What Level of Trust is Needed for Sustainability?
Social Responsibility Journal
Posted: 10 Jul 2008
Date Written: 2007
Abstract
The main ontological position of modern capitalism is founded on the philosophy of utilitarianism, derived of course from the work of Jeremy Bentham and John Stuart Mill. It is of course fundamentally flawed as it ignores power inequalities and assumes that the economic fiction of perfect competition can actually exist. Nevertheless it provides a legitimating mechanism for modern capitalism and the operation of firms within a market economy. More significantly, from the viewpoint of this paper, is the problem caused by the naýve assumption that the firm as nexus of treaties (see Williamson 1975) is sufficient to negotiate the contracts between the various stakeholders. This is significantly inadequate because it ignores the aspect of trust between the parties - the focus of our paper.
In this paper we argue that the sustainability of a firm is not predicated in the negotiated contracts it enacts but rather in the underlying trust which is implied and that one of the problems of the modern firm is that this trust has been negated in the drive for efficiency and shareholder value. The purpose of this paper therefore is to explore the nature of trust between the various stakeholders to the social contract which the firm enacts, paying particular attention to the involuntary stakeholders. In doing so we analyse the role of trust in each aspect of sustainability identified in a previous paper (see Aras & Crowther 2007a) and consider whether it is necessary for each stakeholder or just they key ones, or whether it is different for each aspect? In doing so we pay particular attention to involuntary stakeholders.
Keywords: Trust, Sustainability, Corporate Social Responsibility, Social Contract
JEL Classification: M14, M41, G39, G34
Suggested Citation: Suggested Citation