As an intern you were able to learn some of the business processes that your employer uses. In addition your employer has had an opportunity to evaluate you as an employee. If you are a great employee this can work in your favor. If you are an average or below average employee this can work against you. The reason for this is it is pretty rare for an employee to get better work habits over time, but unfortunately common that they get worse. For this I am talking about those things that managers look at besides you skills at the job. Getting in on time, working hard, willing to go beyond the call when needed, getting along with your peers, not taking long lunches or breaks, etc. The job skills can be taught, but those qualities are harder to learn, or develop in an employee only willing to do the minimum required.
If you have the makings of a great employee then you can command a higher salary. But to do so you have to be willing to say no to their first offer. This carries with it a risk that the company is not going to come back with a better offer. Sometimes you will be able to get that original offer but other times the company may just decline. Especially if they feel the offer was fair or generous in the first place.
The company knows the date that it needs to know if they are continuing on by. Many times they will wait until the last moment to make a better offer. This can be nerve racking and affect your work. So if you do turn them down the best thing you can do is to focus on making yourself look like the perfect model employee. This is more likely to encourage your manager to fight harder to keep you on.
As an outside hire you do not have the ability to show what you can do. As a result companies are willing to negotiate to keep the best interns after the internship is complete. Because your risk is so much lower compared to the unknown from the outside.
