Security and compliance issues occur globally and are a concern for tech-savvy professionals who are the key purchasers of products and services for their companies. A variety of security recommendations and solutions should be considered, no matter the enterprise, for large entities like transnationals, multinationals, and global organizations, and entrepreneurs, which may be startups and small-medium enterprises (SMEs).In particular, security solutions should be considered for third-party risk management (TPRM) where risks linked with outsourcing to third-party vendors or providers are analyzed and minimized. Many risks exist within the digital third-party risk category; other categories are reputational, financial, security, and environmental UpGuard (2022).
CNN Business (2021) and Jazmin Goodwin reported, globally, women of the workforce lost $800 billion in income when the COVID-19 pandemic started. As a result, many women started businesses. Globally, 70% of startups stated they terminated full-time employees at the start of the pandemic (WEF, 2020), many due to financial issues. For example, only 40% of new business owners stated they have enough revenue to cover three months of operation.
Typically, when a company lacks revenue, innovation needs to occur to create new products and/or services. Digital transformation is necessary for businesses to generate sales and remain competitive. Due to national culture and cybersecurity threats (e.g., fraud and financial theft), companies in the eastern hemisphere, like the Philippines, Thailand, and nearby nations, prefer to work at brick-and-mortar locations instead of doing business online. Colleagues in Kenya mentioned similar concerns regarding online shopping.
Another concern is cybersecurity and third-party risk management in emerging markets —markets with institutional forces, but mostly institutional voids. The International Monetary Fund (2021) reported current emerging markets include, but are not limited to, Brazil, Mexico, Philippines, Iran, Egypt, India, Malaysia, Poland, Argentina, Saudi Arabia, Thailand and Turkey. Also, the current digital erauses the internet, websites, and social media to conduct research, operate e-commerce businesses, shop, take fitness classes, gain an education, socialize, and engage in entertainment. Minseong Kim (2022) stated using these in the current digital era helps to avoid physical contact between people and the spread of COVID-19.With economies and businesses now shifting to conducting business online because of the pandemic in addition to having brick-and-mortar locations, compliance and due diligence checks are necessary to mitigate third-party digital risks.
Institutional Voids, Institutional Forces, and Emerging Economies
Gargi (2019) claimed entrepreneurship is not only about employing workers, which helps advance economies, but also is about releasing new technology so more personnel can be employed and organizations can generate profits. Also, Gargi stated emerging markets have features of underdeveloped institutions and constant environmental modifications. Emerging economies contain transaction uncertainty, which makes companies deciding on whether or not to enter the market not want to commit resources, like in Argentina(Gao et al., 2017).
Regarding institutional forces, Oliver (1991) advised emerging economies have institutional forces like other markets, yet institutional forces are where firms must either conform to the institutional force (e.g., regulation) or be fined. However, in developing nations, where institutional forces or regulatory bodies do not exist, an institutional void does. For example, an institutional void is where a regulatory body, system, specialized intermediary, contract enforcing strategies, or key institution need for an economy or local market to operate is absent (Gao et al., 2015),(White &Kitimbo, 2018),(Khanna et al., 2005) — a regulatory body or systems like schools, banking, federal reserve system, or governance/corruption systems or policies. The absence causes businesses, especially multinationals, to perform poorly in developing nations (White &Kitimbo, 2018),(Khanna & Palepu, 2011). Examples of additional institutional voids: China lacks a developed economy and contract enforcing tools are immature; India lacks both formal and informal institutions (Gao et al., 2015); and the Dutch market lacks or has underdeveloped vendor databases, quality certification firms, and some regulatory agencies (van Dijk, 2018). Each are concerns regarding cybersecurity andthird-party risk of digital vendors. This is because of the lack of defense mechanisms to mitigate threats as an offensive strategy (Gao et al., 2017).
Survey Methodology and Results
I collaborated with Dr. Kyla L. Tennin on a recent Access to Smart Finance–Female Entrepreneurship global survey, an investment forum project, to understand how women’s involvement in entrepreneurship will be impacted by not having access to elements of the smart finance model from institutions, including access to training, mentoring, and capital. Survey participants included respondents from 91 top global employers in 22 broad industry sectors in six major regions of the world from advanced and emerging economies.
Third-Party Digital Risks in Female Entrepreneurship
Briefly, 68.1% of respondents see enhancers to female entrepreneurship being access to financial resources to implement strategies, networks, systems, or processes to mitigate digital third-party risks.
From the qualitative data outcomes, four major themes surfaced. Regarding third-party risk, women entrepreneurs need access to capital or investors for funding, but funding institutions in some countries do not exist. Such issues were reported for South Africa, Queensland, Turkey, Serbia, Macedonia, Milan, India, USA, Melbourne and the UK. Online or fintech institutions from other nations could be used, but trust, corruption, local and national culture, regulations, digital payments claims handling, and identity verification are other factors.
Exercising Strategic Partnerships to Fill Institutional Voids
What’s next to help women entrepreneurs? Implementation of third-party digital risk solutions should occur for countries whose national culture allows it. For example, President Alassane Ouattara of Cote d’Ivoire stated at the 9th African Development Forum in Morocco in 2014 that the biggest digital transformation challenge in Africa is creating innovative sources of funding (Invictae, 2022). A remedy is to speed up the development of Africa’s financial markets using innovative products and setting up effective regional and national financial institutions and services. Also discussed(Business Standard, 2013)is an example of how Blue River Capital filled institutional voids in India using partnerships with local accounting firms and entrepreneurs, cash-flow lending institutions, and KPMG for due diligence checks. The exemplary story can be read here.