The Contingent Relationship Between Purpose and Profits

Claudine Gartenberg ()
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Claudine Gartenberg: Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104

Strategy Science, 2023, vol. 8, issue 2, 256-269

Abstract: When do for-profit corporations pursue both purpose and profits and when do they prioritize one over the other? This study explores this question, measuring the strength of purpose based on the perceptions of nearly 1 million employees across 635 U.S. public companies within 14 industry categories. Two main findings emerge. First, the relationship between purpose and profits varies widely across companies and industries. Second, companies with higher levels of innovation intensity, intangible capital, or long-term investors tend to pursue both purpose and profits, whereas companies with lower levels of these factors tend to prioritize one over the other. This evidence suggests that purpose and profits are compatible in settings that rely on innovation and long temporal horizons for value creation and opposed in settings that do not.

Keywords: corporate purpose; corporate governance; social performance (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:8:y:2023:i:2:p:256-269

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