A Conceptual Model and Hypothesis of Firm Bankruptcy: A Romanian Case Study

Abstract

This paper employs a unique approach in studying firm bankruptcy and presents a conceptual framework that identifies several variables that may predict a firm’s bankruptcy. Past research has identified entrepreneurs’ personality and behaviour (selfefficacy, locus of control and risk-taking), business management knowledge, past entrepreneurial experience, firm undercapitalization, financial literacy and entrepreneurial education, existing entrepreneurial culture, and institutional support as key factors. To differentiate Romanian entrepreneurs from others, this study proposes nine hypotheses for testing. Quantitative methodology is chosen to best serve this study’s objective of making bankrupt entrepreneurs heard and to bring in economic and legal changes that will decrease bankruptcy in Romania.

Keywords

• entrepreneurs’ personality
• business knowledge
• entrepreneurial culture
• institutional support