Developed economies such as those of Europe and North America operate in accordance it well established laws and good practice. In these places rules and laws define transactions; institutions protect these; and the prevailing ethos creates an environment that preserves this good practice.
By contrast, in the developing economies of Africa and parts of Asia rules-based decision-making, and strong institutions are less well-established. Personal networks and relationships are much stronger, and the processes for decision-making are much more opaque to outsiders. This means that often policy and events are driven more by patronage networks than by `formal` laws and processes.
The challenge for companies working in such environments is that their usual focus on legal compliance is not sufficient. Companies maintain their licence to operate through compliance with rules and laws. In developing economies, this approach is insufficient.
There is a need to dig deeper. Rather than ignoring the processes that actually make host countries work, it is vital to understand them. Only by doing this can a company both comply with the highest legal and ethical standards, but also operate effectively in these places.
Central to our approach is a tool known as Political Economy Analysis (PEA), which is designed to understand how power and influence operate in developing countries. Use of robust PEA provides a realistic and evidence-based picture of how a country operates, and of how that might challenge a client in developing their business, and in complying with legal requirements and international norms.
However, analysis is only the first step: it is of little use unless it is used to guide action. We therefore use our analysis to help guide our clients in how to respond. We work with them to establish how their plans can be made feasible given the issues that have been identified. How might business plans need to be modified or re-phased to be made to work? What internal systems might need to be amended or developed? What additional training or support might need to be given to in-country staff? Our role is to help our clients work through these and other factors so that they can achieve their aims even in challenging circumstances.