We have just completed our special analysis on the role of business in society, with a focus on the four regions of the U.S. We find that the Midwest is the outlier among regions, the least trusting of the key institutions of business, government, media, and NGOs. The Midwest also has the largest trust gap between high- and low-income respondents. Finally, the Midwest has the biggest gap between expectations and performance of business when it comes to reskilling and support for local communities. That makes the Midwest (and Detroit to be specific) exactly the right place for Harvard Business School (HBS) to launch its new Institute for the Study of Business in Global Society. We undertook this research in Detroit in collaboration with HBS as part of a broader effort to reconsider the Role of the Corporation in Society.
“We are delighted to be working with Edelman on this important research, and to be expanding Harvard Business School’s presence in this crucial part of the country,” said Debora L. Spar, Jaime and Josefina Chua Tiampo Professor of Business Administration and Senior Associate Dean, Business and Global Society. “We have a lot to learn from the Midwest, and hopefully something to contribute as well.”
You will recall from our prior trust studies that business has emerged as the most trusted institution globally, and is seen as over 50 points more competent than government. Trust has become local, with trust in ‘my employer’ sixteen points higher than business overall and twenty-five points higher than government. CEOs are expected to speak out on issues of the day to attract values-driven employees and belief-driven consumers. ESG has emerged as a fundamental part of business strategy, with 88 percent of institutional investors using ESG as one of the fundamental pillars of securities analysis. Business is expected to lead on societal issues, such as diversity and inclusion, sustainability, wages/re-skilling, economic issues, and now geopolitical issues. Business is to consider its role in a broader array of issues from abortion rights to voting rights to gun control, with a greater right and responsibility in their headquarter city or when there is expertise.
Here are the most important statistics from the research done for HBS:
- Business is the most trusted Institution in the U.S.—The Northeast is most trusting of business (57 percent), the Midwest is the least at 51 percent.
- Government and Media are the least trusted Institutions in the U.S.—They are tied at 45 percent. The lowest score for government is in the Midwest at 40 percent; it is the lowest score for any institution across regions.
- Trust Inequality is near record levels in the U.S.—The trust gap between high- and low-income audiences is now 23 points in the U.S. (Trust Index for high income at 61, low income at 38), trailing the UK (34 points) and Germany (28 points) among developed markets. The trust gap in the Midwest is a stunning 32 points (Trust Index for high income at 60, low income at 28), with the next largest gap in the West at 26 points.
- Republicans are less trusting of Institutions than Democrats—There is a 20-point gap between Democrats and Republicans (trust index of 61 vs. 41, respectively). The gap is particularly large for trust in government (25 points, with Democrats at 60%, Republicans at 35%) and trust in media (31 points, with Democrats at 61% and Republicans at 30%).
- Attitudes towards business—Republicans trust business less than Democrats (56% vs. 61%). The difference between parties is even more profound regarding trust in technology (16 points), where Democrats are at 65 percent and Republicans at 49 percent.
- Highest expectations for business on key issues in the Midwest—90 percent say that it is the responsibility of business to train and reskill employees and 87 percent say business should support local communities. In fact, the Midwest also leads in Stakeholder Mindset, with 70 percent or more saying that business should prioritize customers and employees, versus shareholders at 52 percent, a twenty-point gap, on average, that is double that of the South at 10 points.
- Performance of business deeply disappointing, especially in Midwest—There is nearly a 50-point gap in the Midwest between the expectation and performance for business to support local communities and reskilling of employees. Going deeper, 48 percent of Midwestern respondents say that business will not follow through on commitments to address societal challenges because the institution does not have real interest in doing so.
- Tangible benefits from societal engagement—Globally, among those who are aware of and see business acting on societal engagement, there is 89 percent trust in business, while among those who are not aware of business’ commitment to societal issues, there is only 53 percent trust. That means more support for innovation, for business-friendly regulatory policies and a motivated workforce.
The Midwest has suffered first from jobs moving to the South then to Mexico and China. It has seen a contraction of key industries such as auto and steel. It has not shared equally in the fast growth sectors of healthcare, technology, and financial services. Its workforce is now worried (justifiably) about the threat of automation. The Billy Joel song, Allentown, says it all. “Every child had a pretty good shot to get at least as far as their old man got, but something happened on the way to that place, they threw an American flag in our face.”
There are several companies that are acting, to make the Midwest the poster child for what is possible in the coming decades. Discover has in-sourced 2,000 call center jobs and put them in the South Side of Chicago, with superb performance by their new employees. J.P. Morgan has made a $200 million commitment to invest in the economic recovery of Detroit, including loans for small businesses and for affordable housing. Google has a similar program in Detroit, partnering with Ford Motor Company as founding member of the Michigan Central hub that will deploy new urban transport solutions. I am proud that Edelman is the research collaborator for Harvard Business School in this all-important endeavor proving the idea of business as a force for good.
Richard Edelman is CEO.