Resilience in Vulnerable Small and New Social Enterprises

Abstract

The use of financial ratios in predicting financial vulnerability has a large body of literature, but few studies address resilience and the recovery from financial distress. Further, no vulnerability studies specifically address the needs of small and young social enterprises. This study uses over twenty years of panel data to predict which factors signal the future recovery of small and young social enterprises. There is mixed support for hypotheses found in the literature, and though additional equity and revenue diversification is shown to be beneficial, increased surplus ratios carry implications which vary between financial stressors. Even in a sample of small organizations, we find evidence for the liability of smallness. Implications for practitioners, researchers, and policymakers are discussed.