This is only a problem for really big corporations (the ones that are too big to fail). But even then, in a dictatorship country the biggest corporations tend to be rife with corruption. This tends to hollow out the middle and make them unfit to compete without a guarantee of monopoly by the state.

It’s also not restricted to corporations. Look at the Russian military. It is a textbook case study of how years of corruption and nepotism can lead to a culture of abject incompetence and equipment decay. They can’t even provide bandages for their conscripts!