Publication: Corporate Purpose and Financial Performance
Open/View Files
Date
2017-03-23
Published Version
Published Version
Journal Title
Journal ISSN
Volume Title
Publisher
The Harvard community has made this article openly available. Please share how this access benefits you.
Citation
Gartenberg, Claudine, Andrea Prat, and George Serafeim. "Corporate Purpose and Financial Performance." Harvard Business School Working Paper, No. 17-023, September 2016.
Research Data
Abstract
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.
Description
Other Available Sources
Keywords
Terms of Use
This article is made available under the terms and conditions applicable to Open Access Policy Articles (OAP), as set forth at Terms of Service