What makes people willing to start a business, invest money, sign a contract, or accept a job offer?

The answer is not simply opportunity. It is confidence.

Confidence in what?

More than a century ago, Alpha Kappa Psi’s founders believed business should be built on fairness, accountability, and merit rather than privilege or personal influence. Those principles still matter today, but they depend on something larger: the rule of law.

The rule of law may sound like a legal concept; however, it’s also an economic one. Every transaction, partnership, and investment depends on a basic expectation that the rules will be applied fairly and consistently….and that there are mechanisms to assure this. When people trust that contracts will be honored and disputes resolved through established processes, they are far more willing to take risks, innovate, and create value.

That’s why economists often describe the rule of law as economic infrastructure. Roads help move products. Networks move information. Predictable laws and fair enforcement create the confidence that keeps markets moving.

Uncertainty is directly correlated with inaction.

When that confidence exists, businesses plan for the future, entrepreneurs pursue new ideas, and individuals compete on a level playing field. When it does not, uncertainty increases and opportunity declines. Business leaders sacrifice the time they would normally use to create value and instead use that time to mitigate ‘down side’ risk.

Rule of law isn’t just handling criminality appropriately. It’s also having the mechanisms available to solve civil disputes.  In a recent example published in the Federal News Network:

“A federal judge ordered the U.S. Department of Veterans Affairs (VA) to maintain its collective bargaining agreement with the American Federation of Government Employees (AFGE) after VA officials sought to terminate the contract. The court found that the union had met its contractual obligations and that the VA’s attempt to end the agreement was inconsistent with the terms of the contract and prior court orders. The judge stated that correspondence between the parties demonstrated ongoing negotiations and that the contract’s extension provisions applied, requiring the agreement to remain in force while negotiations continued.”

Beyond the criminal and civil court structure, “norms” are also critical. For emerging leaders, this principle starts with everyday actions: honoring commitments, following established processes, applying standards fairly, and accepting accountability when mistakes occur. These habits build trust because people know what to expect and believe they will be treated fairly.

The founders of Alpha Kappa Psi understood that strong markets require more than ambition and talent. They require trust in the systems that govern how people work together. The rule of law provides that foundation, creating the conditions for innovation, competition, and lasting prosperity.

Values in Action: Alpha Kappa Psi was founded in 1904 on the belief that business should be a respected profession defined by character, competence, and accountability. This series explores the principles that strengthen markets, elevate leadership, and create opportunity for all.

More than a century ago, Alpha Kappa Psi’s founders challenged a common reality of their time: opportunity in business was often determined by personal connections, family relationships, or social standing rather than ability.

They believed there was a better way.

Their vision was simple but powerful: business should reward merit. People should earn opportunities through competence, character, effort, and performance, not through favoritism or insider advantage.

That principle remains just as relevant today.

Healthy markets depend on competition. Organizations perform best when individuals are selected, promoted, and rewarded because they can contribute value rather than because of who they know. When merit becomes secondary to favoritism, the consequences extend far beyond individual disappointment. Innovation slows, trust declines, and performance suffers.

Economists have long recognized that competitive systems create incentives for improvement. When individuals and organizations know that success depends on delivering better products, better services, or better ideas, they invest in learning, creativity, and continuous improvement.

Favoritism disrupts that process.

When opportunities are distributed through personal preference rather than transparent standards, talented people may choose not to compete. Some disengage. Others leave. Over time, organizations can lose capable contributors whose ideas might have strengthened performance and helped solve future challenges.

The costs are not always immediately visible.

A 2025 World Bank study of public procurement found that politically connected firms were more likely to win contracts through less competitive processes, yet those advantages did not translate into stronger productivity or employment growth. The research concluded that favoritism can misallocate resources and reduce overall economic performance.*

These decisions may appear small in isolation, but collectively they reduce efficiency and limit the productive exchange of ideas that drives growth.

By contrast, transparent criteria create confidence.

People are more likely to trust decisions when they understand how those decisions are made. Clear expectations, measurable standards, and consistent evaluation processes help individuals see a connection between effort and opportunity. Transparency does not guarantee every outcome will be universally accepted, but it strengthens confidence that the process is fair.

Fair processes also improve performance.

When people believe achievement matters, they are more likely to develop new skills, contribute innovative ideas, and invest effort in long-term success. Organizations benefit from a broader range of talent and stronger accountability. Markets benefit because resources flow toward those creating the greatest value.

For students and young professionals (and experienced professionals!), merit-based leadership can show up in simple ways:

• Evaluating ideas based on their quality rather than their source
• Applying standards consistently to everyone
• Giving opportunities based on demonstrated effort and results
• Recognizing and rewarding contributions fairly

These practices help create environments where people can succeed because of what they contribute, not because of who they know.

Strong economies, strong organizations, and strong careers all depend on that principle.

When merit is rewarded, competition becomes more productive, innovation becomes more frequent, and trust becomes easier to sustain. The result is a system that benefits not only individual participants but the broader communities and markets they serve.

Values in Action:

Alpha Kappa Psi was founded in 1904 on a bold idea: that business could and should be a respected profession defined by character, competence, and accountability.

This blog series is designed to recognize the principles that shape healthy markets, ethical leadership, and long-term prosperity.

The Alpha Kappa Psi founders recognized favoritism and informal networks that often determined opportunity in their era. They believed business should instead reward merit, performance, and the creation of value.

More than a century later, that conviction remains central to AKPsi’s identity. Markets function best when opportunity is accessible, standards are transparent, and success is earned through demonstrated ability and ethical conduct. Merit-based systems encourage innovation, strengthen competition, and help organizations identify and develop talent.

Each post in this series begins with brief factual context and interprets contemporary business themes through the lens of business principles such as Accountability, Integrity, Service, Courage, and Growth.

Values in Action reflects our commitment to developing courageous and principled leaders who succeed in business while strengthening the systems and institutions that make societal prosperity possible.

*Bulgaria’s Procurement Problem: How Favoritism Limits Growth and Innovation

A 2025 World Bank study of public procurement found that politically connected firms were more likely to win contracts through less competitive processes, yet those advantages did not translate into stronger productivity or employment growth. The research concluded that favoritism can misallocate resources and reduce overall economic performance