Vulnerability to Resilience (Part 2) Building the SME - MNC Compliance Relationship
Leveraging SMES compliance and integrity advantages is both strategic and necessary for MNCs. MNCs have large and uniform integrity programs that drive compliance. However, Home Office compliance teams may be slower to respond to emerging risks. SMEs can help MNCs improve their knowledge and response time to emerging risks as they have agility, a local perspective, and can serve as an early warning system for MNC integrity systems.
Reciprocal Relationships MNCs and SMEs
The relationship between MNCs and SMEs can yield powerful results when the relationship is reciprocal. SMEs need MNCs and MNCs need SMEs. MNCs can build a web of relationships that provides both an in-depth understanding of local dynamics while building credibility with local authorities and regulators. SMEs can access established integrity systems, formalized polices, and the reputational boost that comes with being a part of a company with strong integrity systems. In this relationship, MNCs are the “backbone” that lower risk and set system standards, while SMEs serve as the system’s “eyes and ears.”
Making this relationship work requires a shift in mindset. Global business often sees SMEs as a compliance risk, rather than a compliance partner. While there is always a risk in collaborating with a partner, there is also value. Shifting to a mindset that balances the risk and value allows SMEs to become compliance champions capable of enhancing and multiplying ethics and compliance standards. In the SME-MNC compliance dynamic MNCs can enhance SME advantages by committing to building SME capacity. This commitment can result in a dynamic integrity system that is both practical and sustainable over time. Here are simple ways to build SME capacity:
- Deliver practical, locally relevant compliance training that addresses potential risks that SMEs face.
- Create simple and accessible reporting and feedback channels that allow SMEs to flag changes in the local environment or raise concerns.
- Act quickly on SME insights and communicate outcomes to help reinforce the MNC-SME relationship.
- Share Resources and ensure SMEs have access to compliance templates and tools.
- Publicly acknowledge SME partners who exceed compliance expectations.
In complex global markets, MNCs need SME partners who can deliver consistent and reliable responses to evolving compliance risks. SMEs have unique tools and networks that enable them to meet this need. Viewing SMEs as a compliance advantage and building SME capacity will allow MNCs to lower risks, build compliance partners, and extend ethical business practices throughout their supply chain.
Michele Crymes
Anti-Corruption and Governance Expert
Original Publication: https://www.briberymatters.com/post/vulnerability-to-resilience-part-2-building-the-sme-mnc-compliance-relationship