Defining and measuring business closure Flashcards
What are the four main ways business closure can be defined? (BLED)
Bankruptcy, Liquidation/ insolvency, Exit, Deregistration
What is the summarised definition of business closure provided by Storey and Greene (2010)?
When a business stops its transacting activities but doesn’t transfer ownership to another business
What are the positives of business closure?
Successful closures (mergers), Signal to other businesses, Entrepreneur learns from experience
What are the consequences of business closure?
Loss of employment, Economic and social consequences to both owner and employees, loss of investment to financial investors
What do Bankruptcy and liquidation/ insolvency have in common?
They are both formal legal procedures where they can no longer pay their debts and have their assets seized by creditors
What is the difference between bankruptcy and liquidation/ insolvency?
Bankruptcy is focus on individuals and/ or businesses. Liquidation is focused on limited companies (incorporated)
What is exit?
Where an individual leaves self employment for either employment or unemployment.
Where a business closes its enterprise.
What is deregistration?
Where a business removes itself from a formal register such as tax.
What is the main difference between failure and exit?
Failure is where the business owner had no other choice but to close the business
What are the 6 ways of measuring business closure?
People who say they've closed People who have left unemployment Enterprises deregistering Businesses deregistering Number of bankruptcies/ liquidations/ insolvencies Number of business bank accounts closed
Which two are obtained through survey data?
People who say they’ve closed, people who have left unemployment
positives and negatives of number of bankruptcies/liquidations/insolvencies as a measure of business closure?
+ Internationally comparative
- Doesn’t indicate why the business has closed in the first place
positives and negatives of number of No. of enterprise de-registrations as a measure of business closure?
+ Official identification of business closure
- Incomparable internationally (different thresholds)
positives and negatives of number of No. of business de-registrations as a measure of business closure?
+ Easily obtainable data
- Doesn’t include small start ups (they’re not incorporated)
positives and negatives of number of No. of bank account closes as a measure of business closure?
+ Includes all businesses and start ups
- Businesses can close their business account and use personal one instead whilst still remaining open
