Empowering SMEs: Combating Corruption Through Digital Innovation – OpEd


When it comes to the economy of Malaysia, small and medium enterprises (SMEs) are extremely important, since they account for 97.4 percent of all company establishments. The total workforce in Malaysia is comprised of 7.59 million people, which accounts for 48.2% of the country’s total workforce. They contribute 38.4% to the national GDP. SMEs face a multitude of issues, notably with regard to the ethics of their business practices. Due to the fact that they operate in a market that is highly competitive, companies frequently face pressures that encourage immoral activities.

In a survey titled “Bribery and Corruption: The Hidden Social Evil on Your Doorstep,” published by the Association of Chartered Certified Accountants (ACCA), it was found that nearly two-thirds (63%) of SMEs are concerned that refusing to accept bribery and corruption could result in the loss of economic prospects. The prevalence of corruption and the difficult choices that businesspeople must make are brought into sharper focus by this statistic.

SMEs sometimes lack the bargaining leverage to refuse bribery, which places owners of small businesses in precarious positions. Because of this imbalance of power, they are forced to come to a decision between indulging in corrupt tactics and putting their enterprises at risk. Many people, particularly those who are dependent on their businesses to provide for their family, view this as a situation in which neither party can survive. Many people believe that bribery is an unavoidable evil that is necessary to maintain livelihoods and keep businesses afloat. The repercussions of this climate are significant: it weakens the integrity of SMEs and it erodes public faith in the business sector. As an additional point of interest, the normalization of bribery and corruption results in an uneven playing field, which is detrimental to ethical businesses.

In order to address these challenges, it is necessary to examine the underlying factors that contribute to corruption and to cultivate an atmosphere that promotes ethical behaviours. Important efforts include strengthening regulatory frameworks, enhancing transparency, and providing assistance to SMEs in their fight against corruption. Training on anti-corruption, improved enforcement of current laws, and the promotion of ethical corporate cultures are all ways that SMEs might overcome these problems.

In addition, that coordination between the public sector and the business sector is absolutely necessary. There is a need for collaboration between government agencies, business associations, and civil society in order to cultivate an atmosphere within corporations that places a high priority on honesty and does not tolerate corruption. The fight against corruption is significantly aided by the implementation of digitalization. It is possible to improve transparency and accountability through the implementation of digital tools and platforms, hence lowering the potential for corrupt behaviours.

By way of illustration, digital procurement solutions have the potential to expedite operations and reduce the number of human encounters that frequently result in bribery attempts. Additionally, digital financial systems have transparent audit trails, which makes it simpler to identify fraudulent activity and make preventative measures against them.

One way for SMEs to increase their operational efficiency and lessen their susceptibility to corruption is to implement digital solutions. In addition, digital platforms can make it easier to gain access to anti-corruption training and materials, which can assist SMEs in comprehending and putting ethical practices into action. Whistleblowing can be made anonymous through the use of online reporting tools, which gives employees the ability to expose unethical behaviours without worry of getting punished for doing so. Because of this, the company environment becomes more open and accountable to its stakeholders.

In conclusion, SMEs represent an essential component of Malaysia’s economy; nonetheless, they are confronted with major obstacles as a result of bribery and corruption. In order to effectively address these concerns, a comprehensive strategy is required, which should include the implementation of regulatory reforms, the promotion of ethical business practices, and collaborative efforts to promote transparency. The implementation of digitalization is an essential part of this plan because it provides tools that have the potential to improve operational efficiency, accountability, and transparency. It is possible for SMEs to flourish without lowering their ethical standards if they adopt digital solutions and cultivate a culture of integrity. This will ensure that the future business climate will be both stable and ethical.

Ahmad Nizam Che Kasim

Ahmad Nizam Che Kasim is a lecturer attached to the Faculty of Business and Communication, Universiti Malaysia Perlis.

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