New Chance Policy as a way of preventing unintentional economic failures of small firms in Poland

Currently, Polish companies operate in a rapidly changing environment, and the prevailing feature of the economy is uncertainty and volatility. Rapid technological, economic and social changes are the main source of uncertainty for companies with a high risk of crisis. High uncertainty for small businesses exposes companies to high risk of failure, particularly new ones. According to domestic and foreign statistics, the risk of failure in business is high during the first five years of operation.

The company's policy and resources are associated with the entrepreneur (motivation, skills, abilities, character traits, etc.) and with characteristics of the enterprise (period of its development, sector, size, etc.). They are, along with the environment, predictive of the firm's entry onto the trajectory of economic failure.

Analyzing small business economic failures, one can conclude that action is needed to identify causes of deterioration in their condition (including root causes), as well as symptoms and manifestations of business crisis.  The entrepreneur plays an important role in this respect as both the main initiator in the creation of the company and the main person responsible for causing economic failure. The entrepreneur often participates in events leading to deterioration and eventual economic failure. The literature provides recommendations to prevent unintended economic failures of small firms, directly related to the entrepreneur’s behavior.

The study aim is to determine what methods and techniques can be used to prevent unintentional small business failure. Moreover, the question of whether government programs in Poland help companies in crisis prevent business failure is addressed.

The problem has been studied by analyzing the literature as well as currently existing government programs pursuing a policy supporting entrepreneurship. These studies confirmed that due to information asymmetry, entrepreneurs often do not know where to expect threats, so they are always exposed to failure risk. A strategic management approach should also include various instruments of early warning against crisis.

In Poland, based on a recommendation of the Ministry of Development, the New Chance Policy (NCP) program was created, focused on prevention of bankruptcies, reducing the risk of early liquidation, efficient liquidation of companies, and support for relaunching business activities.

The policy includes a number of legislative and economic measures to be implemented by 2020. The measures cover preventing bankruptcies, better reaction to problematic situations, facilitating access to finance for companies in distress, improving restructuring procedures, discharging of debts, and relaunching business activities.