In this chapter, we develop our argument that a national private SME business association will induce authoritarian rulers to reduce corruption in autocracies that have a multiparty elected legislature with de facto opposition parties. We argue that in autocracies with legislative elections in which de facto opposition parties can participate, a private SME association can perform several political functions that produce valuable electoral and legislative dividends particularly for opposition parties. Conversely, the opposition can offer the SME association a legislative channel to influence government policy on issues such as corruption if elected through the legislature. This mutual complementarity of interests leads to a quid pro quo coalition where the opposition parties advocate the SME association's concerns about corruption during and after elections in exchange for the latter's political support. The presence, as well as the actions, of this coalition in turn exerts pressure on authoritarian rulers to curb corruption, which compels these rulers in autocracies to do so. As a result, corruption declines in these countries.

This argument is developed in four parts in this chapter. Part I discusses the four key political resources and services a national SME business association can offer to political players in autocracies with directly elected multiparty legislatures. Part II explains why opposition parties – rather than the incumbent elites – have strong incentives to court the national SME association's support in these autocracies. Part III describes why a quid pro quo coalition forms between the national SME association and opposition parties over the issue of corruption and discusses the anti-corruption tactics adopted by the coalition. Part IV then examines why these anti-corruption tatics incentivize incumbent autocrats to genuinely curb corruption; this leads to the prediction in hypothesis 2. Finally, we analyze how the absence of even one of these two conditions – that is, a private SME business association and an elected multiparty legislature – erodes the incentives of incumbents to tackle corruption, and thus derive a corollary to hypothesis 2.

The SME Association's Political Capability

The emergence of a national SME business association makes it more likely that private SMEs will publicly voice their concerns on governance issues such as corruption through a formal collective platform. Thus, these issues are far more likely to receive a public airing in such countries.