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Curbing grand corruption in ethnically plural societies

The role of corporate responsibility

Under what circumstances can firms favourably contribute to curbing grand corruption in ethnically plural societies? It can be argued that the most practical and strategic entry point is through small and medium-sized enterprises. Compared with larger firms, their distance from the centres of power and relatively high level of ethnic diversity in ownership means it is easier to encourage this group of entrepreneurs to engage in collective action against corruption and ethnic clientelism.

15 February 2021
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Main points

  • Small and medium-sized enterprises (SMEs) have a strategic role to play to contest corruption and ethnic clientelism, and a collective-action approach has the best potential to accomplish this goal.
  • If SMEs are organised into formal associations, they can be the vehicles through which contestations and collaborations are successfully achieved. Formalisation would aid the development of SMEs, and could represent and articulate their combined interests.
  • As formal associations, SMEs are in a position to educate, advocate, and collaborate to contribute to the reduction of corruption and the establishment of a fair and attractive business environment.
  • SMEs can pressure larger firms and the state to adopt a more transparent and competitive procurement system, if they engage with other stakeholders to facilitate a conducive business atmosphere characterised by anti-corruption hypernorms. This increases the opportunities for them to successfully compete with larger firms.
  • Forging alliances under the framework of a professional association means that SMEs could tackle collective-action problems by enforcing social and organisational norms that prohibit corruption. However, there remains the difficulty in ensuring its members embrace – and comply with – these norms, as there is the risk that individual firms might find they gain more from corruption.
  • SMEs have more to gain and less to lose than the larger firms by drawing attention to and opposing instances of corruption – especially in public procurement. If they are persuaded that there are benefits from such actions, such as enhanced business opportunities and higher income, they will be more willing to be part of a collective movement against political corruption.
  • While a low formality rate presents a hindrance to collective action by SMEs, it can also be considered as an opportunity. It is highly likely that SMEs will be driven into a survivalist mode because of the uncompetitive nature of their business environment and the concentration of large cash flows among a small number of favoured firms.

Cite this publication


Edwards, D.; (2021) Curbing grand corruption in ethnically plural societies. Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Brief 2021:1)

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About the author

Duane Edwards

Duane Edwards is a Senior Researcher at the Project Development Consultancy (PDC) in Guyana.

Disclaimer


All views in this text are the author(s)’, and may differ from the U4 partner agencies’ policies.

This work is licenced under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International licence (CC BY-NC-ND 4.0)

Keywords


private sector, business, small and medium sized enterprise, collective action, procurement, grand corruption, Guyana, Latin America