A Three-Country Comparison of the Business Success versus Failure Prediction Model

Abstract

Why do some businesses succeed and others end up bankrupt? There is great discrepancy in the literature as to which variables do in fact lead to success, thus, there currently is no theory. To move the field in that direction, this study tests the Lussier 15-variable business success versus failure prediction model in Chile with a sample of 234 small businesses-131 failed and 103 successful. Results support the model's validity in Chile. Thus, the model has been tested with significant results in three very different parts of the world; first in United States (North America), then in Croatia (Central Eastern Europe), and now in Chile (South America). The model will reliably predict a group of businesses as failed or successful more accurately than random guessing in all three countries over 96 percent of the time.

Towards a new framework for SMEs success: a literature review

“…Financial support, in means of access to capital and credit schemes, is established as one of the most important obstacles to starting up of new businesses and a cause of slower growth and poor performance in all phases of business development (Alsos et al, 2006;De Maeseneire and Claeys, 2012;Dobbs and Hamilton, 2007;Korunka et al, 2010;Lussier and Halabi, 2010). Alfaro et al (2004) also argue that a lack of well-functioning financial markets hinders export activities.…”

“…The fact that efficient management is crucial in the success of any type of organisation is widely recognised in the business literature (Chawla et al, 1997;Dobbs and Hamilton, 2007;Lussier and Halabi, 2010). Therefore, the management skills of the owner/manager are a critical success factor for SME success.…”

Investigating the Relationship Between Emotional Intelligence and Entrepreneurial Behaviour

“…Moreover, evidences from Kurdistan market, through contacting people, show that many of them withdraw from the market before even completing a single year. Therefore, it is highly important for them to understand and identify factors related to entrepreneurial success (Lussier, & Halabi, 2010). Many researches have investigated the concept entrepreneurial behaviors in relation to the emotional intelligence and other factors around the global.…”

Small Business Internationalization Through Strategic Sourcing

“…The authors suggest that there are three exceptions to their model -firms can internationalize more quickly when they have large resources, when market conditions are calm and allow for more risk-taking, and when the firm's management has global experience from markets with similar conditions (Johnson and Vahlne, 1997). For small businesses that have obtained and applied resources such as the creation of a business plan, a business consultant, and experiential learning (Lussier & Halabi, 2010), it would make sense to go against the Johnson and Vahlne model and internationalize quickly.…”

“…In addition, the development of a detailed business plan is an important criterion, and this plan should be consistently updated as new relevant information emerges. Lastly, the use of professional advisors, including experienced investors such as venture capitalists, can help a business accomplish its goals both in terms of financial capital and operational experience (Lussier & Halabi, 2010).…”