On Becoming a Purpose-Driven Firm: Practices and Drivers of Corporate Purpose

Abstract

There is currently much interest in the notion of business or corporate purpose as an organizing concept to capture for-profit firms’ balanced attention to the simultaneous pursuit of financial performance goals and social impact goals. Recent years have seen a steady flow of conceptual and empirical articles seeking to illuminate the concept and shed light on how and why companies differ in their purpose orientation. Speaking to this line of research, our article reports a study of ten prominent companies in the Netherlands, offering a new and unique perspective on companies’ varied engagement with and expression of purpose as well as the factors that influence the direction and speed of companies’ purpose orientation. Based on qualitative analysis of archival material and 58 semi-structured interviews with the companies’ internal and external stakeholders, we present a network of the drivers and practices central to having an explicit purpose orientation. We moreover identify two alternative pathways or trajectories that companies tend to follow on their way to becoming more purpose-driven. The empirically grounded insights of this study contribute a more fine-grained understanding of companies’ commitment to a purpose orientation as they strive to find the right balance between the attainment of financial and social goals in the context of their specific industries. The study also contributes to laying the foundation for variance research interested in operationalizing the purpose concept to examine the relative strength of internal and external contingencies affecting a company’s purpose, and the impact this last has on different performance parameters.