Trust, Legitimacy & the Ethical Foundations of the Market Economy
Trust, Legitimacy & the Ethical Foundations of the Market Economy
At The Ethics Centre, we spend a lot of time talking to regulators, directors and business leaders.
We know that fundamental questions are being asked: What went wrong? Who’s responsible? How do we restore trust? Our research suggests the concept of trust may be less relevant than that of ‘legitimacy’. Where trust is the belief that people/organisations will meet their obligations, legitimacy is the right to claim a status, role or function. Legitimacy, in other words, grants business the social license to operate.
This whitepaper offers insights on the current issues of trust and loss of limited liability, and a framework to participate in the current market economy. Discover the four fundamental values and principles you need to minimise the risk of corporate failure and the potential for unlimited liability. Learn how your purpose, values and principles can be used to guide behaviour and work through the most difficult decisions within an organisation.
"The privileges of incorporation and limited liability were justified by a broad appeal to the common good. If those privileges are to be preserved, then it may be time to establish a new, core ethical foundation for corporations. An alternative and complementary approach to more compliance is to establish a values and principles framework that guides rather than dictates decision-makers."
OVERVIEW
*Source: Edelman Trust Barometer 2017
**Source: AICD-KPMG Maintaining the social licence to operate: 2018 Trust Survey
***Source: PWC, 21st Annual Global CEO Survey
WHATS INSIDE?
An examination of trust’s decline
What is legitimacy?
The costs of losing legitimacy
Ethical foundations of the market
Reimagining corporate law
Four fundamental values and principles
Enabling legitimacy in corporations
The value of ethical frameworks
AUTHORS
Authors
Dr Simon Longstaff
Dr Simon Longstaff has been Executive Director of The Ethics Centre for over 25 years, working across business, government and society. He has a PhD in philosophy from Cambridge University, is a Fellow of CPA Australia and of the Royal Society of NSW, and in June 2016 was appointed an Honorary Professor at ANU – based at the National Centre for Indigenous Studies. Simon co-founded the Festival of Dangerous Ideas and played a pivotal role in establishing both the industry-led Banking and Finance Oath and ethics classes in primary schools. He was made an Officer of the Order of Australia (AO) in 2013.
Victoria Whitaker
Victoria Whitaker has worked across business, civil society, academia and government in the areas of sustainability education, research, policy and advocacy, strategy and evaluation. She previously headed up the Global Reporting Initiative in Australia for five years, before joining The Ethics Centre to manage their consulting and education offering. In January 2019, Victoria joined Deloitte’s risk team.
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