Note: this blog post was originally published on LinkedIn Pulse on February 1, 2017.
When I talk with medical device companies with global business interests in my work as Vice President for International Compliance at AdvaMed (the Advanced Medical Technology Association) about their concerns, ensuring a high standard of ethics while working with distributors is always in the top three. Most companies, large and small, use distributors to access overseas markets, for a number of reasons: economies of scale, familiarity with local laws and customs, and simple language advantages.
But those same cultural advantages can lead to misunderstandings in the ethics area. The Foreign Corrupt Practices Act (FCPA) is clear on this matter: companies are responsible for actions of their distributors that violate anti-corruption statutes. Yet, the control that companies have over what their sales agents are doing on the ground in a foreign country is low. The risk is high. Just last week, Attorney General nominee Jeff Sessions stated his unqualified intention to continue to enforce the FCPA.
In recent conversations with member companies doing business in Latin America, I’ve been hearing a different take on this story. Medical device companies are telling me about distributors that are eager to embrace companies’ high ethical standards, such as those embodied in the AdvaMed Code of Ethics. Distribution companies, apparently, are beginning to see good ethics as a competitive advantage and are recognizing the benefit this brings in working with multinational firms. This represents a shift away from companies being in the position of enforcing ethical standards on a reluctant local distributor and toward companies and distributors becoming partners in understanding the ethical requirements and developing an appropriate compliance plan.
Is pursuit of such a partnership realistic and likely to be fruitful? I'd welcome comments below!