Counteracting the Lack of Trust in Global Business: Creating Economic and Social Value with Stakeholders
Paper in proceeding, 2013
Year after year we are reminded of how badly business organizations are seen in large parts of the world. For example, in survey done by the research firm Edelmann in 2012, less than 30% of the French informed public trusted business organizations and their leaders to do “what is right”. With the exception of some excellent examples, the low trust and legitimacy of business is a problem that prevails throughout the G20 members and most countries where the trust level is measured. With the general critique towards large corporations in society, and with the recurring corporate scandals and reports of executive greed, this is perhaps not surprising. But the implications of this problem are important not only in the societal debate, but for how these organizations function. Trust is connected with engagement, which in turn is connected to performance in what we can call the trust-engagement-performance cycle. Hence, in the general case, a low level of trust is connected with low performance both in terms of people’s engagement and the financial performance of corporations. In a study with 20 CEOs of large transnational corporations selected out of their ability to create both financial and social value (we call them “Higher Ambition”-companies), we try to understand their strategies for increasing trust with stakeholders in the markets that they are active in, engagement among their employees and external partners, and thereby performance. In doing so, the leaders of these corporations have to deal with a larger set of dilemmas and paradoxical choices that arise from the global complex nature of the transnational corporation as well as the double sided nature of their ambition to create economic as well as social value. Hence, instead of focusing on what global corporations do badly (which is the common way of analyzing the issue), we try to understand what they do well. The paper outlines the challenges, the resulting dilemmas/paradoxes, the strategies for handling them and discusses the implications for global business.