The relationship between business integrity and commercial success

This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.

Query

Please provide an overview of the relationship between business integrity and commercial success.

Summary

A sizeable body of evidence has provided clear indication that corruption undermines both market and firm performance. While some studies suggest bribery can bring short-term gains to certain firms, the evidence is clear that the long-term costs generally outweigh the benefits. Research on corporate integrity also indicates a positive relationship between anti-corruption compliance and corporate social responsibility (CSR) on one hand and business success on the other. Studies further indicate that small and medium-sized enterprises (SMEs), despite facing disproportionate burdens in adopting integrity measures, often benefit from such practices.

Main points

• Compared to country-level analyses, firm-level research examining the effects of corruption is limited, partly as a result of the more limited availability of data on firm-level corruption.
• Although some firms may gain short-term advantages from bribery (particularly in captured economies characterised by crony capitalism), evidence shows that corruption leads to higher costs, reduced productivity and slower growth over time.
• Moreover, while some of the more indirect costs may not be captured on a company’s account books, they can have severe implications on the firm’s performance. For example, even acts of corporate corruption undetected by regulators can have a deleterious effect on staff morale, which in turn often leads to marked slumps in productivity.
• Once detected, corruption can lead to legal sanctions, loss of shareholder and investor confidence, reduced access to capital, reputational damage and diminished staff morale.
• Stronger business integrity is associated with fewer incidents of corruption, lower compliance risks and lower operational costs. Integrity also can drive innovation and operational efficiency.
• An increasing body of literature finds that business integrity is positively associated with firms’ profitability, customer reputation and corporate environmental performance. Studies also indicate that companies operating with integrity are more likely to attract business and retain a motivated workforce.
• While resource constraints can make anti-corruption business integrity or compliance more burdensome for SMEs than larger firms, evidence suggests that anti-corruption practices can strengthen SMEs’ contract opportunities, profitability and sustainable growth.
• Business integrity is positively associated with commercial success, yet its benefits are not always effectively communicated to intended audiences. Research suggests that while social media can promote CSR and anti-corruption efforts, its effectiveness depends on the content and timing. Studies highlight the need for tailored stakeholder engagement strategies.

Contents

1. Background
2. The impact of corruption on business at the aggregate level
3. The impact of corruption on firm performance
   1. Before detection
   2. After detection
4. The business case for integrity
   1. Does business integrity save companies money?
   2. Does business intgrity make companies money?
   3. Non-financial benefits of business integrity?

5. References

Caveat

This paper is an update to the 2018 Helpdesk Answer on the same topic.

Authors

Matthew Jenkins and Yusuke Ishikawa

Reviewer

Guillaume Nicaise

Date

18/08/2025

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