Zombie business strategies: The case of Ukraine


Objective: The objective of the article is to study zombie business strategies in Ukrainian practice and present the influence of traditional and manipulative tools on business activity in conditions of weak institutional environment.

Research Design & Methods: We apply linear and logistic regression to estimate the impact of traditional and manipulative tools on the investment possibilities by using data from a sample of small enterprises in Ukraine in 2015-2018. The results of the logistic regression were used to present Nash equilibrium in the payoff matrix to explain the coexistence of traditional and manipulative tools in doing business through the prism of interests of the society as a whole.

Findings: Evidence revealed that the Ukrainian market creates a special type of zombie business resulting from ineffective government policy and unfavourable institutional environment. Moreover, in conditions of weak stock market, this practice could be used not only in Ukraine but also expanded to countries with similar problems. The main problem is the fact that – in the case of searching for the desired level of profitability – Nash equilibrium on the Ukrainian market combines manipulative and traditional tools.

Implications & Recommendations: Considering the business environment that characterized by unprofitability, the equilibrium between adherents of traditional and manipulative mechanisms is reached on the market where the latter prevail. This situation becomes a serious problem for reforms, as fight against manipulative practices by weak market institutions happens almost outside real business. The problem explains why the government and small business practically coexist by interacting only partially without opposition and counteraction. In the case of searching for the desired level of profitability (if the market is in equilibrium), a reformation or transformation of the system will be accompanied by obvious resistance. Our study informs about the risks and economic effects of zombie firms. We recommend the creation of a favourable institutional environment through effective public policies.

Contribution & Value Added: We emphasize the undeniable fact that small business is officially completely unprofitable in Ukraine. The article helps to understand the essence of zombie business. It is one of the first attempts to develop a comprehensive analysis of zombie business by a wide range of manipulative tools of financial statements that apply game theory models.


zombie business; strategy; institutions; Nash equilibrium; Ukraine

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Published : 2021-03-31

PardalP., HurnyakI., & KordonskaA. (2021). Zombie business strategies: The case of Ukraine. Entrepreneurial Business and Economics Review, 9(1), 47-59. https://doi.org/10.15678/EBER.2021.090103

Pedro Pardal 
School of Business Administration, Polytechnic Institute of Setubal  Portugal

Department: Department of Accounting and Finance
Category: Professor Adjunto

2015 - PhD in Accounting (ISCTE Business School: Lisboa, PT)

My URLs:



Ihor Hurnyak 
Faculty of International Relations, Ivan Franko National University of Lviv  Ukraine

PhD, associate professor at the Department of the International Economic Analysis and Finance, 



Author of the 40 scientific articles, included 3 published in journals included in the Scopus Citation Database.

In September 2019 conducted lectures "Enterprise Economics" at the 5 Universities Summer School of Finance in Białystok (Poland)

1999 - 2007 - work in the Lviv Chamber of Commerce and Industry

conducting subjects: "Audit", "Accounting and analysis of foreign economic activity",  "Financial Analysis" and "International Accounting Standards" for students at the Faculty of Unternational Relations, Ivan Franko National University of Lviv

Other IDs:


Aleksandra Kordonska  alexandra.kordonska@gmail.com
Institute of Political Science, University of Warmia and Mazury in Olsztyn  Poland

PhD in economics from 2016;

the author of the 48 scientific articles (included published in journals included in the Scopus Citation Database).

conducting lectures and seminars in subjects: “Economics”, “International Economic Relations”, "International Finance", "Scandinavian states in foreign economic relations"; "Foreign policy of the Scandinavian states"

2012-2014 - Master Program at the Faculty of Economics (field of study: Accounting and Audit)

Master thesis: Accounting, auditing and analysis of a trading company’s financial statement (based on materials and data “Fucks Oil Ukraine”)

My URLs:

Academia.edu: https://uwm-pl.academia.edu/aleksandrakordonska

ResearcherID: N-3231-2018
Scopus Author ID: 57202916411

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