Proceedings

1.2. The Lack of Trust or the Crisis of Credibility
An enterprise’s ethical behaviour demands a conscious and positive attitude from the
enterprise’s key stakeholders towards the enterprise’s core values, culture and climate
in a way that stimulates the desired achievement of business ethics (Lindgreen, Swaen
and Johnston, 2008). This is a real challenge for companies to achieve. According to
market and social trend analyst Daniel Yankelovich, the public’s widespread cynicism
toward businesses today is a real crisis of confidence that companies must face. The
recent global financial crisis is, in fact, a major crisis of trust. The current wave of
disapproval began in 2001 with the bursting of the dot-com bubble, the ensuing bear
market, and the financial scandals involving Enron, WorldCom, Tyco, and others
(Van Lee, Fabish and McGaw, 2005). Business people may attribute recent corporate
scandals to “a few bad apples,” but the public needs more than that to be convinced. A
2002 Gallup Poll found that almost 80 percent of the public believes corruption is
endemic in the corporate world and that executive greed and immorality are the top
causes of current economic woes (Rosell and Yankelovich, 2003).
The first crisis of confidence was the Great Depression of the 1930s which continued
until World War II. Although scholars have not agreed on the exact causes and their
relative importance, it is considered that some of the events that generated the Great
Depression were the massive banks failures, the stock market crash, actions taken by
the US Federal Reserve that contracted the money supply, as well as the Britain’s
decision to return to the Gold standard (Bernanke, 1995). These were marked by a
weakening of confidence in the free-market economy and public disillusionment in
big business, respectively.
Rosell and Yankelovich (2003) suggest that the current crisis of confidence is
different because senior executives, not just corporations, are viewed as being directly
responsible for the scandals. Their over-the-top compensation, excessive management
perks, and perceived willingness to trade jobs, environmental standards, and labour
rights for profits squeezed out of globalization have fanned mistrust in the individuals
who run companies and, secondarily, in the companies themselves. The impact so far
has generated new norms and provisions such as the Combined Code (UK Corporate
Governance Code), that sets out the requirements of disclosure for the public listed
companies on delicate issues such as director remuneration, accountability and audit,
appointment of the directors, relationships with shareholders etc. (FRC, 2010).
Companies are required to break out of narrow frameworks that reinforce mistrust and
create blind spots. Companies should learn to understand the viewpoints of others
who see the world differently and use that understanding to inform actions and
develop ‘trust equity’ (Rosell and Yankelovich, 2003). Change at this deeper level can
open up new possibilities both for addressing the current wave of mistrust and for
creating competitive advantage.
In regaining trust, we consider that companies should think and act a strategy of real
value creation for all the stakeholders, in a transparent and credible manner, starting
with defining a corporate identity that should always be aligned with an ethical
conduct.
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