 2014. "Entrepreneurial Behavior of Academic Scientists: Network and Cognitive Determinants of Commitment to Grant Submissions and Award Outcomes," Entrepreneurship Theory and Practice, , vol. 38(4), pages 807-831, July.
    4. Ruta Aidis & Tomasz Mickiewicz & Arnis Sauka, 2010. "Small- and Medium- Sized Businesses’ Growth Expectations and Financial Performance in Latvia: does Ethnicity Matter?," TeliaSonera Institute Discussion papers 11, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    5. Gudmundsson, Sveinn Vidar & Lechner, Christian, 2013. "Cognitive biases, organization, and entrepreneurial firm survival," European Management Journal, Elsevier, vol. 31(3), pages 278-294.
    6. Nan Langowitz & Maria Minniti, 2007. "The Entrepreneurial Propensity of Women," Entrepreneurship Theory and Practice, , vol. 31(3), pages 341-364, May.
    7. P. Köllinger & M. Minniti, 2006. "Not for Lack of Trying: American Entrepreneurship in Black and White," Small Business Economics, Springer, vol. 27(1), pages 59-79, August.
    8. Arnis Sauka & Friederike Welter, 2010. "Productive and Unproductive Entrepreneurship in Latvia," TeliaSonera Institute Discussion papers 6, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
    9. Bob Bastian & Antonella Zucchella, 2022. "Entrepreneurial metacognition: a study on nascent entrepreneurs," International Entrepreneurship and Management Journal, Springer, vol. 18(4), pages 1775-1805, December.
    10. Verheul, I. & Carree, M.A., 2008. "Overoptimism among Founders: The Role of Information and Motivation," ERIM Report Series Research in Management ERS-2008-008-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    11. Justin Van Der Sluis & Mirjam Van Praag & Wim Vijverberg, 2008. "Education And Entrepreneurship Selection And Performance: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 795-841, December.
    12. Zhao, Hao & O'Connor, Gina & Wu, Jihong & Lumpkin, G.T., 2021. "Age and entrepreneurial career success: A review and a meta-analysis," Journal of Business Venturing, Elsevier, vol. 36(1).
    13. Lucio Fuentelsaz & Consuelo Gonz�lez-Gil & Juan P. Maicas, 2015. "What determines entepreneurial failure: taking advantage of the institutional context," Documentos de Trabajo dt2015-05, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    14. Warnick, Benjamin J. & Kier, Alexander S. & LaFrance, Emily M. & Cuttler, Carrie, 2021. "Head in the clouds? Cannabis users' creativity in new venture ideation depends on their entrepreneurial passion and experience," Journal of Business Venturing, Elsevier, vol. 36(2).
    15. Oliver Thomas, 2018. "Two decades of cognitive bias research in entrepreneurship: What do we know and where do we go from here?," Management Review Quarterly, Springer, vol. 68(2), pages 107-143, April.
    16. Aidis, Ruta & van Praag, Mirjam, 2007. "Illegal entrepreneurship experience: Does it make a difference for business performance and motivation?," Journal of Business Venturing, Elsevier, vol. 22(2), pages 283-310, March.
    17. Cucchiarini, Veronica & Scicchitano, Sergio & Viale, Riccardo, 2024. "The Entrepreneur's Cognitive and Behavioral Journey: Understanding Heuristics and Bias under Risk and Uncertainty," GLO Discussion Paper Series 1390, Global Labor Organization (GLO).
    18. Jaeyeob Jeong & Myeonggil Choi, 2017. "The Expected Job Satisfaction Affecting Entrepreneurial Intention as Career Choice in the Cultural and Artistic Industry," Sustainability, MDPI, vol. 9(10), pages 1-16, September.
    19. Erik Lundmark & Anna Krzeminska & Dean A. Shepherd, 2019. "Images of Entrepreneurship: Exploring Root Metaphors and Expanding Upon Them," Entrepreneurship Theory and Practice, , vol. 43(1), pages 138-170, January.
    20. Dimo Dimov, 2007. "Beyond the Single-Person, Single-Insight Attribution in Understanding Entrepreneurial Opportunities," Entrepreneurship Theory and Practice, , vol. 31(5), pages 713-731, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bic:tpaper:7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anna Zasova (email available below). General contact details of provider: http://www.biceps.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.