The business failure process : towards an integrative model of the literature

Considering the fragmented literature dedicated to business failure prevention and considering the need for a unifying conceptual framework on how and why companies fail, the aim of this paper is to gather the findings from the multiple studies focused on the identification of failure factors and of failure paths, in order to propose a unifying model showing the chronological combination of the diverse factors leading a company to bankruptcy. An in-depth analysis of the existing literature and of its limitations leads us to the elaboration of an original integrative model on how and why companies fail. It is founded on a resource-based view of the firm (Wernerfelt, 1984) and it represents the different general phases through which a company goes by in its evolution towards its juridical failure. Moreover it emphasizes the fact that all companies do not necessarily follow the same paths before they disappear (Argenti, 1976).