How business can address waning trust in capitalism

There has been a precipitous decline in trust in capitalism and large corporations. Although capitalism has generated substantial wealth, prosperity, and cheap access to path-breaking innovations across socio-economic classes in many countries, the public and many business school academics blame capitalism for a growing list of societal problems, such as climate change, pollution, poverty, and corruption. Over half of respondents to a recent survey in 28 advanced industrial nations believe that capitalism does more harm than good. Anti-capitalist sentiment is even stronger among young people.

A concomitant trend is that the environment, social, and governance issues (ESG) movement has heightened pressure on firms to be more “socially responsible” and even directly address social problems. The media has also played an important role in pressuring firms to address the alleged failures of capitalism and the need for companies to behave more “responsibly.” Market failure and corporate wrongdoing merit more attention in the media than government failure and malfeasance. The upshot is that declining trust can empower politicians to regulate business more heavily, which can hinder managers’ efforts to create value for investors and other stakeholders.

 
Συνέχεια εδώ

 
Πηγή: blogs.lse.ac.uk