In Which State Do Residents Trust Business The Least?

Ed BurghardWhat the people want is very simple. They want an America as good as its promise.

Barbara Jordan, American congresswoman and professor (1936-1996)



Trust in Business

The power of the American Dream Composite Index research is found in understanding the 5 sub-indexes and 35 dimensions that comprise the ADCI.

The American Dream Trust in Business dimension measures the extent of resident satisfaction with business’s fairness and trustworthiness.  Here are the 10 lowest scoring states:

  1. Hawaii
  2. Wyoming
  3. Vermont
  4. South Carolina
  5. Arkansas
  6. Alabama
  7. Mississippi
  8. Pennsylvania
  9. Rhode Island
  10. Nevada

Read the above as residents in these states have the lowest degree of trust and satisfaction in the decisions business executives make.

For perspective, trust in business is a low scoring dimension nationally.   I personally think this is a very disturbing, rather than healthy situation.  While it may be considered good in a democracy to have conditional trust of government programs, distrust can be crippling to progress.  The principles espoused in Stephen Covey’s book “The Speed of Trust” are instructional for economic development.  Stephen’s Firth Wave discussion is about societal trust.

In the book, there are six great quotes worth reprising –

Robert Eckert  –  “Trust isa key building block in the creation of a company’s reputation, and as a direct result, its shareholder value.”

Hank Paulson – “[W]e’ve got a business principle the says, ‘Our assets are our people, our capital and our reputation’ And if any of those are diminished, the last one is the hardest one to regain.”

Ellen Ryan Mardiks – “Smart companies will amass true assets that can be called upon to protect the brand in tough times.  Without these deposits in its Trust Bank, a single breach of trust can devastate a company because you have no track record of trust enhancing behavior to call upon.”

Jeff Bezos – “A brand for a company is like a reputation for a person.  You earn reputation by trying to do hard things well.”

Deborah Dunn – “There has been a tendency in the business world to confuse citizenship with philanthropy.  They’re not the same thing.  Enron was a great philanthropist, and clearly, it was not a good corporate citizen.  The heart of global citizenship is about ethics and conduct.  It begins with the way a company thinks about its role in the world.  Does it simply exist to make as much money as possible?”

Tachi Kiuchi – “People talk about businesses needing to be responsible as if it’s something new we need to do on top of everything else.  But, the whole essence of business should be responsibility.  My philosophy is ‘We don’t run companies to earn profits, we earn profits to run companies.’ Our companies need meaning and purpose if they’re to fit into the world, or why should they live at all?”


I think the take-away message from these quotes is that the interest of business and residents are inseparable.  But, this lack of trust in business isn’t a new phenomenon.  In 2011, NPR ran a great article entitled “Trust in America: Recovering What’s Lost”.  One observation is that in times of economic stress people trust businesses less.  Consequently, the recent economic melt down likely exasperated an already bad situation.  But, the current lack of trust in business cannot be attributed exclusively to a poor economic cycle.  Companies are routinely making choices that raise ethical questions.  This article entitled the “Top 10 Unethical Business Actions” provides some compelling examples.  An increasingly, poor business decisions are being linked to environmental disasters that receive global media attention.  “The World’s Worst Environmental Disasters Caused by Companies” article reviews the impact of business decisions that led to catastrophes.  The intent of sharing these articles is not to cast blame, but rather to suggest residents lack of trust is probably not irrational.

When residents have low trust in business, the probability of increased regulation to ensure businesses make decisions that do minimal harm on the public goes up.  This lack of trust has a real cost.  If you simply look at the federal regulation environment, here are some startling facts from the Small Businesses For Sensible Regulation Organization to consider.

Some Startling Facts

  • Today, there are 3,305 federal regulations in the pipeline, with nearly 1/3 impacting small business directly.  (Source: The Office of Information and Regulatory Affairs, Unified Agenda 2013)
  • In the first two months of 2014, 72 new proposed regulations affected small businesses, with 12 of them costing $100 million in compliance costs (Source: The Office of Information and Regulatory Affairs)
  • There are more than 175,500 total pages in the Code of Federal Regulations, an increase of more than 21 percent over the last decade.  (Source: Congressional Research Service)
  • In 2013 alone, more than 80,330 pages were added to the federal register. (Source: Congressional Research Service)
  • Estimated cost $112 billion of compliance with federal regulations in 2013, resulting in over 67 million hours of paperwork (Competitive Enterprise Institute)

Does your community have a trust strategy?

How many communities actually have a strategy of always being trustworthy?  My guess is few if any.  If residents view fairness and trustworthiness as an integral part of their American Dream, why should’t state and community leaders make it a priority and strive to ensure businesses and government are both fair and trustworthy?  Covey provides practical insights into how to go about doing this with advise like “Trust is equal parts character and competence… You can look at any leadership failure, and it’s always a failure of one or the other.”  States and communities that focus on building resident trust and fairness will have a distinct competitive advantage in attracting capital investment and top talent.  It is one way to create a virtuous circle for sustainable economic success.

A great resource to look at is the Trust Across America website.  The Organization has a unique tool to help companies assess their trustworthiness.  And they have produced a book entitled  “Trust Inc.: Strategies For Building Your Company’s Most Valuable Asset”.  The information can give you a good grounding on what company executives can do to rebuild resident trust.  It may also stimulate ideas on what you can do as an economic development professional to help the companies in your community better understand how to tackle this problem.

What Do The Data Tell You?

The ADCI data reflect the sentiment of residents.  If you think about it, these are the people in the best position to assess how easy it is to achieve their American Dream, and as a consequence their perspective is worth paying attention to.  Resident sentiment is measured through a validated questionnaire.  To produce the Report, the data collected from residents in each state throughout calendar 2013 have been compiled to create a 12-month snap shot.  The intent of the Report is to help economic development professionals and elected officials better understand where the state might have opportunities to better enable residents to achieve their American Dream.  This can be done by comparing one state’s dimension scores with other states that might be seen as competitive for capital investment or attraction of top talent.  It is important to note the data inform HOW residents are feeling, but do not explain the sentiment drivers behind WHY they feel that way.  Answering the WHY question requires additional local market research.

How Were The Dimensions Determined?

In general, the Xavier University team did an exhaustive literature review along with both qualitative and quantitative market research to identify an initial list of dimensions that make up the American Dream.  Questions or statements were generated to measure each dimension.  Then two separate large-scale quantitative studies were used to statistically validate and refine the questionnaire.  Finally, three nationally representative samples were used to validate the ADCI, and factor analysis was used to verify that each dimension was sound.  The result of all this work was 35 dimensions that are grouped into five statistically sound and validated sub-indexes.

more complete description of the process is available on the Xavier University website.

What Is Your State’s Ranking?

In 2013, New Mexico is Ranked as the #1 State in the Nation for Enabling Residents to Achieve Their American Dream.

American Dream Duck Cover

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