Surviving beyond expiry: a systematic literature review of zombie firms

Abstract

This paper reviews the literature on zombie firms to provide a holistic view by delineating their formation, impact, widespread nature, prevention and policy implications. This paper uses a systematic literature review methodology, in which 76 papers published in journals ranked on the Australian Business Deans Council (ABDC) 2022 list were reviewed. The study period was from 2000 to 2022. Among the main findings, the widespread problems of zombie firms were evident. The authors found that consistent support, either in the form of government grants or a weak financial framework, was responsible for their formation. The suboptimal performance of factors of production, depressed job creation, low innovation and overall negative impact on economic activity are the consequences of zombification. This can be controlled by ensuring better bankruptcy codes, focused on government assistance, technology use and better due diligence by banks. This review serves as a reference point for future researchers as a cohesive and holistic study presenting a full picture of the problem, so that the proposed solutions are robust and tenable. This review is among the initial attempts to comprehensively study published work on zombie firms in terms of analyzing their region-specific nature, with an emphasis on definition, causes, impact and prevention.

Keywords

• zombie firms
• evergreening
• financial assistance
• systematic literature review