Paying Less and Getting More? Evidence on the Effect of Corporate Purpose from Two Field Experiments

Abstract

The (re)definition of corporate purpose beyond profit-maximization can be seen as one of the fundamental tasks of management and leadership in the 21st century. To this end, the present paper employs two natural field experiments on different online labor marketplaces to investigate the effect of communicating a pro-social corporate purpose on three employee-level outcomes that constitute major cost components for most organizations: workers’ reservation wage, work quality and work misbehavior. The main findings in both experiments show that receiving information about an employer’s corporate purpose causes workers to accept lower wages for the same job. Workers that personally assess a high importance to organizations having a pro-social purpose are most responsive. At the same time, sacrificing wage for a corporate purpose comes at no cost of quality and even decreases the likelihood of engaging in work misbehavior. In a broader context, the results provide some indications that the (re)definition of corporate purpose in commercial organizations is not ultimately at odds with creating profits.