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Does lowering entry cost counter the persistence of zombie firms?

Author

Listed:
  • Nguyen Thi Tuong Anh
  • Doan Quang Hung
  • Nam Hoang Vu
  • Bui Anh Tuan

Abstract

How to deal with zombie firms, which are inefficient but still surviving, is an important question that needs to be addressed by all countries. Using longitudinal data of enterprises and local business environment in a transition economy, this study shows that reducing entry costs to facilitate competition in the market is a key to drive out the persistence of being zombies, which typically characterises a large number of state-owned and foreign invested firms in transition economies. The study further reveals that the strategy to remove persistence of zombie firms by lowering entry costs in the market is effective for enterprises in manufacturing industries, while it is not in non-manufacturing industries.

Suggested Citation

  • Nguyen Thi Tuong Anh & Doan Quang Hung & Nam Hoang Vu & Bui Anh Tuan, 2021. "Does lowering entry cost counter the persistence of zombie firms?," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 27(3), pages 333-354.
    • Handle: RePEc:ids:ijbglo:v:27:y:2021:i:3:p:333-354
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