2018 Edelman Trust Barometer

2

Methodology

2017 Edelman Trust Barometer: 28-country global data margin of error: General Population +/-0.6% (N=32,200), Informed Public +/- 1.2% (N=6,200), Mass Population +/- 0.6% (26,000+). Country-specific data margin of error: General Population +/- 2.9 ( N=1,150), Informed Public +/- 6.9% (N = min 200, varies by country), China and U.S. +/- 4.4% (N=500), Mass Population +/- 3.0 to 3.6 (N =min 740, varies by country), half sample Global General Online Population +/- 0.8 (N=16,100).2017 Edelman Trust Barometer Family Business Supplement: 12-country global data margin of error: +/- 0.83% (N=13,800). Country-specific data margin of error: +/- 2.9 (N=1,150).

EdelmanTrust Barometer18 years of studying trust

Launched annually at the World Economic Forum Annual Meeting in Davos

Inaugural Family Business SpecialReport in 2014

2018 EdelmanTrust BarometerOnline survey in 28 countries

33,000+ respondents total

All fieldwork conducted between October 28th and November 20th, 2016

Ages 18+

1,150 respondents per country

2017 Family BusinessSpecial ReportOnline survey in 12 countries

15,000+ respondents total

All fieldwork conducted between June 7th and June 27th, 2017

Ages 18+

1,150 respondents per country

Measured opinions of family business employees vs. those not employed in a family business

Source: 2018 Edelman Trust Barometer. The Trust Index is an average of a market's trust in the institutionsof government, business, media and NGOs. General population, 28-market global total. 3

Average trust in institutions, general population, 2017 vs. 2018

Trust IndexA World of Distrust

Biggest changes in

47 Global72 India69 Indonesia67 China60 Singapore60 UAE 53 The Netherlands52 Mexico52 U.S.50 Colombia49 Canada48 Brazil48 Italy48 Malaysia45 Argentina44 Hong Kong44 Spain43 Turkey42 Australia42 S. Africa41 Germany40 France40 U.K.38 S. Korea37 Sweden36 Ireland35 Japan35 Poland34 Russia

U.S. -9

China +7

S. Korea +6

UAE +6

Italy -5

Trust (60-100)

Neutral (50-59)

Distrust (1-49)

Trust decline in the U.S. is the steepest ever measured

48 Global74 China71 Indonesia68 India66 UAE58 Singapore54 Mexico54 The Netherlands53 Malaysia49 Canada 47 Argentina47 Colombia47 Spain46 Turkey45 Hong Kong44 Brazil44 S. Korea 43 Italy43 U.S.41 Germany41 Sweden40 Australia40 France 39 Poland39 U.K.38 Ireland38 S. Africa37 Japan36 Russia

2017General Population

2018General Population

Global Trust Index remains at distruster level

20 of 28 markets are distrusters, up 1 from 2017

4

Percent trust in each institution, and change from 2017 to 2018No Recovery in Trust

53 52

41 43

53 52

43 43

67 65

53 53

64 64

53 53

-3 -1 0 0

Business MediaNGOs Government

0 0 +2 0

Informed Public

General Population

20182017

Y-to-Y Change− +0

5

Informed Public

MassPopulation

50

Neutral

Trusted

Distrusted

53

6059

44

48

46

2012 2016 2018

Percent trust in the four institutions of government, business, media and NGOs, 2012 to 2018

Trust gap is widening

13pt

9pt

12pt

6

The inversion of influence

Influence & Authority

Influence

Authority

MassPopulation

48 = Distrust

59 = Edge ofTrustInformed

Public

State of Trust in Business

7

8

Without Trust, They Will Stop Buying

1 Safeguard privacy

2 Drive economic prosperity

3 Invest in jobs

4 Ensure competitive workforce

5 Consumer safety63% agree

A good reputation may get me to try a product—but unless I come to trust the company behind the product I will soon stop buying it, regardless of its reputation”

“ Trust-building mandates for business

52

36 3640 41 42 42 43 43 44 44 45 46 47 48 49 49

53 54 56 57 60 6064

68 7074 74

78

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Hon

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orea

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U.K

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Aust

ralia

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Swed

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Can

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Spai

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S. A

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Italy

Sing

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9

Percent trust in business, and change from 2017 to 2018

Trust in Business Increases in 14 of 28 Markets

0 +2 +7 -1 +2 -8 +1 +3 -2 -1 +1 -3 +3 +1 -10 -1 +3 -3 -1 -2 -4 +4 0 0 +4 +3 +7 0 +2

Distrusted in 16 markets

TrustNeutralDistrust

Y-to-Y Change− +0

10

Percent who have a strong expectation that CEOs shape conversations and policy debates about each issue

CEOs Seen as Authority on Issues and Policy

expect CEOs to inform conversations and policy debates on one or more issues

84%1 Jobs

2 The economy

3 Automation

4 Regulations

5 Globalization

6 Corruption

7 Global warming

Global ranking

8 Discrimination

9 Infrastructure

10 Cost of living

11 Education

12 Healthcare

13 Immigration

72

57 57 60 60 62 64 65 66 68 68 71 71 71 71 72 72 72 73 74 75 76 79 80 81 82 83 8690

Glo

bal 2

8

Japa

n

S. K

orea

Arge

ntin

a

Fran

ce

Turk

ey

Rus

sia

Spai

n

Irela

nd

Hon

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ng

Pola

nd

Ger

man

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S. A

frica

Swed

en

U.K

.

Braz

il

Italy

Mal

aysi

a

Sing

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Aust

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Can

ada

UAE U.S

.

Mex

ico

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Net

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Source: 2018 Edelman Trust Barometer. TRU_INS. [YOUR EMPLOYER] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal.“ (Top 4 Box, Trust) General population, 28-market global total.

Note: 2016 data was taken from Q525-526. Thinking about your own company and other companies in your industry, please indicate how much you trust each to do what is right using a 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust), question asked of half of the sample. General population, 28-market global total.

11

Percent trust in employer, and change from 2016 to 2018Employers Trusted Around the World TrustNeutralDistrust

+7 +17 +2 -18 +12 -2 +16 +2 +6 +9 +12 +9 -1 +21 +14 -5 +14 -4 0 +20 +11 0 +15 -9 +19 +3 -2 +3 +13

Change, 2016 to 2018− +0

Where Family Business Stands

13

Family business has a double-digit trust advantage in 10 of 11 markets

7582

73 74 72 75 79 75 78 76 80

625948

43 44 4349

54 57

70 74 78 74

Glob

al 1

1

U.S

.

Fran

ce

Germ

any

U.K

.

Cana

da

Italy

Braz

il

Mex

ico

Indi

a

Indo

nesia

Chin

a

People Trust Family BusinessPercent trust in family business vs. business in general, 11-market global total

Source: 2018 Edelman Trust Barometer. TRU_INS. Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a nine-point scale, where one means that you “do not trust them at all” and nine means that you “trust them a great deal.” (Top 4 Box, Trust) General population, 11-market global total.

Source: 2017 Edelman Trust Barometer. Q15-17G. Thinking about different types of businesses, please indicate how much you trust each type of business to do what is right using a 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 4 Box, Trust), question asked of half the sample. General population, 11-market global total.

Family business trust advantage+-Family

businessBusiness in general

2 2 -1216 34 30 30 29 26 25 18 8

14

Among Those with a Preference, More Than Twice as Many Would Rather Work for a Family Business

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q37. Indicate how much you agree or disagree with the following statements using a 9-point scale where one means that you “strongly disagree” and nine means that you “strongly agree”. (Bottom 4 Box, Disagree; Code 5, Neutral; Top 4 Box, Agree) General population, 12-country global total.

54%Would rather work for a family business21%

Would rather not work for a family business

19%No preference

2.6xFamily business

advantage

15

21

66

If They Know You, They Will Pay MorePercent who will pay more for products or services offered by family business, comparing those who know which companies they buy from are family businesses vs. those who do not

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q37. Indicate how much you agree or disagree with the following statements using a 9-point scale where one means that you “strongly disagree” and nine means that you “strongly agree”. (Top 4 Box, Agree) General Population, 12-country global total, cut by those who know which companies they buy from are family businesses (Q37r1 Top 4 Box) vs. those that do not (Q37r1 Bottom 4 Box).

Willing to pay more for products or services offered by a family business

+45 ptsmore likely to pay more if they know which company is a family business

Knows which isfamily business

Does not know which is family business

Silence Isn’t Working

17

Just Over 1 in 2 Know Which Companies are Family BusinessesPercent who know which companies they buy from are family businesses

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q37. Indicate how much you agree or disagree with the following statements using a 9-point scale where one means that you “strongly disagree” and nine means that you “strongly agree”. (Top 4 Box, Agree) General Population, 12-country global total.

40 4046 46 48 50 51 52

56 5663

69

Ger

man

y

Fran

ce

Saud

iAr

abia

Braz

il

U.K

.

U.S

.

Can

ada

Mex

ico

Italy

Chi

na

Indo

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Indi

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Globally

51%“ I know which

companies I buy from are family businesses and which ones are not ”

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Family Business Not Getting Credit for Job Creation

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q48. Please rate Family-owned or Family-Controlled businesses or companies on how well you think they are performing on each of the following attributes. Use a nine-point scale where one means they are “performing extremely poorly” and nine means they are “performing extremely well”. (Top 2 Box, Performing extremely well; excludes DKs) General Population, 12-country global total.Source of third-party research: Family Firm Institute.

Fewer than

1 in 3see family business

as a job creator

Family businesscreates

50–80%of jobs

Source: Family Firm Institute, Global Data Points

Perception Reality

19

Family Business Perceived as Behind on Innovation, Long-Term Thinking and Financial SuccessPercent who believe each is more likely to be true of family business vs. nonfamily business

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q35. Think about family businesses versus businesses that are not controlled by a family. For each of the characteristics below, please indicate how likely it is that each one would describe a family versus a non-family owned business. Rate each trait on the following scale where 1=This is much more likely to be true of family businesses, 5=This is equally likely to be true of family-owned and non-family-owned businesses, and 9=This is much more likely to be true of non-family-owned businesses. (Top 4 box, Non-family businesses; Bottom 4 Box, Family businesses) General Population, 12-country global total.Source of third-party research: Academy of Management Journal, Doing More with Less: Innovation Input and Output in Family Firms.

For every dollar invested in R&D, family businesses drive more innovative outputs—measured by number of patents, number of new products, or revenues generated with new products—than nonfamily firmsSource: Academy of Management Journal,Doing More with Less: Innovation Input and Output in Family Firms

Reality

2115 15

45 45 43

Long-term thinking Innovation Financial success

Family business

Nonfamily business

Perception

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Family Business Perceived as Behind on Societal ContributionsPercent who believe each is more likely to be true of family business vs. nonfamily business

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q35. Think about family businesses versus businesses that are not controlled by a family. For each of the characteristics below, please indicate how likely it is that each one would describe a family versus a non-family owned business. Rate each trait on the following scale where 1=This is much more likely to be true of family businesses, 5=This is equally likely to be true of family-owned and non-family-owned businesses, and 9=This is much more likely to be true of non-family-owned businesses. (Top 4 box, Non-family businesses; Bottom 4 Box, Family businesses) General Population, 12-country global total.Source of third-party research: E&Y and Kennesaw State University. Staying power: How do family businesses create lasting success?

1723

46

38

Leads on societal challenges Philanthropy / Foundations

81% of the world’s largest family businesses practice philanthropy

56% of all family business owners personally oversee the progress and effectiveness of their philanthropic projectsSource: E&Y and Kennesaw State University.Staying power: How do family businesses createlasting success?

PerceptionFamily business

Nonfamily business

Reality

21

Philanthropic Motives Under ScrutinyPercent who agree wealthy individuals create nonprofit foundations for one or more of the following reasons

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q40. Please indicate how much you agree or disagree with the following statements using a 9-point scale where one means that you “strongly disagree” and nine means that you “strongly agree”. (Top 4 Box, Agree) General Population, 12-country global total. Callout is a net of three items: Q40 r5, r6, and r7 (Top 4 Box, Agree) General Population, 12-country global total.

78%agree wealthy

individuals often create nonprofit foundations for

negative reasons

To exert political influence

For vanity and self-promotion

To ease their guilt regarding those they hurt amassing their wealth

Challenges for the Next Generation

23

Next-Generation Leaders Seen as Less Capable Percent who agree with each of the following statements about next-generation leaders

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q29. Please indicate how much you agree or disagree with each of the following statements using a 9-point scale where one means that you “strongly disagree” and nine means that you “strongly agree”. (Top 4 Box, Agree) Q44. Thinking about your current company, please indicate how much you agree or disagree with each of the following statements using a 9-point scale where one means that you “strongly disagree” and nine means that you “strongly agree”. (Top 4 Box, Agree), question only asked of family business employees. General Population, 12-country global total.

63%will mismanage

the company

53%less impressive

and talented

56%less committed and passionate about

the company

24

Next Generation Must Overcome Wealth StigmaPercent who associate each of the following with individuals who earned vs. inherited their wealth

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q21. Thinking about wealthy individuals who inherited their wealth, please indicate how much you associate each statement below with these individuals. Please use a 9-point scale, where one means you “do not associate that statement at all” with wealthy individuals who inherited their wealth and nine means you “strongly associate” that statement with wealthy individuals who inherited their wealth. (Top 4 Box, Associate), question asked of half the sample. Q22. Thinking about wealthy individuals who earned their wealth, please indicate how much you associate each statement below with these individuals. Please use a 9-point scale, where one means you “do not associate that statement at all” with wealthy individuals who earned their wealth and nine means you “strongly associate” that statement with wealthy individuals who earned their wealth. (Top 4 Box, Associate), question asked of half the sample. General Population, 12-country global total.

6661 61

4034 35

Deserve what they have People I admire and respect Good role models

Earned Inherited

25

Next-Generation Leaders Must Prove Themselves Top factors that would be important in maintaining trust in a business that passed leadership on to a family member

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q45. If the owner of a FAMILY-OWNED BUSINESS passed ownership or leadership of the business to a member of their family, how important would the following factors be to maintaining your trust in the business? Please answer using a 9-point scale where 1 is not at all important to maintaining your trust and 9 is extremely important to maintaining your trust. (Top 4 Box, Important) General Population, 12-country global total.

Successor must be…

80%Committed tothe future of

the business

79%Innovative

80%Appointedon merit

79%Experienced

within thebusiness

78%Transparent

about their plansfor the business

74%Committed to legacy

Your Story Must Be Told

27

Tell Them Where You Came FromPercent who say the following would increase their trust in a family business

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q34. How much would each of the following increase your trust in a family business? Using a nine-point scale where one means “would not increase my trust at all” and nine means “would increase my trust a lot” rate each item below. (Top 4 Box, Increase trust) General Population, 12-country global total.

Knowing the company’s history and founding story builds my trust

“”

73%

28

Tell Them Who You Are as a Family and BusinessPercent who say the following would increase their trust in a family business

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q34. How much would each of the following increase your trust in a family business? Using a nine-point scale where one means “would not increase my trust at all” and nine means “would increase my trust a lot” rate each item below. (Top 4 Box, Increase trust) General Population, 12-country global total.

67

68

70

71

74

75Information about their supply chain

Transparency regarding how its business decisions are made

Information on the family’s role in the business

Information about the backgrounds, experience and personalities

of the family

A public presence for family members involved in the business

Family not afraid to take a stand on controversial issues

29

Use Multiple VoicesPercent who rate each spokesperson about a family business as extremely/very credible

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q47. Below is a list of people. In general, when forming an opinion of a family business, if you heard information about that family business from each of these people, how credible would you consider that information to be--extremely credible, very credible, somewhat credible, or not credible at all? (Top 2 Box, Credible) General Population, 12-country global total.

62 61 61 58 57 55 54 52 50 4944

37

A technicalexpert

Founder & CEOof the family

business

Academicexpert

Entrepreneur Financialindustry analyst

A person likeyourself

Board ofdirectors

Employee Nonfamily CEO Second / third-generation

family member

NGOrepresentative

Family membernot working inthe business

Employees more credible than next-generation or nonfamily CEOs

Founders 12 points more trusted than second/third-generation family members and nonfamily CEOs

30

“ I would recommendour products or services to others ”

Activate Your Employees as AmbassadorsEmployees of family business who say…

Source: 2017 Edelman Trust Barometer Family Business Supplement. Q38. Thinking of the current company where you work, please indicate how much you agree or disagree with each of the following statements using a 9-point scale where one means that you “strongly disagree” and nine means that you “strongly agree”. (Top 4 Box, Agree) Family Business Employees, 12-country global total.

72%82% “ I would recommendthis organization as an employer ”

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Unlocking the Family Business Advantage