Health-focused small and medium-sized enterprises (SMEs) in the Asia-Pacific Economic Cooperation (APEC) region with robust ethics and compliance programs are more competitive and trade-ready, according to new APEC research.
Through in-depth interviews with 17 SMEs in health-related sectors across nine APEC economies, the research identified components of ethics maturity that stood out by yielding the greatest economic benefits to these firms.
It showed that employee training at onboarding, conflict of interest policies, robust due diligence of business partners and unwavering compliance with local laws, regulations, and customs procedures are the most common components of ethics that provide the ability to unlock new markets, strengthen partnerships, and drive long-term growth.
“SMEs view trust and reputation as fundamental to achieving economic success, built through a steadfast commitment to ethical standards,” the study, Deepening the Value of Business Ethics for APEC SMEs, said.
These qualities contribute to several key advantages: improved access to business partners and tendering opportunities, decreased exposure to demands for illicit payments or unethical practices, and more efficient regulatory approvals with fewer administrative obstacles, it said.
The study said health-related SMEs are motivated by the goal of becoming trusted and valued partners within resilient supply chains to adopt such programs.
It said building this resilience requires multinational corporations to lead the promotion of high ethical standards, while SMEs adopt these standards to position themselves as reliable distributors, suppliers, or service providers.
“By conducting rigorous due diligence on business partners, SMEs contribute to the development of robust supply chains that are less vulnerable to disruptions caused by allegations of corruption,” it added.
The research also found that industry codes of conduct, often developed and maintained by industry associations, serve as a vital tool for health-related SMEs to advance their ethics maturity.
“These codes enable resource sharing, reduce costs, and accelerate the journey toward ethical maturity. By establishing clear standards, they help SMEs implement the necessary policies to secure business partnerships and gain access to local procurement opportunities,” it said.
Derived from these findings, the research offers specific recommendations for those who work to advance business ethics and integrity, either within or in partnership.
“SMEs should implement the key components of ethical maturity that drive economic growth and unlock new opportunities,” it said.
The research said MNCs should continue supporting SMEs in achieving ethics maturity by promoting high ethical standards and providing tailored guidance on implementing effective ethics programs.
“By upholding these standards and requiring their business partners to adhere to them, MNCs and SMEs can together build more resilient supply chains and unlock greater business opportunities,” it said.
The research further said industry associations, on the other hand, should continue to prioritize the development and reinforcement of ethics codes, as these serve as valuable tools for building SME capacity and supporting their ability to adhere to ethical practices.
“Strengthened ethics codes also help SMEs reach ethical maturity more efficiently and at a lower cost, leading to positive economic outcomes,” it added.
The additional research validates the findings from the previous research from the Business Ethics for APEC SMEs Initiative indicating that health-related SMEs with strong ethics maturity saw an expansion of crossborder trade opportunities, reduced staff turnover, higher employee wages, and an overall benefit to economic performance.
