CORRUPTION AS A BUSINESS RISK: EVALUATING THE EFFECTIVENESS OF ANTI-CORRUPTION COMPLIANCE IN NIGERIAN SMES

Abstract

Corruption poses a significant business risk to Small and Medium Enterprises (SMEs) in Nigeria, affecting operational efficiency, financial performance, and sustainability. This study examines the extent to which corruption impacts SMEs and evaluates the effectiveness of anti-corruption compliance mechanisms in mitigating these risks. Guided by two research questions assessing corruption as a measurable business risk and the role of compliance measures, the study tests the hypothesis that anti-corruption compliance mechanisms significantly reduce corruption-related business risk in Nigerian SMEs. A quantitative cross-sectional survey design was adopted, targeting 400 SMEs across manufacturing, trade, agriculture, services, and technology sectors. Data were collected through structured questionnaires administered to SME owners, managers, and compliance personnel. Analysis using descriptive statistics, correlation, and multiple regression revealed that corruption, particularly bribery and regulatory delays, constitutes a measurable business risk, while internal controls, ethical codes, whistleblowing systems, and compliance training significantly mitigate these risks (R² = 0.52, F = 81.3, p < 0.001). The study concludes that structured internal compliance, supported by institutional oversight, effectively reduces corruption-related business risks in Nigerian SMEs. Recommendations include strengthening governance frameworks, expanding compliance training, and fostering collaboration between SMEs and regulatory institutions to enhance ethical business practices.