The sustainability paradox: Unveiling zombie firms' influence on sustainable development goals through the ADO-TCM framework

The post-2008 and COVID-19 eras have witnessed a global proliferation of ‘zombie’ firms as economically unviable entities sustained by policy distortions and financial misallocations. While scholarly attention has increased, research remains theoretically fragmented and disconnected from sustainability parameters. Our study systematically reviews the literature on zombie firms through the lens of the ‘sustainability paradox,’ underscoring the potential trade-off between short-term macroeconomic stability — often maintained through satisficing survival strategies — and long-term open innovation-driven adaptability, productivity growth, and resource efficiency. By integrating the Antecedents-Decisions-Outcomes (ADO) and Theories-Contexts-Methods (TCM) frameworks, we analyze how government, creditors, and managerial decisions perpetuate zombification, undermining the United Nations’ Sustainable Development Goals (SDGs) - SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation, and Infrastructure). Our findings reveal that zombie firms emerge not only from market failure but also as systemic artefacts of institutional lock-ins, regulatory ambiguity, political entrenchment, and strategic inertia. While some policies provide temporary stability, they inadvertently hinder structural innovation and environmental transition. We identify critical research gaps across antecedents (e.g., bankruptcy resolution lags, ESG adoption), decision ecosystems (e.g., behavioural biases, legal incentives), and outcomes (e.g., innovation suppression, financial exclusion), and propose future research directions that involve dynamic modelling, machine learning, and causal inference. This study contributes to paradox theory by framing zombification as a sustainability tension, not a statistical anomaly. It offers an interdisciplinary agenda that links firm behaviour, regulatory systems, and sustainability trade-offs and provides actionable insights for policymakers and managers to recalibrate support schemes. We call for a paradigmatic shift to retheorize zombie persistence, as systemic inertia impedes SDG attainment.