Corruption is one of the worst enemies of business because it can result in far-reaching consequences, including total closure of the company. The vice can be perpetuated by an individual or a clique of employees within a business organization. Corruption in business involves misappropriation of funds, bribery, misuse of office by company officials and dishonesty in financial matters. Its magnitude notwithstanding, corruption can hurt the image of the business and jeopardize its profitability.

Financial Losses

Corruption often results in loss of funds through embezzlement and graft. Resources that could be useful in implementing business strategies are derailed or used unproductively. The practice may lead to loss of customers who lose faith in the organization and prefer rival products, leading to losses. Besides, internal or external corruption may force a company to inflate its prices so as to recover lost resources. Competing firms can seize this opportunity to outdo the affected firm, leading to a significant decline in market share for the affected organization. The firm can also accrue losses trying to reassure its customers, partners and the general public, or dealing with sanctions and lawsuits resulting from its corruption activities.

Discouragement of Shareholders and Investors

Reports of corruption in a firm can cause shareholders and investors to lose trust and confidence in the business. Perpetuation of fraud boosts the entrepreneurs’ risk of accruing losses through a decline in sales and misuse of scarce resources among others. Corruption, either internal or external, can discourage potential innovators and entrepreneurs from investing in business opportunities for fear of failure.

Damaged Business Image

Corruption within a firm can dent the image of the business organization concerned. As customers and the general public get a negative picture of the company, they may lose trust in the company and its products. This may result in loss of clients and reputable business partners. It can take time for a business organization to rebuild its reputation and win people’s trust again, if ever.

Business Inefficiency

Because corruption entails improper use of the available resources, it can jeopardize the efficiency of a business organization. Resources that would be used in implementing important business operations are instead employed in unrelated or unproductive functions. Bribery in the process of awarding tenders and contracts may result in enlistment of incompetent contractors. In the process, business efficiency and productivity suffer. Inefficiency can also result from employees who are demoralized -- due to corruption in the business. Besides, fraud in the recruitment process may lead to hiring of incompetent employees who are unproductive in the firm.