ABSTRACT
The main purpose of this article is to study the influence of innovation, strategic repositioning, and firm-related characteristics on the outcome of reorganization within formal proceedings in Austrian small and medium-sized enterprises (SMEs). Although the bankruptcy and failure of SMEs worldwide are major topics in the academic crisis and turnaround literature, the path to sustainable reorganization has been largely neglected. After successfully overcoming the causes of the crisis, a sustainable reorganized firm shows sufficient creditworthiness in relation to the industry average, which is conferred by outside actors (e.g., credit protection associations). A total of 459 bankrupt firms located in Upper Austria were included, which comprises a complete survey of all insolvencies opened in 2012. This study aims to identify the factors that influence economically sustainable reorganization. The most important finding is that only a very small proportion of the analyzed companies (SMEs with a high proportion of micro-enterprises) achieve long-term reorganization, and even fewer achieve sustainable reorganization. The results show that neither innovation nor strategic repositioning has a significant influence on sustainable reorganization or firm-related characteristics. The results illustrate the central challenges of sustainable reorganization with a creditor-friendly bankruptcy law. These findings can guide future scientific studies and the further development of reorganization options for bankrupt SMEs.
Keywords
Reorganization, bankruptcy, SMEs