Title: Does lowering entry cost counter the persistence of zombie firms?

Authors: Nguyen Thi Tuong Anh; Doan Quang Hung; Nam Hoang Vu; Bui Anh Tuan

Addresses: Foreign Trade University, No. 91, Chua Lang Street, Dong Da District, Hanoi, Vietnam ' Foreign Trade University, No. 91, Chua Lang Street, Dong Da District, Hanoi, Vietnam; Department of Business and Management, LUISS University, Viale Romania, 3200197, Rome RM, Italy ' Foreign Trade University, No. 91, Chua Lang Street, Dong Da District, Hanoi, Vietnam ' Foreign Trade University, No. 91, Chua Lang Street, Dong Da District, Hanoi, Vietnam

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.

Keywords: zombie firms; persistence; entry costs; ownership; Vietnam.

DOI: 10.1504/IJBG.2021.113273

International Journal of Business and Globalisation, 2021 Vol.27 No.3, pp.333 - 354

Received: 11 Jul 2018
Accepted: 12 Sep 2018

Published online: 15 Feb 2021 *

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