The Power of Corporate Purpose

Abstract

Since the financial crisis, many business leaders and organizational researchers have begun in earnest to ponder the question of “corporate purpose.” This re-evaluation of the raison d’être of companies has culminated in the question of whether companies have any other purpose than to generate money for their owners. Although the debate is not new in management research and literature, it is certainly enjoying a renaissance. In fact, pondering the purpose of a company could be much more relevant in terms of its reputation and success than previously thought. When a company communicates its purpose well and systematically, it also helps the company to stand out from the competition while reducing reputation risks and ultimately creating better financial performance. If a company’s raison d’être is clear in the minds of its stakeholders, it simultaneously legitimizes the company’s activities.