Declining Trust in Capitalism: Managerial, Research, and Public Policy Implications

Academy of Management Perpsectives

47 Pages Posted: 28 Mar 2022

See all articles by R. Michael Holmes

R. Michael Holmes

Florida State University - Department of Management

David Waldman

Arizona State University West

Donald S. Siegel

Arizona State University-School of Public Affairs

Justin Pepe

Florida State University - Department of Management

Date Written: February 18, 2022

Abstract

Many people no longer trust in capitalism. We draw on upper echelons theory, paradox theory, and the trust literature to consider the sources and implications of this loss of trust. Although firms face growing pressures to address social problems that often are attributed to capitalism, firms also face intense pressures to maximize shareholder returns. In response, we outline key attributes of stakeholder-oriented leadership that can help managers address these new social demands. We also identify stakeholder-based strategies that firms are enacting to tackle these challenges, how lack of trust affects the impact of these strategies, and how strategic leadership is critically important to their effectiveness. We argue that a more widespread, consistent, and concerted effort to integrate social and financial missions, and to balance the needs of multiple stakeholders, is needed to mitigate the loss of trust in capitalism. We conclude with managerial, theoretical, and public policy implications, including a discussion of the tradeoffs between private-sector and government-mandated solutions to social problems.

Keywords: capitalism, trust, upper echelons, paradox, strategic corporate social responsibility, stakeholder theory

JEL Classification: M14, M38, M52

Suggested Citation

Holmes, R. Michael and Waldman, David A. and Siegel, Donald S. and Pepe, Justin, Declining Trust in Capitalism: Managerial, Research, and Public Policy Implications (February 18, 2022). Academy of Management Perpsectives , Available at SSRN: https://ssrn.com/abstract=4038854

R. Michael Holmes

Florida State University - Department of Management ( email )

United States

David A. Waldman

Arizona State University West ( email )

P.O. Box 37100
Phoenix, AZ 85069
United States
602-543-6231 (Phone)

Donald S. Siegel (Contact Author)

Arizona State University-School of Public Affairs ( email )

411 North Central
Phoenix, AZ 85004
United States
6024961101 (Phone)

Justin Pepe

Florida State University - Department of Management ( email )

United States

HOME PAGE: http://https://business.fsu.edu/person/justin-pepe

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