Doing Business With Integrity: Stories from Small and Medium-Sized Enterprises in Europe and Eurasia

Business ethics, integrity, and compliance are often relatively new concepts for businesses in emerging markets, most of which are small and medium-sized enterprises (SMEs). To help SMEs realize the benefits of business integrity and offer practical suggestions to implement robust mechanisms for compliance and ethics, the Center for International Private Enterprise (CIPE) published the Strengthening Ethical Conduct & Business Integrity: A Guide for Companies in Emerging Markets in December 2020. The Guide offers practical recommendations to small business owners on how to apply existing anti-corruption compliance tools to their operations and growing needs for effective risk mitigation strategies and approaches. This new publication Doing Business with Integrity: Stories from Small-and Medium-Sized Enterprises in Europe and Eurasia seeks to supplement the Guide by providing specific, real-world examples of both business integrity challenges that companies face and approaches they use to overcome such challenges.

SMEs continue to frequently face the threat of bribery, fraud, and other unethical practices, as well as related challenges due to limited financial and human resources. Informality, described by the World Bank as economic activities conducted outside of official rules and regulations, also presents significant challenges to responsible business conduct and countries’ overall economic development. The costs of complying with relevant laws and regulations, and time spent dealing with bureaucracy, often present a deterrent for SMEs seeking to conduct business ethically and formally.

In addition, those challenges are compounded by widespread corruption, which further drives informality, as businesses seek ways to minimize their contacts with corrupt officials and therefore prefer to operate under the radar. An overall lack of trust in government and poor public service delivery can further complicate doing business ethically. Delayed decision-making, abuse of public authority, and inefficient or excessive bureaucratic procedures often result in SMEs facing high costs for regulatory compliance. Companies need to be able to trust that fair and effective remedies will be applied to abuses by public officials or misconduct in private transactions because they have limited capacity and agency to address these issues on their own.

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