A unified framework for incorporating decision making into explanations of business failure

The purpose of this paper is to examine how decision-maker attributes unfold to precipitate organisational failure. The analysis brings to light how key attributes such as information-processing capabilities and human capital decay interact to bring about business decline and exit.

The study is based on an integrated review and conceptualisation of the literature.

The study articulates how a set of attributes of decision makers, i.e. human capital obsolescence, powerlessness, meaninglessness and institutional linkages, contributes to organisational failure.

The paper concludes by setting out an array of strategies of learning from others’ failures.

In spite of a growing body of research on organisational failure, scholars have placed overwhelming emphasis on ecological explanations and business failure prediction models. The study moves beyond the ecological explanations to offer a more fine-grained analysis of firm-level factors that precipitate business failure.