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Is the corporation to blame?

Yes. The corporation is to blame for a breakdown of trust and confidence, according to Sa?d Business School, at the University of Oxford’s Professor of Finance, Colin Mayer.

In his forthright book, “Firm Commitment”, the Professor says the failure of trust in economic and financial institutions is down to the corporation prioritising shareholder’s interests above those of society at large.

Professor Mayer said: “The corporation is arguably the most important institution in the world - an institution that employs us and invests our savings, and is the source of economic growth and prosperity around the world.

“Yet the corporation has lost its purpose and become dominated by short-term financial concerns to the exclusion of all others and to the detriment of us as its customers, employees and communities.”

In his book the Professor urges policy-makers and business heads to reform practices within corporations, and posed a key focus on ownership, values, governance, regulation and taxation.

The corporation must take responsibility for its actions, and give control to its long-term shareholders, according to the Professor’s argument.

Furthermore,the Professor argues that a “truly independent” board of directors must set out a clear set of values, and harsher regulations must be introduced where laws are broken.

The tax system must also be used to align corporate interests with the concerns of the public, according to Professor Mayer.

Sa?d Business School commented that most successful organisations already displayed the characteristics outline in the book, and exemplified Jaguar Land Rover owner, Tata, brewery giant, Carlsberg, automotive parts maker,Robert Bosch and media firm, Bertelsmann.

Professor Mayer added: “We can no longer look to regulation as the sole instrument to control the corporation.”

“Instead, re-establishing trust in the corporation is one of the most important policy issues of the 21st century.

“Without it, economic policies will fail, environmental degradation will continue and financial systems will collapse. With it, we can achieve far greater levels of economic and social well-being than at present.”

This was posted in Bdaily's Members' News section by Miranda Dobson .