The corporate image of an organization represents the perceptions of the public about a given institution. The image of a company keeps on changing with the circumstances facing the company, and some of these changes have a financial implication on the companies. For this reason, companies strive to maintain the good image so as to attract investors and other business players for increased financial performance. Often, some business organizations engage in unethical practices such corruption to gain influence in the corporate circles. In this paper, corporate image and its relationship with corporate corruption will be explored.
The brand of the company needs to be communicated throughout the company and to the public using all the forms of contacts. They may include calls made via phones, and business cards handed out, or even the websites created. Companies have an obligation to convince their customers that it has an understanding of their needs through excellent customer service. In the creation of a corporate image, the companies also prepare financial reports not only in compliance with the relevant regulations but also convince investors, potential investors and other business partners about the financial positions of the companies (Dumke, 2007). Also, a company may engage in activities of corporate social responsibility to improve its image before shareholders, the public, customers, employees, and the government (Fryzel, 2015)
Corruption is one of the major problems that lead to deep and enduring problems in many institutions. Many firms, for instance, are awarded contracts to parties that do not meet the requirements of the tendering processes and procedures in exchange for favors. Corruption may include embezzlement, graft, extortion, bribery and other informal considerations .Although the practice constitutes an economic crime, many firms extensively dabble in corruption in their daily business engagements (Eicher, 2012)
Globalization and increased competitive environment predispose business institutions to corrupt practices. Since players have tremendously improved various aspects business, many companies are looking for new ways of sustaining their competitive positions in the market. These companies involve themselves in corruption as they see it translating into a bigger business, huge profits as well as more jobs for their workers. They maintain their fortunes in multi-million dollar contracts that highly depend on a strong desire for the foreign officials to have a share of the money that passes through their hands. Some institutions also give bribes to obtain favors or for the fear of retaliation for the failure of getting to contribute to corrupt government agencies (Obidairo, 2013).Such scenario promotes a cycle of corruption in both the private and public sectors
Poor management practices also encourage business enterprises to engage in unethical behaviors such as corruption. Many firms consider the strong financial reports as an essential element in bolstering the performance of the share prices of the listed companies. The approach is anchored on short-term considerations that are intended to boost profits. These types of policies encourage the pursuit of high-risk investments that often obtained through extensive lobbying and instances of bribery and favoritism (Obidairo, 2013).The long-term effect of these strategies is that the long-term value of the firm is given little consideration and thereby posing dangers to the goal of maximization of the shareholders funds.
Corrupt business practices lead to the diminishing of the companys business climate as the trust the public has put at a higher risk. When resources, for instance, are used in a manner that is inappropriate, the efficiency of the business will suffer. As a result, the organization may fail to achieve its mandate because resources are diverted to corrupt dealings that offer quick profits with the intention attracting the attention of the public and shareholders at the expense of long-term goals. The irony in these practices is that any leakage of information to the public about the corrupt dealings of the company would lead to extensive damage of the reputation of the business (Obidairo, 2013) In effect, many investors would pull out, and the business would lose business opportunities.
Corruption promotes constitutes an economic crime and therefore erodes democratic principles. The malpractice leads to wastages of resources that would have been used to improve the livelihoods of shareholders and society as a whole. In the same breadth, engaging in corrupt business is synonymous tax evasion practices, and this denies governments the revenues that are essential for offering services and delivering public goods(Eicher, 2012).Similarly, when business institutions collapse as a result of corruption scandals, citizens lose employment, resulting in more economic problems for countries(Obidairo, 2013)
Corporate image of any organization is critical in the determination of its credibility. There is the need for companies to come up with ways of ensuring their customers have trust in the institutions as well as their product by engaging in ethical business practices and participating in corporate social responsibility activities. In doing so, however, some and companies have been involved in different unethical issues such as corruption to solidify their positive perceptions in the public spheres. The reverse effect of these practices is a negative public image and damage to their reputations, leading to substantial financial losses.
Dumke, R. (2007). Corporate reputation - why does it matter?: How communication experts handle corporate reputation management in Europe. Saarbrucken: VDM, Muller.
Eicher, S. (2012). Corruption in international business: The challenge of cultural and legal diversity. Farnham, England: Gower.
Fryzel, B. (2015). The true value of CSR: Corporate identity and stakeholder perceptions.
Obidairo, S. (2013). Transnational corruption and corporations: Regulating bribery through corporate liability. Farnham, Surrey: Ashgate Publishing Company.
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