The Value of Corporate Purpose

Competing in today’s global digital economy requires increasingly complex contributions: Employees need to be motivated to go above and beyond; customers need to be inspired, and their feedback needs to be incorporated; and the demands, opinions, and goals of civil society and government are also critical. The value of organizational purpose is to help coordinate activity among stakeholders in this complex system. The author’s research suggests that when a company and its management make it clear that their purpose is harmony in their stakeholder system — i.e., an intent to grow the pie for everyone — stakeholders make larger contributions and engage in less conflict. Firms are better able to weather crises, and total value created and distributed is enhanced — including to shareholders.

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