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Corporate governance and business ethics for SMEs in developing countries:

Mahmood, Shahnawaz
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Mahmood, Shahnawaz
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Keywords
business ethics
development ethics
corporations
Good governance
GE Subjects
Political ethics
Economic ethics
Governance and ethics
Business ethics
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Business Ethics
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n2008_C_Mahmood_shahnawaz.pdf
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http://hdl.handle.net/20.500.12424/173900
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Abstract
Small and Medium Enterprises (SMEs) are critical for developing countries because of their role in economic growth and poverty reduction. As companies globally face issues relating to transparency, accountability and timely disclosure of material information, the concept of corporate governance and business ethics has gained significant importance. SMEs in developing countries face a number of challenges including access to finance both domestically and internationally, developing international trade linkages. Developing entrepreneurial culture and ethical business environment are also important challenges. The main underlying constraint to their growth is lack of corporate governance structure. There is generally a lack of awareness among these enterprises regarding significance of corporate governance and if there is awareness, there is a general aversion to adopting these practices because of the high cost of implementation. This paper discusses issues facing SMEs in developing countries (particularly in South Asia) and the need for embracing corporate governance and ethical business practices. This paper proposes that an incentive based system for encouraging SMEs to adopt good governance practices is more likely to succeed. It also presents a market based solution through creation of venture services companies for engaging closely with SMEs. SME Chambers can also play a critical in this regard. This paper discusses the framework through a Code for SMEs and suggests mechanism to develop it. Developing and implementing a framework of corporate governance for SMEs needs be a participatory and engaging process. The key components of the Code are also given. Business ethics practices from SME perspective are also discussed. The paper then concludes by giving recommendations to push the agenda forward.
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Preprint
Date
2008
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With permission of the license/copyright holder
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