Purpose: This study examines whether SMEs located in municipalities that favor proximity to stakeholders are more likely to survive financial distress through debt restructuring. Drawing on the resource-based view of the firm, we hypothesize that proximity, as a form of social capital, is a crucial asset in times of crisis. Design/methodology/approach: This study employs a multivariate logistic regres- sion to analyze a sample of Italian private SMEs that underwent formal debt rene- gotiation between 2017 and 2019.
Findings: The results of our analyses show that proximity significantly aids in re- solving financial distress through debt restructuring.
Research limitations/implications: This study is limited to a single country. Future research could extend the analysis to multiple countries to explore the influence of different legal frameworks on the results.
Practical implications: This study provides valuable insights for distressed compa- nies, highlighting the need to invest in stakeholder relationships to reduce the risk of failure.
Originality/value: This study is the first to examine the proximity dimension of so- cial capital in the context of financial distress, highlighting the importance of stake- holder support as a vital intangible resource for recovery.
Keywords: proximity, financial distress, debt restructuring, social capital
