Since the rise of capitalism, the world has experienced steady economic growth despite occasional setbacks. After the recession of 2008-09, the global economy bounced back swiftly, and the bull run continued for a decade; until Covid-19 pandemic struck the world, freezing all economic activity.
Today, as nationwide lockdowns are being lifted in phases, people’s trust in capitalism becomes a significant factor in determining business recovery. Businesses around the world have adopted a transparent and sensitive tonality of communicating with customers in order to maintain trust levels.
The “Trust Barometer 2020” report, basis the recent research by Edelman (a firm that has been conducting global trust survey since last two decades), finds a worrying decline in public trust for all types of institutions – government, business, NGOs and media.
Despite the strong economy of 2019, the survey found that 56% respondents believed capitalism in its present form is doing more harm than good in the world. In developed markets, less than one in three people thought that in five years’ time, conditions would improve for them and their family. The report also found that 83% employees globally are living in the fear of job-loss due to automation, an impending recession, lack of skills, and the gig economy.
The report displays a major regional disparity between levels of trust in businesses. Countries like US, UK, France, Germany, that were first to experience, and champion capitalism have displayed trust levels lower than 50%. Russia recorded lowest trust level at 35%. Surprisingly, in comparison India and China have recorded highest levels of trust in businesses at 82%.
While globally the trust paradox underlines a serious problem, higher levels of trust in India, is good news for the domestic as well as international entrepreneurs, contemplating doing business in the country. Historically, strong economic growth has raised people’s trust in businesses. The report highlights that it still holds true in the developing economies of Asia and the Middle East but not in developed countries, where wider income inequality, becomes a major factor in determining public trust.
Competence and Ethical Behavior
In context of the report, Edelman said that in current times public trust has two attributes – competence and ethical behavior. Competence implies the ability of businesses to deliver on their promises while ethical behavior entails achieving that objective in a manner that will benefit the overall society. The survey found that people perceived businesses to be competent and NGOs to be ethical, while media and governments were seen as delivering neither.
The report shows that people are thrice more likely to trust an enterprise if they think it is ethical rather than just competent. 92% employees felt that business CEOs should speak openly on important issues like income inequality, ethical use of tech, diversity and climate change.
“Ethical drivers such as integrity, dependability and purpose drive close to 76% of the trust capital of business, while competence accounts for only 24%” – Antoine Harary, President Edelman Intelligence.
Lessons for Indian Entrepreneurs
The findings of the report are extremely crucial for Indian businesses, especially in the current post-Covid scenario. Indian people have demonstrated immense trust in business organizations and now it is up to the business leaders to build on that trust by focusing equally on competency and ethical behavior.
If business leaders are able to deliver on both the fronts, the society and economy will thrive equally while failing on either of the fronts could hurt both phenomenally. Entrepreneurs must choose their goals wisely and employ sustainable methods to ensure all-encompassing success.
Sources:
Edelman Trust Barometer 2020 – Click here to read report
https://www.statista.com/chart/22136/levels-of-trust-in-business-by-country/
Article on Time – Click here to visit page
