For decades, anti-corruption efforts have been built on a familiar premise—that corruption is wrong, illegal, and should be punished. Governments strengthen laws, regulators impose penalties, and companies invest in compliance programmes, ethics training, and internal controls. Yet corruption remains one of the most persistent barriers to economic growth, investment, and development.
But what do we mean by integrity? In corporate governance, integrity is more than honesty or legal compliance; it is a defining characteristic of ethical leadership. It requires acting in good faith, in the best interests of the organisation, managing conflicts of interest responsibly and consistently setting an ethical tone from the top. Stephen Covey captures the idea more simply – honesty is telling the truth; integrity is ensuring that our actions consistently match our words.
In business, integrity is therefore about narrowing the gap between what an organisation says it values and how it behaves when commercial incentives pull in the opposite direction.
Businesses generally do not engage in corruption because they are unaware that it is illegal or unethical. Rather, they often do so because, in certain environments, corruption continues to appear commercially rational. In some jurisdictions, firms might even calculate that the financial benefits of bribery outweigh the risks of detection, prosecution or regulatory penalties. An illicit payment could secure a licence more quickly. A bribe might win a contract that would otherwise go to a competitor. Political connections could provide access to markets or procurement opportunities.
For an individual firm, the immediate commercial gains can appear to outweigh the perceived risks. When firms believe competitors are paying bribes, refusing to participate can feel like a commercial disadvantage.
History shows that corruption can generate substantial short-term rewards for individual firms. South Africans need only recall the commercial beneficiaries of state capture, while internationally, companies like Glencore and BSG Resources have faced major corruption investigations and settlements arising from business practices that, although commercially advantageous in the short term, resulted in high legal, financial and reputational costs.
Corruption, therefore, becomes self-reinforcing. The persistence of corruption cannot be explained simply by weak ethics. Many firms recognise the long-term costs of corruption but continue to participate because the incentives facing individual firms remain misaligned with the collective interests of the market.
Until governance systems, investor expectations and competitive incentives change, the commercial logic that sustains corruption will remain difficult to overcome. As more firms participate, markets become less efficient, investor confidence declines, and the overall costs to the economy ultimately outweigh the temporary gains enjoyed by individual actors.
The challenge is not that firms fail to understand corruption. It is that corruption often creates a collective action problem. Individual firms might recognise that corruption damages the economy, yet conclude that refusing to pay bribes will hand contracts to less scrupulous competitors. In weakly institutionalised environments, corruption can therefore become individually rational while remaining collectively destructive.
Economists Daron Acemoglu, James Robinson and Thierry Verdier describe how kleptocratic systems can use a divide-and-rule strategy to prevent businesses from coordinating against corruption. The threat of selectively punishing firms that resist, even if never exercised, is often enough to discourage collective action. Firms might privately recognise that corruption damages markets while concluding that acting alone would simply hand contracts and opportunities to less scrupulous competitors.
This does not mean integrity cannot become commercially rational. What changes the incentive structure for many internationally exposed firms is access to global capital and value chains. Businesses seeking International Finance Corporation financing, development finance institution support or participation in global value chains increasingly encounter governance and anti-corruption requirements as part of investment due diligence and procurement processes.
The incentives are strong for firms competing in international markets. They are far weaker for businesses operating primarily in captive domestic markets or politically protected sectors, where institutional reform remains essential. In other words, while corruption might secure today’s contract, integrity is increasingly becoming an important determinant of access to international capital, development finance and global value chains.
South Africa’s state capture experience illustrates the point. Corruption delivered short-term gains for politically connected Bosasa and the Gupta business network but imposed enormous costs on the wider economy through weakened procurement, deteriorating infrastructure, electricity shortages, logistics failures and declining investor confidence.
As access to international capital increasingly depends on credible governance, integrity is becoming a commercial requirement rather than simply an ethical aspiration. This is the premise of the Corruption Avoidance for Sustainable Competitive Advantage methodology. Rather than treating anti-corruption as a compliance exercise focused on avoiding sanctions, it positions integrity as a driver of organisational performance, resilience, and long-term value.
The Corruption Avoidance for Sustainable Competitive Advantage methodology is built on a simple proposition. While corruption might generate short-term gains for individual firms, sustainable competitiveness increasingly depends on trusted governance, organisational resilience and access to investment, finance and markets. As the incentives strengthen, integrity becomes not merely an ethical aspiration but an increasingly important commercial capability.
This helps explain why corruption ultimately undermines even the firms that appear to benefit from it. Corruption is more damaging than a tax because it creates uncertainty. Firms cannot know whether contracts will be awarded fairly or political relationships will endure. The uncertainty discourages investment and increases the cost of doing business — and it is not confined to internationally exposed firms: even businesses operating solely in domestic or protected markets face it in the form of unpredictable enforcement, unreliable counterparties and reputational exposure.
Even where firms continue to benefit from corrupt arrangements in the short term, the wider uncertainty weakens market confidence, reduces investment and ultimately undermines the broader economic environment on which long-term business success depends.
The Zondo Commission showed how governance failures weakened Eskom, Transnet and other state institutions, contributing to electricity shortages, logistics failures and declining investor confidence. Its recommendations extended beyond law enforcement to stronger procurement systems, governance and whistleblower protection. The reforms are essential to building a more competitive economy.
South Africa is not unique. Across Africa, corruption is estimated by the African Union to cost economies $148 billion (R2.5 trillion) annually, distorting markets and diverting resources from development. Yet the continent also has immense potential through its young population, critical minerals and the African Continental Free Trade Area. Unlocking the potential depends on governance systems that reduce corruption and build investor confidence.
Integrity is increasingly emerging as an economic asset for firms whose competitiveness depends on trusted governance, access to international finance and participation in global value chains. Strong governance can enhance investor confidence, organisational resilience and long-term competitiveness.
Dr Max Burger-Scheidlin
Dr Max Burger-Scheidlin is the senior director of the International Chamber of Commerce Austria. He is internationally recognised for developing the "Corruption Avoidance for Sustainable Competitive Advantage" methodology, which reframes anti-corruption as a commercial and economic opportunity rather than solely a legal or compliance challenge.
Dr Ruth Kolevsohn is the Executive Director of Governance Programmes at Good Governance Africa, a member of the GGA Group Board and alternate director for the Chair of GGA-SARO. She leads GGA’s continent-wide advocacy and communications efforts to promote the signing and ratification of the treaty establishing the International Anti-Corruption Court (IACCourt), working with governments, civil society, academia, and international partners to advance accountable governance across Africa. She also serves on the Interim Executive Council of the AU Advisory Board against Corruption (AUABC) Non-State Actors Forum and the Africa Subcommittee for the establishment of the IACCourt. With over 30 years’ experience spanning the public, private, academic, and social sectors, Ruth specialises in translating research into action, with a focus on prevention, empowerment, and systemic reform. Her work includes strategic advocacy, stakeholder engagement, social and behavioural change communication, and coalition building across diverse African contexts. She has led multi-award-winning teams and delivered programmes that strengthen public trust, institutional integrity, and citizen participation. Ruth is completing a PhD in Psychology at the University of Pretoria, studying social representations of anti-corruption and holds a Doctor of Business Administration in Executive Leadership from the European Institute of Applied Science and Management (Prague).
