Dead or Alive: Why do Belgian Social Purpose Companies Go Bankrupt?

How and why do Belgian social purpose companies (SPCs) thrive or go bankrupt? Because they operate with both a financial and social bottom line, factors influencing SPCs’ survival may be meaningfully different than for their non-profit or business counterparts. Drawing on prior research on organisational predictors of bankruptcy, this paper models the degree to which financial, environmental and institutional conditions drive SPCs’ financial collapse. Cox survival regression analysis is applied to panel data compiled from a decade of observations yielding 2,103 unique observations of 526 SPCs, which allow us to investigate the conditions preceding SPC failure. The results indicate that poor financial situation, potential agency problems, older age, smaller size, a hostile policy environment, a credit crunch period and a specific industry affiliation all significantly increase the probability of bankruptcy in SPCs. These findings suggest that scholars and practitioners must look beyond financial determinants to understand the drivers of bankruptcy among SPCs.