Purpose in the For-Profit Firm: A Review and Framework for Management Research

Purpose is a concept often used in managerial communities to signal and define a firm's benevolent and pluralistic approach to its stakeholders beyond its focus on shareholders. While some evidence has linked purpose to positive organizational outcomes such as growth, employee satisfaction, innovation, and superior stock market performance, the definition and application of purpose in management research has been varied and frequently ambiguous. We review literature streams that invoke purpose in the for-profit firm and propose a unifying definition. Next, we develop a framework to study purpose that decouples its framing and formalization within firms from its realization, thus helping to avoid conflation of the presence of purpose with positive organizational outcomes. The framework also highlights internal and external drivers that shape the framing of purpose as well as the influence of the institutional context on its adoption and effectiveness. Finally, we provide a rich agenda for future research on purpose.

Automated summary

Purpose is a concept frequently discussed in managerial communities to indicate and define a firm's focus on stakeholders beyond shareholders. While some evidence suggests that purpose is related to positive organizational outcomes such as growth, employee satisfaction, innovation, and stock market performance, the definition and application of purpose in management research is diverse and often unclear. This article reviews literature on purpose in for-profit firms and proposes a unified definition. It also presents a framework to study purpose that separates its framing and formalization within firms from its realization, avoiding the conflation of purpose with positive organizational outcomes. The framework highlights internal and external drivers of purpose framing and the influence of the institutional context on its adoption and effectiveness. Finally, the article provides a comprehensive agenda for future purpose research.