Small and Medium-sized Enterprises (SMEs) make up the vast majority of businesses in any given economy, in the European Union for example, SMEs represent 99% of all businesses . SMEs are pivotal for economic growth and development. However, they are also more prone to corruption risks given their size and resources limitations to implement integrity and compliance programmes. On the flip side, the lack of implemented standards can hamper their capacity to access funding and participate in international supply chains, as most Multilateral Development Banks (MDBs) and multinational companies impose strict risk mitigation measures in their procurement processes. Moreover, the lack of cohesion of MDBs and multinational companies’ compliance standards can often feel overwhelming for SMEs.

One practical solution to overcome these challenges is for SMEs to engage in anti-corruption Collective Action. Collective Action offers many tangible business benefits for SMEs willing to further integrate into the local economy.

1. Benefits for SMEs joining Collective Action initiative

• Competitive advantage: Collective Action facilitates the integration of SMEs into global value chains by demonstrating high ethical standards to multinationals or MDBs bound to strict anti-bribery rules.

• Leveraging the power of the group: Due to their size, SMEs are often vulnerable to bribery and corruption. Collective Action helps create market situations in which no business has the advantage to engage in bribery by giving companies greater bargaining power to resist corruption and foster a collaborative problem-solving approach to addressing integrity challenges.

• Peer-learning opportunity: SMEs often lack the financial resources and capacity to implement strong internal compliance programmes and comply with additional compliance requirements. Collective Action gives the opportunity to exchange and learn from companies of different sizes and sectors about common shared challenges, opportunities and best practices to counter corruption effectively.

• Context-sensitivity: as there is no one-size-fits-all approach to Collective Action, stakeholders get to decide how to tailor their initiative to their own challenges and resources. Collective Action is an agile and flexible approach to fighting corruption collectively.

2. Tools available to strengthen internal integrity and compliance programmes of SMEs in a Collective Action approach

• Local certification

Certification based on a Collective Action initiative provides a supportive framework and platform for companies to exchange experiences and build capacity. Collaborative, multi-stakeholder development of the methodology and certification standards ensures relevance and buy-in for both SMEs and multinationals . For more info and concrete examples click here.

• TheIntegrityApp

Launched by Alliance for Integrity, TheIntegrityApp is a digital tool designed for SMEs to self-assess their internal compliance programmes. The digital tool specifically aims at SMEs with little or no experience in compliance. By answering a practical and short questionnaire, SMEs receive a score indicating the status quo of your company or institution in terms of compliance . The application provides free access to training material to implement internal measures that promote integrity and compliance.

TheIntegrityApp is available in English, German, Portuguese, Spanish, French and Bahasa.

• OECD Toolkit for raising awareness and preventing corruption in SMEs

Published by the OECD, this toolkit identifies practical ways in which governments and other stakeholders can engage SMEs in the fight against corruption. It offers “a set of tried anti-corruption awareness-raising initiatives that have proven effective across various industries and countries”.

• Visit the B20 Hub and get inspired by SME-focused Collective Actions in your country or sector! To name but a few, you can consult Thai CAC, the Banknotes Ethics Initiative (BnEI), MozUp Enterprise Development Center (Mozambique) and the Virtuous alliance: SMEs and public enterprises project of Poder Ciudadano (Argentina).

3. How can governments and multinationals work with SMEs?

• Governments, usually through their anti-corruption agencies, play a pivotal role in incentivising, raising awareness and supporting companies to engage in multi-stakeholder activities to address corruption. As a means of illustration, the French Anti-Graft Agency (AFA) provides SMEs with advisory support to implement their anti-corruption compliance programmes. The same way, Korean diplomatic missions sensitize Korean SMEs operating abroad on international conventions and domestic laws through workshops, seminars and meetings .

For more concrete examples of governments engaging companies in anti-corruption Collective Action, please consult our Practical Guides covering countries that are part of the Network of Corruption Prevention Authorities (NCPA) and from Africa.

• Multinational Companies (MNCs) can provide anti-corruption compliance mentorship to SMEs wishing to strengthen their integrity efforts. This way, MNCs reduce the risk of corrupt practices in their supply chain and SMEs get to access new markets and greatly benefit from larger companies’ experience in mitigating risks. Mentoring offers a mutually beneficial option to both larger and smaller businesses.

One successful example is the World Bank Group mentoring programme which encourages companies that have been released from sanctions to help debarred companies, including SMEs, to comply to its integrity and compliance rules and requirements.

To find out more please reach out to: liza.young@baselgovernance.org