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The trust gap

between consumers
and corporations
Serge Bloch

Sheila M. J. Bonini, Kerrin McKillop,


and Lenny T. Mendonca

Sixty-eight percent of executives say that large corporations make a


generally or somewhat positive contribution to the public good. Yet only
48 percent of consumers agree.
Consumers are less positive than
executives are about the contributions
that large global companies make to the
public good, according to a survey of
how consumers view the role of business
in society.1 Moreover, consumers and
corporate leaders prioritize different sociopolitical issues, and consumers have
no qualms about taking big business to
task for what they perceive as failures
to meet its social obligations.
We compared the findings of this consumer research with a McKinsey Quarterly
global survey2 that probed the opinions
of executives on the same topics. The
comparison revealed a trust gap between
consumers and corporations, as well as
a lack of understanding among business
leaders about what consumers really
expect from companies.
These observations, worrisome for executives, suggest that companies should
widen their polling and market research
beyond the traditional focus on current
and prospective customers and product
offerings. What the public thinks about
business and its role in tackling social and
political issues such as global warming,
obesity, and online privacy is important. As
consumers, members of the public
make their voice heard through purchasing
decisions. As voters, they influence
the politicians and regulators who set the
ground rules of the market. Only through
a detailed understanding of public opinion

can companies hedge the risks and seize


the opportunities that social and political
developments present (see What
consumers expect from companies, in
this special report).
Our twin surveys reveal that 84 percent
of executives and 89 percent of consumers
believe that corporate obligations to
shareholders must be balanced by contributions to the broader public good
for example, providing good jobs, making
philanthropic donations, and going
beyond legal requirements to minimize
pollution and other negative effects
of business activities. The consensus for
engagement is widespreadranging
from 75 percent in China to 90 percent
in India among executives and from
86 percent in India to 91 percent in the
United Kingdom among consumers.
In addition, six out of ten executives
believe that the public expects companies
to take just as much responsibility as
governments for handling social issues.
More than seven out of ten consumers say
equally shared responsibility should be
the norm.
Many consumers are not impressed by
current corporate contributions to
the public good. That perception may
reflect distrust fueled by numerous
and widely publicized examples of corporate misconduct in recent years.
While 68 percent of executives say that
large corporations make a generally

Q2 2007
Business in society Overview
The McKinsey Quarterly 2007 Number 2
Exhibit 1 of 3
Glance: Consumers are less than positive about large corporations contributions to the public
good.
exhibit 1

The good corporation?


% of respondents who describe the overall contribution that large corporations (public
and private) make to the public good as generally or somewhat positive1
Europe2
Asia-Pacific3
North

America4

35

Consumers
Executives

62
39

66

40

China

76

68

India

1Executive
2Executive
3Executive
4Executive

75

73

78

data weighted by GDP of constituent countries.


data are for Europe; consumer data are for France, Germany, and United Kingdom only.
data are for Asia-Pacific; consumer data are for Japan only.
data are for North America; consumer data are for United States only.

Source: Dec 2005 McKinsey Quarterly survey of 4,238 global business executives and July 2006 McKinsey survey of 4,063
consumers in China, France, Germany, India, Japan, United Kingdom, United States

or somewhat positive contribution to the


public good, only 48 percent of consumers
agree. The geographical variations are
significant. Consumers in China and India
report much more positive feelings about
the social contributions of corporations
than do their peers in Europe, Japan, and
the United States (Exhibit 1). Only 26 percent of French consumers, for instance,
say that business makes a generally or
somewhat positive contribution.

to select the three issues that would be


most important to them over the next
five years, almost half of the consumers
picked environmental issues, followed
by pension and other retirement benefits,
and health care. By contrast, executives
view job losses and offshoring as the issue
that will attract the most public and
political attention, followed by privacy and
data security, and the environment
(Exhibit 2).

Similarly, European and US consumers,


when asked how much they trust certain
institutions to act in the best interest
of society, place large global corporations
at the bottom of the listbeneath nongovernmental organizations, small regional
companies, the United Nations, labor
unions, the media, and government. Just
33 percent of European consumers and
40 percent of US ones say that they trust
large global corporations to act in
societys best interest all, most, or even
some of the time.

A similarly wide gap emerged when we


compared responses to a question
about which single action would be most
effective if large companies wanted a
better reputation. Twenty-seven percent
of the consumers say it would be
to improve benefits and conditions for
employees, 17 percent to tighten safety
and environmental procedures, and
14 percent to limit redundancies and the
offshoring of jobs. By contrast, executives
believe that the most effective actions
would be to tighten corporate-governance
procedures (25 percent), to increase
philanthropy and social investments
(20 percent), and to improve benefits and
conditions for employees (15 percent).

We found that executives have only a


limited understanding of what issues are
on the minds of consumers. Asked

Research in Brief

This limited understanding of what conThe price of mismanaging social issues


sumers really think might help explain why
can be high. Consumers everywhere
many of the executives we surveyed
are ready to act in response to corporate
view sociopolitical trends as risks rather
behavior they consider to be against
than opportunities. Whats more, only
the best interest of society. Half of US
14 percent of the executives think that
consumers, for instance, say they have
large corporations in their own industries
refused to buy products or services for
do an adequate or good job of anticithis reason, and four out of ten have
pating social pressures, including criticism
recommended the same course to others.
of corporate activities. Indeed, almost
Consumers report a particular willinghalf of the executives from consumer business to change their purchasing decisions
nesses, such as retailing and food and
for the offerings of the food and beverbeverage, say that large corporations in
age, retailing, and financial-services indusQ2
2007
their
industries have been publicly crititries. Although six out of ten US concized by interest
groups
or the media either
sumers say they had done so for food and
Business
in society
Overview
for
failing
to
meet
generally
expected
beverage, US consumers emerge as
Exhibit 2 of 3
social responsibilities or for violating the
the group least likely to take action, along
Glance: Business executives dont understand what is on the minds of consumers.
spirit (though not the letter) of the law.
with the Japanese (Exhibit 3).
exhibit 2

A disconnect
% of respondents selecting given issue as 1 of top 31
Top 3 issues overall

Which issues will be most important in the next 5 years?


Consumers

Executives
47

Environmental issues

31

38

Pension, retirement benefits

21

31

Health care, other benefits


Demand for healthier or safer products

19

27

Job losses, offshoring

25

Affordability of products

25

18
42
18

21

Workplace conditions, safety

15

18

Privacy, data security


Human-rights standards

16

Pay inequality2

33
5

13

Demand for more ethically produced products

17

9
9

Demand for investment in developing countries


Political influence/involvement of companies

Ethical standards for advertising, marketing

Opposition to foreign investment, freer trade

Other

11
9
23
19
12
9

1Executive data weighted by GDP of constituent countries; executives were asked to select those issues that will attract most public

and political attention over next 5 years; consumers were asked to select those issues that will be most important to them over
next 5 years.

2Between top management and other employees.

Source: Dec 2005 McKinsey Quarterly survey of 4,238 global business executives and July 2006 McKinsey survey of 4,063
consumers in China, France, Germany, India, Japan, United Kingdom, United States

10

Q2 2007
Business in society Overview
The McKinsey Quarterly 2007 Number 2
Exhibit 3 of 3
Glance: Consumers indicate that they are willing to act on their views, particularly in their
purchasing decisions.
exhibit 3

Consumer activism
% of respondents1

Which of the following actions have you ever taken in response to a


companys behavior that you considered to be against the best interest
of society?
Food and beverage
industry
Average of all
industries2

Asia
United
States

Refused to buy
products/services

Europe

China

India

60
49

Recommended
others not buy
products/services

89
79

49
38
28
18

16
18

Voted for political


parties that pledge to
address behavior

17
21

22
21

Refused to work
with them or on
their behalf

15
13

Refused to invest
in stock

14
19

Contacted other
interested parties to
address issue

14
11

No action taken

2
6
24
33

70
54

75
66

Contacted company
to express yourself

Participated in public
demonstration

Japan

France
62
46

57
44

44

16
12

20
19

Germany
67

United
Kingdom

67
57

49
32

67
53

42
40

41
31

1
4

5
7

10
13

22
14

10
13

1
6

8
13

13
22

8
10

38
37

16
19

2
2

8
8

41
49

21
28

2
5

18
17

2
3

5
6

2
5

6
7

5
6

5
5

2
4

17
19
7
9

20
13

2
3

18

1
5

16
19

33
45

18
34

14
12
22
25

11
15

22
22

22
33

1Excludes respondents who answered other.


2Electric power, financial services, food and beverage, petroleum, pharmaceuticals, retailing.

Source: Dec 2005 McKinsey Quarterly survey of 4,238 global business executives and July 2006 McKinsey survey of 4,063
consumers in China, France, Germany, India, Japan, United Kingdom, United States

While business leaders overwhelmingly


recognize the need to engage with the
public on social issues, they appear to be
groping for ways to do so successfully.
A top priority will be to close the trust gap.
This step will in turn force executives
to build a deeper understanding of social
attitudes by developing ways to track
and interpret public opinion and to scan the
horizon for new issues. Executives must
also devise a road map of initiatives and
actions to address key social problems.3
Sheila Bonini is a consultant in McKinseys
Silicon Valley office, Kerrin McKillop is a
consultant in the Washington, DC, office, and
Lenny Mendonca is a director in the San
Francisco office. Copyright 2007
McKinsey & Company. All rights reserved.

1
Incite Marketing conducted the survey on behalf
of McKinsey in July 2006, receiving responses
from 4,063 consumers in China, Europe (France,
Germany, and the United Kingdom), India, Japan,
and the United States. The survey explored
consumer perceptions of the role of business in
society, the way large global companies deal
with sociopolitical questions, and the issues facing
six industries: electric power, financial services,
food and beverage, petroleum, pharmaceuticals,
and retailing.
2
The McKinsey Global Survey of Business
Executives: Business and Society, The McKinsey
Quarterly, Web exclusive, January 2006.
3
Sheila M. J. Bonini, Lenny T. Mendonca, and
Jeremy M. Oppenheim, When social issues become
strategic, The McKinsey Quarterly, 2006
Number 2, pp. 2032.