Communicating with SMEs on anti-corruption

October 23, 2018

This article was written by Brook Horowitz, CEO of IBLF Global, and Jan Dauman, Chairman of IBLF Global, published on the Public Administration Review.

SMEs are particularly vulnerable to bribery and corruption, despite available advice 

SMEs are often said to be the engine of growth; but they are highly vulnerable in the face of bribery and other corrupt practices. Corruption acts as a serious constraint to their growth and to social and economic development.

They do not have the purchasing or selling strength of large companies to “just say no”; they lack the financial and human resources for legal defence, internal audits or compliance; and they do not have the basic governance structures that would allow them to control their own employees and representatives.

The challenges are there not only for SMEs in developing countries; but also apply to SMEs from developed countries exporting to, or investing in, developing or emerging markets. A global multinational can easily decide not to pursue business in a country it considers too risky; but smaller, specialised companies, with their commercial strategy focused on specific markets, may not have this choice.

There is no shortage of online advice for SMEs. A recent unpublished study came up with nine pages of links to various anti-corruption toolkits and other information and educational resources produced by NGOs, governments, international organisations, multilateral banks and private companies. And that was only on the English-speaking web. Not all these sources of information were directed specifically at SMEs; but many could have helped them.

All this activity suggests that the expert community understands the importance of supporting SMEs in dealing with corruption. At the same time, there is no evidence (at least that is publicly available) to suggest how many SMEs are reading, downloading and using this material. There is no data to show how the online tools and training change business practices, transform management methods, or reduce exposure to corruption. In short, the effectiveness and impact of this activity is quite unknown, both to most of the intended beneficiaries and, we suspect, to the suppliers of the information.

IBLF Global’s anti-corruption toolkit for SMEs in the UK and Vietnam

Our experience in providing anti-corruption support to SMEs provides some valuable insights into these issues. IBLF Global’s interest in this subject began in 2015, when we produced, at the request of the G20, an anti-corruption toolkit for SMEs. This was designed for local adaptation, and versions have since appeared in several languages. Over the last year, we have been working on two separate UK Prosperity Fund projects designed to support SMEs, one in a developing country, Vietnam, the other in the UK. In Vietnam, we have developed a website and training programme for SMEs on how to resist corruption. In the UK, we have completed phase 1 of a new Business Integrity Initiative, which involves adding corruption risk advice to a government website aimed at British exporters.

In both cases we received feedback from the users of the website in the UK and from the training participants in Vietnam. This took the form of a number of online surveys, feedback forms following the training, user interviews, and one-to-one conversations. We learnt a number of important points about how to raise SMEs’ interest in corruption risk and how to communicate with them about it:

• Experience of corruption: We found that, in both Vietnam and the UK, the SMEs were quite aware of the risks and costs of corruption and bribery and were willing to talk about them. Most British companies we spoke to had never encountered it directly in the UK, but had come across it abroad. For the Vietnamese companies, it is widespread practice which they encountered frequently. In both countries, SMEs felt corruption was a constraint to business, adding cost and complexity, and would have preferred to do business cleanly. They seemed resigned to the idea that it was not something that would disappear in the foreseeable future.

• Awareness of the law: SMEs in both countries knew that bribery was illegal, but had little knowledge of the specifics of the law. For example, British companies seemed to have a poor understanding of key concepts of the UK Bribery Act, such as “adequate procedures” and the extraterritorial reach of the law. There was a feeling that smaller companies were unlikely to be prosecuted. In Vietnam, the companies felt that there was little or no risk of prosecution because the law was so poorly enforced.

• Support: Despite the large number of resources on the English-language internet, the UK companies had little knowledge of where to obtain more information about how to avoid corruption, set up a compliance system, or report a crime. In Vietnam, that was even more the case. In neither country is there an obvious place for companies to turn for advice, either from the government or private sources.

• Interest: The interest in learning more about dealing with corruption seemed generally quite low in both countries. In the UK, corruption was seen as low risk; in Vietnam, it was perceived as an inalienable and inevitable part of the business culture. In both countries, it was neither going to keep company executives awake at night; nor was it the first thing they thought about in the morning. Laws, such as anti-bribery legislation. were only of interest if they were seen to have a direct impact on their business. In the training, they were looking for intensely practical solutions and a positive mindset which would help them increase their productivity and profitability.

• Communication: In both countries, SMEs are a very disparate group without centralised channels of communication. In the UK, most SMEs were receiving information directly online through websites, social media and email. In Vietnam, they received information from a variety of channels via the internet. SME business associations and industry groups in both countries were seen to be generally passive.

How to communicate better with SMEs about corruption

In conclusion, our experience in Vietnam and the UK suggests a number of ideas on how to communicate with SMEs and support them.

SMEs in both a developed country like the UK, and a developing country like Vietnam can definitely benefit from a central resource about how to deal with corruption.

It should primarily be an online resource, but designed for easy adaption into hard copy in countries where internet is less widely used or available. Our experience clearly emphasises that the effectiveness of communications is much greater, when written materials are supplemented with face-to-face training/mentoring for small groups of SMEs, especially when the trainers/mentors are themselves from business and can discuss the issues in practical business language.

The online resource should first and foremost provide signposting for companies about where to get further information about the law, enforcement, case studies of prosecutions and of how companies have successfully resisted corruption.

It should include downloadable training modules for use in companies or by individual employees which could be part of a broader set of management training materials. It would also be a central point for publicising seminars and workshops throughout the country.

The site could include an online Help Desk which companies could use to receive specific answers to their questions.

To maximise effectiveness, the site and materials on it, should be written in the simplest, clearest language, avoiding any kind of business or legal jargon. It should “package” the anti-corruption argument as an attractive and positive message about productivity and profitability, rather than solely compliance with the law or a moral ethical imperative. It would make sense to include anti-corruption training and advice as part of a broader range of management training rather than a stand-alone topic.