Education Policy | Post Primary | Preschool | Primary | Tertiary | Search

 

Loss of trust in business—what this means for global economy

22 February 2013

Loss of trust in business—and what this means for the global economy

The causes and consequences of decreasing public trust in business, and what this means for societies and the global economy, will be the focus of a public lecture on Monday at the Victoria Business School.

Harvard Professor and Victoria University alumnus Paul Healy will discuss recent cases and research findings that provide insights into the causes of the loss of trust, its ongoing impact, and the changes required to rebuild confidence.

Professor Healy is the James R. Williston Professor of Business Administration and Senior Associate Dean for Research at the Harvard Business School, where he researches and teaches in corporate governance and accountability, strategic financial analysis and financial reporting.

He cites Enron, the Madhoff Ponzi scheme, the global financial crisis and ongoing banking issues in Europe as just a few examples of many events causing public faith in business to decrease.

“People have a sense that the leaders of the firms involved in these scandals took a very narrow approach to management that served their own short-term interests, often at the expense of customers, employers, the company’s reputation and the financial system.

“This loss of trust is twofold: it’s in the individuals that lead corporations and the corporations themselves. That, I think, is the tragedy—as a result of ethical lapses some leaders failed to preserve the reputation of their own organisations and led them to their demise.”

Professor Healy says as a result increased regulation is being placed on business, and while this is appropriate, some laws will likely end up being heavy-handed.

Another consequence is economic growth also slows, along with opportunities to reduce unemployment, as investors move their resources into more secure locations than the stock market. Meanwhile, innovative new businesses find it increasingly difficult to raise capital.

“Many of the challenges in the world today, such as providing affordable health care for ageing populations, or providing energy, water and food in ways that are economically and ecologically sustainable, need to involve business. But the consequences of recent events can lead to less business innovation in approaching these challenges.”

He says in almost all of the scandals he’s observed, the problem can be traced to the company’s values.

“Corporate boards need to take a good look at the organisation’s values and ensure that they are not only rewarding short-term performance. Compliance systems in organisations need to be sufficiently robust and taken seriously, so that lapses are detected before they bring down the company.”

Professor Healy graduated from Victoria University, majoring in accounting and economics, with first class Honours in 1977 and went on to complete his Master’s and PhD studies from the University of Rochester in New York. He spent 14 years at the M.I.T. Sloan School of Management, before joining Harvard Business School.

Media and the public are invited to attend the lecture on Monday 25 February at 5.30pm.

ENDS

© Scoop Media

 
 
 
 
 
Culture Headlines | Health Headlines | Education Headlines

 
Snow Business: Coronet Peak Turns 70

In 1947 Coronet Peak in Queenstown opened with just a rope tow pulling keen skiers up a mountain, the first commercial ski field to open in New Zealand. More>>

Howard Davis: 'Dunkirk'

The British have an extraordinary penchant for celebrating catastrophic military defeats. It is not only the Battle of Hastings, the Charge of the Light Brigade, and Gallipoli that have become immortalized in prose, poetry, and movies ...
More>>

Conservation: Gecko Stolen From DOC Visitor Centre

A long-term resident at the Fiordland National Park Visitor Centre has been stolen. The Marlborough green gecko was reported missing on 19 July. More>>

Scoop Review Of Books: Rare Ingredients

When I heard Kiazim was publishing a cookbook, I jumped at the opportunity... I was back in New Zealand, but how hard could it be to create Turkish-Cypriot cuisine on the opposite side of the world? Well, it turns out — pretty damn hard. More>>

Remembrance: British Memorial Design Revealed

After years of work with Weta Workshop, the British High Commission has revealed the final design of the United Kingdom’s presence in Pukeahu National War Memorial Park. More>>

ALSO:

Scoop Review Of Books: The Whole Intimate Mess

Alison McCulloch: Walker’s account of what she went through is harrowing and intimate, and, at risk of sounding trite, very brave. More>>

 
 
 
 
 

LATEST HEADLINES

  • CULTURE
  • HEALTH
  • EDUCATION
 
 
  • Wellington
  • Christchurch
  • Auckland