Corporate purpose as the basis of moral leadership of the firm

Abstract

Abstract In response to the growing number of corporate scandals, senior managers need to redefine their firms' corporate purpose in order to strengthen their moral leadership. This paper articulates three key principles of moral leadership and then evaluates different types of corporate purpose in terms of their impact on these principles based on original and ongoing research. A corporate purpose that focuses on delivering value to customers is found to be meaningful to employees, morally elevating and probably most likely to deliver its intended results. In contrast, a corporate purpose of maximizing shareholder value is found to be much less meaningful to employees and significantly less morally elevating. Managers in these companies seem to have the least moral authority. Finally, a corporate purpose of balancing the needs of all stakeholders, whilst meaningful to employees and morally uplifting, is arguably least likely to deliver its intended results. Implications for senior managers and business school education are examined. Copyright © 2004 John Wiley & Sons, Ltd.