However, empirical studies show that it can only account for a small share of the observed inflation differentials.8 Regional supply and demand shocks are factors that can always give rise to new differences in inflation. Since labour markets are not yet closely interlinked, the price mechanism plays a major part in balancing supply and demand.
The board and senior management are obligated to deliver a strong message to others in the firm about the importance of integrity, compliance with the law, fair treatment of customers, and overall good business ethics. Leaders should demonstrate their commitment through their individual conduct and their response to control failures.