Corporate Purpose and Financial Performance

By Claudine Gartenberg, Andrea Prat, George Serafeim. Organ. Sci., 2019

297 citations recorded by the source corpus.

We construct a measure of corporate purpose within a sample of US companies based on approximately 500,000 survey responses of worker perceptions about their employers. We find that this measure of purpose is not related to financial performance. However, high purpose firms come in two forms: firms that are characterized by high camaraderie between workers and firms that are characterized by high clarity from management. We document that firms exhibiting both high purpose and clarity have systematically higher future accounting and stock market performance, even after controlling for current performance, and that this relation is driven by the perceptions of middle management and professional staff rather than senior executives, hourly or commissioned workers. Taken together, these results suggest that firms with employees that maintain strong beliefs in the meaning of their work experience better performance.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/6d2bf0e095deab10e665bd468bd955933aff5bbb

Citations in the corpus

• Public Sentiment and the Price of Corporate Sustainability (2020, unknown): “On the social side, studies have shown that companies with better employee satisfaction and a stronger sense of corporate purpose among employees have better financial performance (Edmans 2011; Gartenberg, Prat, and Serafeim 2019).”