The impact on internal management is an increasingly important issue as firms turn to capital markets for financing and exposure. According to the environment in which corruption takes place, firms can face considerable risks. If public opinion condemns firms that engage in corruption practices, these companies run the risk of tarnishing their reputations. This can be especially important for firms that are listed in financial markets, where the mere perception of corruption can be devastating. Finally, corruption has negative systemic effects that have an impact on all firms.
Corruption is a main factor in the collapse of the Indonesian economy.
Simply put, corruption weakens the ability of businesses to compete in the international marketplace. Self-regulation vs. changing the environment To rid the marketplace of corruption, two modes of action are possible. The second mode is to engage in a dialogue with the government to work together in changing the environment, its structures, and defining new rules of the game. This is possible only if there is very strong coordination among all firms. Self-regulation tends to be more viable for multinationals than for local firms because an international company has a negotiating advantage that few local companies enjoy.