The Role of Executives in Enhancing Trust in Capitalism

Abstract

Trust in capitalism is declining, and many observers hold executives responsible. However, there is limited theory explaining why this decline is important and how executives’ characteristics and actions can enhance trust in capitalism. In our theory development, a core premise is that executives can restore trust in capitalism by prioritizing financial and social missions equally, although dealing with this paradox represents a challenge for executives. Specifically, we recognize that placing social missions on an equal footing with financial missions is difficult, but nevertheless pivotal, to ultimately affecting trust in capitalism. Drawing on the upper echelons perspective, paradox theory, and the trust literature, we describe why executives might pursue financial and social missions equally, and how executives’ actions that follow this pursuit could help shape trust in capitalism. Further, we describe the role of information asymmetry in shaping the effects of such actions. Our theoretical framework has implications for understanding executives’ responsibilities and relationships with shareholders and other constituents, the origins and importance of trust, and responsible leadership. Our overall contribution is to shed light on the role that executives play in the development of trust in capitalism.