Poor managerial competences: three typical failure patterns for small firms

After an in-depth review of the scientific literature dedicated to (small) business failure causes
(Crutzen and Van Caillie, 2008), it comes out that mismanagement is, by far, the failure cause which
is the most commonly evoked by previous researchers (Argenti, 1976; Wichman, 1983; Newton,
1985; O'Neill and Duker, 1986; Thornhill and Amit, 2003). Nevertheless, the concept of
« mismanagement » is relatively vague and large (Bruno et al., 1987; Sheldon, 1994). It is thus now
necessary to clarify it if one wants to better understand the causes of small business failure and, in
fine, to better prevent this phenomenon (Argenti, 1976). In particular, it is essential to distinguish
between the main categories of managerial problems small businesses can be faced to in order to be
able to better anticipate their failure (thanks to adequate trainings, for example) and in order to
propose adequate remedies to specific managerial problems small distressed firms are confronted
to.
In this context, the current article identifies, on the basis of two complementary statistical analyses,
three specific patterns for badly-managed firms, amongst a sample of 91 small distressed firms.