Half of the businesses questioned in a new global survey believe that bureaucracy hinders them from complying with new corporate governance and internal control regulations. A quarter of the companies blame red tape for hindering their international expansion.

23 May 2006

AMSTERDAM - Half of the businesses questioned in a new global survey believe that bureaucracy hinders them from complying with new corporate governance and internal control regulations. A quarter of the companies blame red tape for hindering their international expansion.

The survey of 2,739 Human Resources and Finance Managers in nine countries shows that 50 per cent of companies believe red tape is slowing their ability to comply with new corporate governance and internal control regulations.

Despite the burden, nearly 50 per cent of companies still focus heavily on new business development although a quarter of businesses blame red tape for hindering their international expansion

The survey by specialised recruitment firm Robert Half International found that companies in Italy – 62 percent – are most affected by the administrative burden linked to the new corporate governance and internal control regulations, closely followed by companies in the Czech Republic with 60 percent, the UK with 57 percent and France with 56 percent saying they are affected.

The results show that despite the administrative burden of regulatory compliance following financial scandals such as in the US and Europe, 49 percent of respondents still have time to focus their efforts on new business development and innovation.

Respondents from the Czech Republic are the most positive with as many as 89 percent of companies demonstrating their commitment to new business development reports Robert Half.  Businesses in New Zealand were the next most positive with 71 percent, followed by Belgium with 63 percent and The Netherlands with 61 percent.

Over a quarter of companies in the survey blame red tape for preventing them from expanding their businesses internationally. The countries where regulatory requirements and its administrative burden seem to restrict companies investing internationally are Italy, France and Germany. 

Companies in New Zealand and the Czech Republic are the least restricted which could lead to a significant rise in foreign investment from these countries.

The results suggest however that although authorities have put in place regulations to mitigate future scandals the amount of bureaucracy is slowing up a company’s ability to comply with new rules and may undermine the original goal.

"Unless the regulatory authorities state clearly that these new regulations are more than just a box-ticking exercise," said Ian Graves of Robert Half International.

"Many companies that are looking to expand will consider this as a serious hindrance to spending more time on new business development and innovation," he said, pointing out that naturally this is a big risk for the larger economies "but potentially even more for flexible, innovative emerging economies such as the Czech Republic."

[Copyright Expatica 2006]