How do the personal characteristics of business owners affect the survival rates of SMEs during economic crises?

A Leiden University study reveals that during crises, the resilience of business owners significantly impacts a small or medium-sized enterprise's survival, exceeding the traditional focus on financial health. This resilience encompasses their response to setbacks and their support networks.

What specific characteristics of business owners and their support networks are most strongly correlated with SME survival during economic downturns?

The study analyzed 520 SMEs, using 46 characteristics including financial data and owner traits, to model survival during crises like the COVID-19 pandemic. It found that the owner's resilience, encompassing their problem-solving approach and resourcefulness, is crucial for survival, contradicting conventional economic models that prioritize financial factors.

How can the measurement of resilience in business owners be incorporated into lending models and governmental crisis support programs to improve effectiveness?

The research advocates integrating personal characteristics into lending decisions to improve crisis response. The study suggests future models should incorporate metrics for resilience, potentially adapted from health assessments, to better predict SME survival, impacting lending practices and potentially mitigating future economic downturns.

nrc.nl

SME Survival During Crises: Resilience of Owners Trumps Financial Health

A Leiden University study found that the resilience of business owners, exceeding financial health, significantly impacts SMEs' survival during crises; this resilience incorporates their response to setbacks and support networks, influencing future lending models.

Read original article in Dutch

Dutch

Netherlands

EconomyOtherEconomic CrisisResilienceEntrepreneurshipSmeBusiness SurvivalLending Practices

Universiteit LeidenInstituut Voor Midden- En Kleinbedrijf (Imk)Van Lanschot KempenNyenrode Business Universiteit

Han DieperinkMichiel HordijkMarta Berent-Braun

How do the personal characteristics of business owners affect the survival rates of SMEs during economic crises?: A Leiden University study reveals that during crises, the resilience of business owners significantly impacts a small or medium-sized enterprise's survival, exceeding the traditional focus on financial health. This resilience encompasses their response to setbacks and their support networks.
What specific characteristics of business owners and their support networks are most strongly correlated with SME survival during economic downturns?: The study analyzed 520 SMEs, using 46 characteristics including financial data and owner traits, to model survival during crises like the COVID-19 pandemic. It found that the owner's resilience, encompassing their problem-solving approach and resourcefulness, is crucial for survival, contradicting conventional economic models that prioritize financial factors.
How can the measurement of resilience in business owners be incorporated into lending models and governmental crisis support programs to improve effectiveness?: The research advocates integrating personal characteristics into lending decisions to improve crisis response. The study suggests future models should incorporate metrics for resilience, potentially adapted from health assessments, to better predict SME survival, impacting lending practices and potentially mitigating future economic downturns.

Cognitive Concepts

1/5

Framing Bias

The framing emphasizes the importance of the entrepreneur's resilience and other personal characteristics in addition to the financial health of a company during a crisis. This is presented as a novel finding that challenges the current practices of lenders and investors, thereby framing the existing system as incomplete. The headline, although not explicitly provided, likely emphasizes this new perspective.

2/5

Bias by Omission

The article focuses primarily on the financial aspects and the entrepreneur's resilience, potentially omitting other crucial factors influencing a company's survival during a crisis. While acknowledging limitations of scope, a more comprehensive analysis might include factors like industry-specific challenges, market conditions beyond the general economic climate, and the company's overall business strategy.

Sustainable Development Goals

Decent Work and Economic Growth Positive

Direct Relevance

The research highlights the importance of entrepreneurial characteristics, such as resilience and support networks, in ensuring business survival during economic crises. By incorporating these factors into lending decisions, the model can improve the allocation of resources to viable businesses, thus promoting economic growth and reducing unemployment.

Mar 21, 10:12

French and Belgian Cities Combat Food Waste with Free Chickens

French and Belgian cities have been successfully distributing free chickens to residents since 2012, significantly reducing food waste and providing a source of fresh eggs; over 5,282 chickens have been distributed in Colmar alone, resulting in an estimated 273.35 tons of waste reduction, and the program continues to expand.

Mar 21, 01:13

Market Timing Risks and Contrarian Investing Strategies

An article discusses the risks and potential rewards of market timing and contrarian investing, highlighting the significant losses that can occur by missing even a few of the market's best-performing days and advising investors to use objective analysis and avoid emotional decision-making.

Mar 21, 16:11

Asda's Price War Costs Rivals £3.9 Billion

Asda, facing declining sales, slashed prices on 1,500 products, adding to nearly 10,000 price cuts since January, triggering a price war that cost competitors £3.9 billion in market value; however, challenges remain in improving operational efficiency to attract more customers.

Mar 21, 13:14

Salzgitter Doubles Cost Cuts Amidst €348 Million Loss

German steelmaker Salzgitter is doubling its annual cost-cutting target to €500 million by 2028 to offset a €348 million loss in 2023, while continuing its green steel production and exploring opportunities in defense and infrastructure.