Identifying Reasons for Small and Medium-Sized Firm Closures in North Carolina: An Exploratory Framework Leveraging Administrative Data

Business failure is a natural part of the development lifecycle. In a healthy economy, the formations and dissolutions of small firms drive innovation through the process of creative destruction. However, an excessive level of involuntary closures lowers both economic mobility and community social capital. We partnered with the North Carolina Secretary of State’s Office (NCSOS) to identify factors that might be driving involuntary firm closures using administrative data. This analysis outlines our recommendation to use an exploratory open-ended survey instrument which targets dissolved firm owners. We believe the 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. Our recommended analysis lens complements phenomenological qualitative inquiry by connecting the respondent’s open-ended answers to theories in the business failure literature.