Ethical Business Environment Vital For SMEs

The impact of bribery which has become a global concern for many developing nations all over the world. In conjunction with International Anti-Corruption Day, ACCA (the Association of Chartered Certified Accountants) releases a report on ‘Combating bribery in the SME sector’ to raise awareness and advocate for rightful and ethical practices in business.

The report is compiled from various countries and regions which forms part of ACCA’s global strategy covering a multitude of challenges faced by small- and medium-sized enterprises (SMEs) within a corrupted business landscape.

Today, SMEs account for 99 percent of registered businesses around the world and although the impact of bribery and corruption in this sector can be significant, it continues to receive relatively little attention globally.

The World Bank estimates that businesses and individuals worldwide pay over USD3.6 trillion in bribes every year. In 2017, the Transparency International Survey conducted on 160,000 respondents reveals that 1 in 4 participants had paid bribes for public services over the last 12 months.

According to Edward Ling, Country Head of ACCA Malaysia, “Awareness on corruption and anti-bribery efforts can help inform parties such as investors, stakeholders and consumers of their shared responsibility to uphold ethical behaviour in the management of their business practices.”

“In our professional capacity, reports like these serve to educate the public and future generations of accountants on the importance of fulfilling our responsibilities with due diligence and integrity,” Ling says.

Impact of Bribery on Industry & Economy

The survey-based report found that 64 percent see bribery and corruption as having a negative effect on the business environment. As many SMEs already struggle with cash flow, bribery is an additional financial and ethical burden that impedes its operations, growth and survival.

In addition, the potential harm that arises from bribery and corruption in the SME sector has a noticeable impact in other areas as well, which includes, but are not limited to:

  • Erosion of trust when funds are misused
  • Compromised safety when bribes are paid to overlook poor quality, flaws and weaknesses in products, services and infrastructure
  • Poor financial performance or insolvency as funds intended for product development, marketing, training, infrastructure, maintenance and investments are diverted
  • Stunted business growth, from SMEs being unable to obtain necessary licenses and permits needed to conduct its business, and disruption of fair market practices
  • Weakened economy from lack of foreign investments, due to concerns of bribery and corruption in the business chain

Fighting Bribery & Corruption at all Levels

With 25 percent of survey participants thinking that SMEs lack proper understanding of the legal definition of bribery and corruption, greater awareness is the first step. Furthermore, 59 percent of respondents felt there is insufficient guidance being provided in this area, indicating a greater need for national and global frameworks.

On a positive note, the report indicated a high level of acceptance for anti-bribery and corruption programmes as over 70 percent of respondents think that an SME with strong anti-bribery values will boost consumer confidence, enhance a firm’s reputation for having high standards of conduct and help prevent firms from breaking the relevant laws. A majority also agreed that guidance from professional and trade associations would yield results, alongside an ethical code or agreement that businesses can publicly acknowledge and agree to.

The report concluded that the combined approach of a clearly-developed, SME-level statement of policy; the development of whistle-blowing laws; and legislature that carries severe penalties for non-compliance, is needed to effectively combat bribery. Furthermore, any anti-bribery guidance for SMEs must of necessity be short, accessible and sustainable, as many SMEs have limited resources for implementing such programmes.

For full report, view at


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