Corrupt and dishonest firms grow faster, but are less profitable, and when they’re caught in the act, the reputational damage costs far more than the fines.
White-collar crime doesn’t pay, write Paul Healy and George Serafeim for Harvard Business Review. Not only do dishonest firms end up paying huge fines, but the cost of the reputational damage inflicted is even higher. In contrast, the more employees, customers, regulators and the wider community respect your firm for its integrity, the more profitable it becomes and the more likely it is to survive and thrive in the long term.
In the fight against corruption and scandal, effective leadership is what matters most. If you want to instill a genuine sense of honesty and fair play into your company, it has to come from the top.