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Identifying Reasons for Small & Medium-Sized Firm Closures in North Carolina

An Exploratory Framework Leveraging Administrative Data





ABSTRACT

Business failure is a natural part of the development lifecycle and critical to the maintenance of a healthy economy. The formations and dissolutions of small firms cultivate innovation through the process of creative destruction. However, an excessive level of involuntary firm dissolutions lowers both economic mobility and community social capital. We propose a method to isolate factors behind involuntary closures utilizing administrative data provided by the North Carolina Secretary of State’s Office (NCSOS). The cornerstone of our recommended approach is an exploratory open-ended survey instrument which targets dissolved firm owners. We believe this methodology is indicated due to the inherent challenges of getting survey data from this population. With a relatively small number of responses, an open-ended survey would allow for a hybrid-thematic analysis framework which combines a data-driven inductive approach with a deductive theoretical (a priori) template of codes. While our recommendations are only a starting point, we believe they would aid the NCSOS in crafting strategies to improve the resiliency of North Carolina’s small business ecosystem.

WHY THIS MATTERS

Like many areas of public policy, institutions that support community economic development are often confronted with making decisions based on limited data. CSBDF often works with public and non-profit partners to leverage research in environments with enduring capacity and resource constraints. Our survey test highlights the difficulty of collecting data on this topic and the need for additional exploratory research. By identifying clusters of factors that may contribute to involuntary firm closures, NCSOS and other state agencies can craft more effective strategies to improve the resiliency of North Carolina’s small business ecosystem.

GET THE DATA

We’re committed to sharing our data so that it can be replicated by other researchers. The anonymized data used for this publication can be accessed at CSBDF’s dataverse.


DOWNLOAD THE BRIEF AND REPORT:

Brief-Firm-Closure-Factors.pdf

Involuntary Firm Closures Brief
.pdf
Download PDF • 167KB

Report-Firm-Closure-Factors.pdf

Involuntary Firm Closures Report
.pdf
Download PDF • 1.23MB

SUGGESTED CITATIONS:

McCall, Jamie R., Prochaska, Natalie, & James R. Onorevole. 2023. “Identifying Reasons for Small & Medium-Sized Firm Closures in North Carolina: An Exploratory Framework Leveraging Administrative Data.” Raleigh, NC: Carolina Small Business Development Fund. doi: 10.46712/firm.closure.reasons.

McCall, Jamie R., Prochaska, Natalie K., & James R. Onorevole. 2023. “Replication Data

for: Identifying Reasons for Small & Medium-Sized Firm Closures in North Carolina: An Exploratory Framework Leveraging Administrative Data.” North Carolina Office of the Secretary of State. Carolina Small Business Development Fund Replication Dataverse. doi: 10.7910/DVN/N3RPNR.

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