BM_IMD_REPORT-How-Authentic-is-your-Corporate-Purpose
BM_IMD_REPORT-How-Authentic-is-your-Corporate-Purpose
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<strong>How</strong> <strong>Authentic</strong> <strong>is</strong> <strong>your</strong><br />
<strong>Corporate</strong> <strong>Purpose</strong>?<br />
February, 2015
Authors:<br />
Daina Mazut<strong>is</strong>, Ph.D, <strong>IMD</strong> Professor of Strategy and Ethics<br />
and<br />
Aileen Ionescu-Somers, Ph.D, Director, CSL Learning Platform, <strong>IMD</strong> Global Center for Sustainability<br />
Leadership<br />
with support from Michael R. Sorell (quantitative research) and Sophie Coughlan (interviews and<br />
case research), <strong>IMD</strong> Research Associates<br />
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Contents<br />
Executive summary ................................................................................................................................. 5<br />
1. Defining The Business Challenge: Why Does An <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> Matter? .............. 8<br />
2. Methodology ................................................................................................................................... 9<br />
3. Introducing the <strong>Authentic</strong>ity of <strong>Corporate</strong> <strong>Purpose</strong> Model.......................................................... 11<br />
4. Survey Results and Key Findings ................................................................................................... 15<br />
4.1 Response sample .................................................................................................................... 15<br />
4.2 The challenge of establ<strong>is</strong>hing an authentic corporate purpose ............................................. 15<br />
4.3 The current state of authentic corporate purpose among organizations .............................. 18<br />
4.4 The role of leadership in driving an authentic corporate purpose ......................................... 18<br />
5. Testing the <strong>Authentic</strong>ity of <strong>Corporate</strong> <strong>Purpose</strong> Model................................................................. 19<br />
6. Leadership and <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong>.............................................................................. 21<br />
7. Qualitative Research Findings ....................................................................................................... 23<br />
7.1 Defining authentic corporate purpose ................................................................................... 23<br />
7.2 Impact ..................................................................................................................................... 24<br />
7.3 Integrating corporate purpose into dec<strong>is</strong>ion-making ............................................................. 25<br />
7.4 The role of leadership ............................................................................................................. 27<br />
7.5 Recommendations .................................................................................................................. 27<br />
8. Understanding the Dimensions of <strong>Authentic</strong>ity ........................................................................... 28<br />
8.1 Awareness ............................................................................................................................... 28<br />
8.2 Embeddedness ........................................................................................................................ 31<br />
8.3 Transparency ........................................................................................................................... 34<br />
8.4 Checking the authenticity of corporate purpose against 12 dimensions ............................... 36<br />
9. Executive Benchmarking Session .................................................................................................. 36<br />
10. Implications for Leaders .............................................................................................................. 37<br />
11. Conclusion ................................................................................................................................... 38<br />
12. Bibliography ................................................................................................................................ 40<br />
13. Appendices .................................................................................................................................. 43<br />
Appendix I: Survey Questionnaire ................................................................................................ 43<br />
Appendix II: Qualitative Interview Protocol .................................................................................. 45<br />
Appendix III: Qualitative Interview Respondents Rating of Dimensions ..................................... 47<br />
Appendix IV: L<strong>is</strong>t of Survey Respondents...................................................................................... 48<br />
Appendix V: Character<strong>is</strong>tics of Survey Executives ........................................................................ 49<br />
Appendix VI: Executives and Firm Character<strong>is</strong>tics ........................................................................ 50<br />
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Appendix VII: Industry Demographics .......................................................................................... 51<br />
Appendix VIII: Ranking of Companies Identified as Having a <strong>Corporate</strong> <strong>Purpose</strong> ........................ 52<br />
Appendix IX: Companies Identified as Having an <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> and Receiving at<br />
Least One Mention - unsolicited ................................................................................................... 53<br />
Appendix X: Level of <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> - Top 10 solicited ......................................... 54<br />
Appendix XI: Ranking of Full L<strong>is</strong>t of 30 Companies - Solicited ...................................................... 55<br />
Appendix XII: Presence of <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> in Respondents companies ................. 56<br />
Appendix XIII: Status of <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> in Companies .......................................... 57<br />
Appendix XIV: Influence of <strong>Corporate</strong> <strong>Purpose</strong> on Dec<strong>is</strong>ion-making ........................................... 58<br />
Appendix XV: Standardized item factor loadings for each dimension ......................................... 59<br />
Appendix XVI: Internal cons<strong>is</strong>tency coefficients using the McDonald’s ω and Cronbach’s α<br />
methods for the first-order factors and Fornell & Larker’s (1981) for composite reliability ..... 60<br />
Appendix XVII: Confirmatory Factor Analys<strong>is</strong> ............................................................................... 61<br />
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Executive summary<br />
Introduction<br />
Over the last century, much has been written about the corporate organization’s “reason for being”<br />
(or “ra<strong>is</strong>on d’être”). From early debates about the fiduciary duties of the corporation to more recent<br />
d<strong>is</strong>cussions regarding stakeholder responsibilities, how an organization’s leaders choose to position<br />
their company within a broader societal context can be interpreted as a clear reflection of their own<br />
ideas and beliefs. Over time, the term “corporate purpose” has come to be more widely used – by<br />
leading companies – to express how an organization sees its role in society. As “corporate purpose”<br />
<strong>is</strong> not yet a term utilized by all companies, a clear definition <strong>is</strong> necessary. We define “corporate<br />
purpose” as follows:<br />
<strong>Corporate</strong> purpose <strong>is</strong> a company’s core "reason for being.” The organization’s single underlying<br />
objective unifies all stakeholders and embodies its ultimate role in the broader economic, societal<br />
and environmental context. <strong>Corporate</strong> purpose <strong>is</strong> often communicated through a company's<br />
m<strong>is</strong>sion or v<strong>is</strong>ion statements, but it may also remain informal and unarticulated.<br />
<strong>How</strong>ever, if it does not match the firm's actions, internal and external stakeholders will view<br />
corporate purpose with m<strong>is</strong>trust and skeptic<strong>is</strong>m and perceive it as mere “window dressing”. In the<br />
shadow of the recent financial cr<strong>is</strong><strong>is</strong>, public confidence in the authenticity of any stated corporate<br />
purpose that differs from the predominant profit-maximizing norm <strong>is</strong> increasingly met with d<strong>is</strong>trust.<br />
Therefore, it behooves us to understand the drivers of authentic corporate purpose better so that<br />
we can begin to heal the rift between business and society.<br />
The explicit objective of th<strong>is</strong> study <strong>is</strong> to uncover the drivers or “dimensions” of an authentic<br />
corporate purposed. Based on a quantitative survey of over 200+ executives and in-depth qualitative<br />
interviews with 12 executives from organizations perceived as having an authentic corporate<br />
purpose, we present our findings. On the one hand, they illustrate the challenges of establ<strong>is</strong>hing an<br />
authentic corporate purpose in corporate organizations, and on the other hand, they provide<br />
executives with a roadmap to achieving an authentic corporate purpose for their firms.<br />
Findings<br />
The challenges of establ<strong>is</strong>hing an authentic corporate purpose<br />
About a third of the executives we surveyed had considerable difficulty identifying a single company<br />
that they perceived as having an authentic corporate purpose. Th<strong>is</strong> finding points to the fact that,<br />
while many companies may “talk the talk”, they do not necessarily “walk the walk” when it comes to<br />
their stated corporate purpose. In addition, if they do “walk the walk,” they may not be perceived as<br />
doing so, so their internal and/or external communications strategies need rev<strong>is</strong>ion.<br />
It <strong>is</strong> also significant that not one company stood out from the pack as having the most credible or<br />
convincing authentic corporate purpose. Of the companies our respondents identified as having an<br />
authentic purpose, most received only a single mention. Even the top three companies that<br />
respondents identified – Google, Nestle and Apple – received relatively low levels of multiple<br />
mentions, signifying that executives felt there was not one company that most exemplified an ideal<br />
5
authentic corporate purpose. Th<strong>is</strong> may point to a dearth of leadership; therefore, th<strong>is</strong> study<br />
specifically focuses on the implications of our findings for the leadership in corporate organizations.<br />
We also identified gaps between a company’s stated corporate purpose and managerial attitudes<br />
and behaviors. While executives generally agreed that their own company had an authentic<br />
corporate purpose (we may expect considerable bias in th<strong>is</strong> finding), they also admitted that they do<br />
not always rely on their company’s corporate purpose to guide their dec<strong>is</strong>ion-making processes. We<br />
suggest that if managers are not using the organization’s corporate purpose to guide their dec<strong>is</strong>ionmaking,<br />
then the organization’s corporate purpose will never be truly “authentic” or perceived as<br />
such either internally or externally. Th<strong>is</strong> state of affairs may be leading to increased cynic<strong>is</strong>m<br />
amongst employees and the general public, which then endorses the lack of trust that <strong>is</strong> often<br />
reported in corporate reputation surveys. The lack of an authentic corporate purpose has knock-on<br />
effects on reputation and brand and therefore on the performance of corporate organizations.<br />
Strong and committed leadership <strong>is</strong> crucial to authenticity<br />
Our research provides strong evidence that leadership <strong>is</strong> a strong and cons<strong>is</strong>tent predictor of<br />
authentic corporate purpose, explaining almost 50% of the variance in perceptions of authenticity.<br />
Th<strong>is</strong> <strong>is</strong> not surpr<strong>is</strong>ing since leaders set both the direction and overall objectives of the company.<br />
Leaders also personify the company’s identity and image through communications with both<br />
internal and external stakeholders. Th<strong>is</strong> supports the idea that corporate purpose must be cons<strong>is</strong>tent<br />
with both corporate leadership and action (i.e. both “walking the talk AND talking the walk”).<br />
Leaders who are perceived to be effective, capable and leading operations sat<strong>is</strong>factorily are much<br />
more likely to be running organizations that have an authentic corporate purpose. <strong>How</strong>ever, in a<br />
complex and uncertain global business context – and as organizations grow in scale and across<br />
geographies – it <strong>is</strong> increasingly challenging for leaders to ensure that an authentic corporate purpose<br />
<strong>is</strong> maintained.<br />
A roadmap to authenticity<br />
Using the survey questionnaire, backed by benchmarking interviews with corporate executives, we<br />
provide a conceptual model that addresses the dimensions of an authentic corporate purpose and<br />
cons<strong>is</strong>ts of factors relating to both an organization’s identity and image. We have categorized our<br />
findings under the following organizational activities: stewarding, leading, differentiating and<br />
delivering – which broadly capture the 12 separate dimensions of awareness, balance,<br />
connectedness, cons<strong>is</strong>tency, embeddedness, long-term orientation, originality, passion, reliability,<br />
reputation, self-regulation and transparency. Our results deliver a veritable “diagnostic toolset” that<br />
allows leaders in corporate organizations to check – hol<strong>is</strong>tically and at different levels within firms –<br />
whether all dimensions that have the potential to contribute to the authenticity of a firm’s corporate<br />
purpose have been addressed. We provide definitions of these dimensions and concepts in our<br />
report so that executives can find their way easily around the diagnostic toolset.<br />
Our survey results indicate that managers identified awareness as the top dimension that<br />
organizations need to have in place if they are to have a truly credible and authentic corporate<br />
purpose. By awareness, we mean that the company, through its direct interactions with<br />
stakeholders, has acquired an understanding of its own strengths and weaknesses and what drives<br />
or motivates its actions and how these affect key stakeholders as well as the environment. <strong>How</strong>ever,<br />
6
although awareness <strong>is</strong> critical to authentic corporate purpose, all 12 dimensions are highly important<br />
when it comes to establ<strong>is</strong>hing an authentic corporate purpose. Focusing on one or two dimensions <strong>is</strong><br />
unlikely to be sufficient to overcome the skeptic<strong>is</strong>m of internal and external stakeholders; therefore,<br />
the diagnostic toolset we present will enable leaders to tackle the full gamut of authenticity<br />
dimensions in a comprehensive and cohesive way.<br />
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1. Defining The Business Challenge: Why Does An <strong>Authentic</strong> <strong>Corporate</strong><br />
<strong>Purpose</strong> Matter?<br />
Many management scholars have tried to articulate what exactly corporate purpose means. For<br />
example, almost 80 years ago, Chester Barnard (1938: 82) stated that a company comes together<br />
when the following three things occur concurrently: (1) there are people who communicate with<br />
each other; (2) there <strong>is</strong> an action/task to be completed; and (3) there <strong>is</strong> a common purpose. He saw<br />
defining th<strong>is</strong> common purpose as a core task of leadership.<br />
Yet, success in both defining and implementing a common purpose <strong>is</strong> of necessity based on the<br />
willingness of individuals in organizations to cooperate. According to Barnard, individuals will usually<br />
act un-cooperatively unless there <strong>is</strong> an objective that unites them. <strong>How</strong>ever, simply having a defined<br />
purpose does not mean that people relinqu<strong>is</strong>h their individual self-interests:<br />
A purpose does not incite co-operative activity unless it’s accepted by those whose efforts will<br />
constitute the organization (Barnard, 1938: 86).<br />
More recently, scholars such as Collins and Porras (1994), Ellsworth (2002) and Binney (2006) have<br />
built on Barnard’s initial ideas about corporate purpose.<br />
Collins and Porras (1996: 68) stated:<br />
Core purpose <strong>is</strong> the organization’s reason for being. It does not just describe the organization’s<br />
output or target customers; it captures the soul of the organization. A primary role of core<br />
purpose <strong>is</strong> to guide and inspire.<br />
Ellsworth (2002: 4) defined corporate purpose as follows:<br />
<strong>Corporate</strong> purpose sits at the confluence of strategy and values. It expresses the company’s<br />
fundamental value — the ra<strong>is</strong>on d’être or overriding reason for ex<strong>is</strong>ting. It <strong>is</strong> the end to which<br />
the strategy <strong>is</strong> directed.<br />
Binney (2006) defined corporate purpose as:<br />
A shared sense of “Why do we ex<strong>is</strong>t?” and “What <strong>is</strong> the essence of how we do things around<br />
here?” It was what gave exceptional companies a compass to steer by, and enabled them to<br />
adapt and thrive in periods of great economic and social change.<br />
We integrate the above, and define corporate purpose as follows:<br />
<strong>Corporate</strong> purpose <strong>is</strong> a company’s core "reason for being.” It <strong>is</strong> the organization’s single underlying<br />
objective that unifies all stakeholders and embodies its ultimate role in the broader economic,<br />
societal and environmental context. <strong>Corporate</strong> purpose <strong>is</strong> often communicated through a<br />
company's m<strong>is</strong>sion or v<strong>is</strong>ion statements, but it may also remain informal and unarticulated.<br />
Through th<strong>is</strong> study, we are interested in understanding what determines the authenticity of a firm’s<br />
corporate purpose. Since “authenticity” <strong>is</strong> generally defined as being “true to oneself,” we further<br />
define authenticity of corporate purpose, as the alignment between a firm’s perceived corporate<br />
purpose and the actual strategic dec<strong>is</strong>ions and actions that a firm takes.<br />
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Research by Burson-Marsteller and <strong>IMD</strong>’s Center for <strong>Corporate</strong> Sustainability in 2010 validated the<br />
importance that corporate purpose plays in firm performance. 1 In particular, the study found that:<br />
• A well-executed corporate purpose communication strategy enhances the financial<br />
performance of leading European companies;<br />
• A well-executed corporate purpose communication strategy <strong>is</strong> more important than<br />
company size in terms of its effect on financial performance;<br />
• <strong>Corporate</strong> purpose enhances not only economy-wide financial performance of leading<br />
European companies but also relative financial performance within industries. 2<br />
Unfortunately, corporate purpose can act as a double-edged sword. On the one hand, a corporate<br />
purpose that <strong>is</strong> cons<strong>is</strong>tent with related and relevant strategic corporate actions can build, sustain<br />
and increase trust. On the other hand, a corporate purpose that <strong>is</strong> incons<strong>is</strong>tent with corporate<br />
actions, will lead stakeholders to view the corporate purpose and the company with m<strong>is</strong>trust and<br />
skeptic<strong>is</strong>m. The research described in th<strong>is</strong> report revealed once again that companies absolutely<br />
need to “walk the talk” in order to be credible and authentic with regard to their corporate purpose<br />
statements. <strong>How</strong>ever, it also revealed that “talking the walk” was an equally important part of the<br />
paradigm. Since perception – built on awareness and knowledge gained through experience,<br />
learning and communication – <strong>is</strong> often reality, corporate purpose messages must be carefully tuned<br />
to indicators that demonstrate that the organization effectively “walks its talk.”<br />
For organizations to overcome th<strong>is</strong> double-edged sword and build trust with stakeholders, their<br />
corporate purposes must be aligned with their strategic dec<strong>is</strong>ions and actions in order to be<br />
perceived as “authentic.”<br />
Understanding how to manage the authenticity of their corporate purpose successfully <strong>is</strong> a challenge<br />
for many organizations’ leaders and managers. The goal of th<strong>is</strong> report <strong>is</strong> to put forth a model for<br />
authentic corporate purpose. Our hope <strong>is</strong> that th<strong>is</strong> model will help business leaders effectively<br />
manage their firm’s authenticity into the future.<br />
2. Methodology<br />
Similar to procedures followed in previous research on authenticity in different domains, we began<br />
with an item development and validation process that followed several steps. First, we compiled a<br />
l<strong>is</strong>t of possible authenticity dimensions based on an extensive literature review of empirical research<br />
conducted in other relevant domains, including psychology, philosophy, leadership, strategy and<br />
marketing.<br />
Next, we generated a pool of items from the literature based on these dimensions, identifying items<br />
that have empirically been shown to capture the different dimensions of authenticity in these<br />
various d<strong>is</strong>ciplines. Based on th<strong>is</strong> literature review, twelve initial dimensions and forty eight items<br />
were identified that related to the construct of authenticity of corporate purpose with scales<br />
adopted from the following research: continuity/cons<strong>is</strong>tency, originality, naturalness and reliability<br />
1 “ Communicating <strong>Corporate</strong> <strong>Purpose</strong>,” <strong>IMD</strong> and Burson-Marsteller, 2010 Link: http://bursonmarsteller.eu/wp-content/uploads/2011/10/<strong>IMD</strong>-B-M-<strong>Corporate</strong>-<strong>Purpose</strong>-Impact-Study-2010.pdf<br />
2 “ Communicating <strong>Corporate</strong> <strong>Purpose</strong>”, page 26<br />
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(Bruhn et al., 2012), awareness, transparency, balanced processing and self-regulation/internalized<br />
moral perspective (Bento & Ribeiro, 2013; Leroy, Anseel, Gardner, & Sels, 2012; Neider &<br />
Schriesheim, 2011; Walumbwa et al., 2008), connectedness (Turker, 2008; Lee & Robbins, 1995),<br />
passion (Tate, 2008), improvement (O’Connell, 2014) and image (Riordan, Gatewood, & Bill, 1997).<br />
As a second step, we asked a second group of research ass<strong>is</strong>tants to describe a company that they<br />
regarded as having an authentic corporate purpose: “What specifically about these companies<br />
makes you believe in the authenticity of their corporate purpose?” Their responses were then<br />
content analyzed to ensure that the emergent categories were a close fit to our original<br />
multidimensional conceptualization of the authentic corporate purpose construct. At th<strong>is</strong> point, the<br />
dimensions of naturalness and improvement were dropped, while embeddedness (Lee & Robbins,<br />
1995) and long-term orientation (Bearden, Money & Nevins, 2006; Ganesan, 1994) were added<br />
leaving a total of twelve dimensions and fifty-three items that related to the construct of<br />
authenticity of corporate purpose at the organizational level.<br />
As a final step, we conducted an item purification test with the second group of research ass<strong>is</strong>tants,<br />
by asking them to name a company that they would classify as having an authentic corporate<br />
purpose. We then asked each rater to point out the degree to which these 53 items described the<br />
authenticity of the company’s corporate purpose (where 1 = “describes very poorly’ to 7 “describes<br />
very well”), with the intent of removing any items with a mean rating below four. No items needed<br />
to be removed at th<strong>is</strong> stage providing support that our minor adaptations from other d<strong>is</strong>ciplines<br />
adequately captured the intended dimensions of authentic corporate purpose.<br />
In summary, our final corporate purpose authenticity scale contains twelve dimensions that are fully<br />
defined in Section 3: awareness (6 items), balance (4 items), connectedness (5 items), cons<strong>is</strong>tency (4<br />
items), embeddedness (4 items), long-term orientation (4 items), originality (4 items), passion (4<br />
items), reliability (4 items), reputation (5 items), self-regulation (5 items) and transparency (4 items).<br />
Th<strong>is</strong> final scale was pre-tested with a sample of employees in an academic research department<br />
(n=18). The full questionnaire generated from th<strong>is</strong> process of verification can be found in Appendix I.<br />
The criteria used for collecting the sample were as follows:<br />
Geographies and sectors: For th<strong>is</strong> research, we invited responses from executives at<br />
companies located all over the world (companies in nearly 50 different countries are thus<br />
represented in our sample). In th<strong>is</strong> study, we also accepted responses from executives in all<br />
business & industry sectors;<br />
<br />
Executive level: The executives surveyed were primarily alumni and network contacts of a<br />
top business school – thus high middle- to senior managers. The average age was 51 and<br />
there were 46 different nationalities.<br />
The finalized survey questionnaire was sent in two phases to a total of 10,500 (first to 7,000 and<br />
then – one month later – to a further 3,500) executives. We can report a 2% response rate, since a<br />
total of 200 questionnaires were received in return. Semi complete questionnaires were included in<br />
the analys<strong>is</strong> where feasible to integrate them. A further 40 responses were received with only the<br />
first question answered, and these were used in the analys<strong>is</strong> of the first question only.<br />
10
To validate the dimensional structure of a higher order authentic corporate purpose construct, we<br />
then conducted a confirmatory factor analys<strong>is</strong> (CFA) using Mplus 7.11 on the 200 responses<br />
received. As described in Section 5, the analys<strong>is</strong> supported all 12 identified dimensions. Having<br />
establ<strong>is</strong>hed the dimensionality of the ACP construct, we then ran a full structural model (SEM) to<br />
test the relationship between leadership and ACP. As d<strong>is</strong>cussed in Section 6, leadership was found to<br />
be an important predictor of ACP.<br />
To benchmark the survey findings and go deeper with the analys<strong>is</strong>, we conducted qualitative<br />
interviews with executives from the companies identified by survey respondents as having an<br />
authentic corporate purpose. We identified ten companies as subjects for interviews; contacts<br />
within each of these companies in relevant functions were then e-mailed to inquire about their<br />
willingness to participate in a structured interview. For those who confirmed, interviews were<br />
conducted by phone in a standardized open-ended format for 45 minutes (refer to Appendix II for<br />
the interview protocol). Interviews were recorded with the respondent’s perm<strong>is</strong>sion, and transcribed<br />
after the conclusion of the interview. During the interview, respondents were asked if they would<br />
agree to rate each of the dimensions with regard to their company. If they agreed, these were then<br />
sent to them by email in the form shown in Appendix III, together with a one-page attachment<br />
briefly describing each of 12 the dimensions. The respondent companies and areas of activity are<br />
indicated in Appendix IV.<br />
3. Introducing the <strong>Authentic</strong>ity of <strong>Corporate</strong> <strong>Purpose</strong> Model<br />
In th<strong>is</strong> section, we introduce our theoretically derived model of authentic corporate purpose.<br />
Stemming from the authentic leadership, authentic branding and authentic CSR literatures, as<br />
captured in Figure 1, we grouped the 12 core dimensions of authentic purpose conceptually into<br />
factors that relate either to an organization’s identity or to its image. An organization’s identity<br />
refers broadly to how an organization internally defines its central, d<strong>is</strong>tinctive and enduring features,<br />
while the notion of image captures how external constituents, including customers and other<br />
stakeholders, perceive the organization. As such, we see these two broad concepts as a mirror<br />
reflection of each other or as two sides of corporate purpose and it <strong>is</strong> only when the internal and<br />
external perceptions of corporate purpose align that we see attributions of authenticity occur.<br />
11
Figure 1. <strong>Authentic</strong>ity of <strong>Corporate</strong> <strong>Purpose</strong>: A Conceptual Model<br />
We chose identity and image to capture the idea that authenticity has both internal and external<br />
components and that an authentic corporate purpose <strong>is</strong> both about how the organization sees itself<br />
as well as how others see the organization.<br />
Identity: Translating measures from the authentic leadership and corporate social responsibility<br />
(CSR) literature, we found that activities related to leading and stewarding the company within<br />
society reflect more broadly how an organization sees itself and thus pertains to organizational<br />
identity. For example, authentic leaders are described as having highly developed systems of selfawareness<br />
and self-regulation. They have real<strong>is</strong>tic, balanced concepts of themselves that are rooted<br />
in strong values and they tend to base their actions on these core values, acting transparently and<br />
leading from conviction. Similarly, we argue that organizations with an authentic corporate purpose<br />
will also act with awareness, self-regulation, balance and transparency and that these activities are<br />
central to leading with an authentic corporate purpose. Similarly, how an organization chooses to<br />
interact with its stakeholders, the environment and the broader community in which it operates can<br />
also be seen as a reflection of how a company defines its role within society. Therefore, these<br />
stewarding activities are also deemed part of organizational identity.<br />
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Leading<br />
Image: In contrast, research into the authenticity of brands and communications focuses more on<br />
how external constituents, notably consumers, view an organization’s activities. Delivering reliable<br />
and cons<strong>is</strong>tent brand experiences, for example, has been found to be central to authenticity in the<br />
marketing literature. Part of being authentic <strong>is</strong> also being d<strong>is</strong>tinct and being recognized for <strong>your</strong><br />
passion and excellence, which can be attributed to an organization’s differentiation strategy. As<br />
more externally driven factors, delivering and differentiating are thus largely indicative of a<br />
company’s image.<br />
We now elaborate on identity and image by defining the four broad sets of organizational activities<br />
within identity and image that directly contribute to perceptions of authenticity of corporate<br />
purpose. We classify these organizational activities as leading, stewarding, differentiating and<br />
delivering.<br />
Leading refers to the set of organizational activities that relate to how the company chooses to<br />
interact with its stakeholders and make dec<strong>is</strong>ions that affect these stakeholders. The dimensions<br />
associated with leading the organization authentically are derived from the authentic leadership<br />
literature and they include balance, awareness, transparency and self-regulation as defined below:<br />
Dimension<br />
Balance<br />
Awareness<br />
Transparency<br />
Self‐regulation<br />
Description<br />
The company solicits and objectively takes into account in its dec<strong>is</strong>ion‐making all<br />
relevant information and points of view regardless of source, including views that<br />
challenge deeply held positions or evoke its own organizational limitations and<br />
shortcomings.<br />
The company – through direct interactions with its stakeholders – has acquired a<br />
deep understanding of its own strengths and weaknesses, what drives or<br />
motivates its actions and how it impacts stakeholders and the environment.<br />
The company promotes trust by openly sharing information with its stakeholders,<br />
demonstrating coherence between “talk” and “walk”, <strong>is</strong> honest and truthful<br />
about its activities, admits m<strong>is</strong>takes when they are made, and does not pretend<br />
to be something it <strong>is</strong> not.<br />
The company makes dec<strong>is</strong>ions that are true to its stated corporate purpose and<br />
that exhibit restraint with regard to growth and profit ambitions based on strong<br />
internalized moral standards and values that promote legal and ethical norms<br />
and positive stakeholder impact.<br />
Stewarding refers to the set of organizational activities that reflect how the organization sees its role<br />
in the broader environmental and social context. We identified three dimensions of stewarding,<br />
which are drawn primarily from the authentic, CSR, corporate citizenship and sustainability<br />
literature. Embeddedness, long-term orientation and connectedness are defined as follows:<br />
13
Differentiating<br />
Delivering<br />
Stewarding<br />
Dimension<br />
Embeddedness<br />
Long‐term<br />
Orientation<br />
Connectedness<br />
Description<br />
The company’s choices and actions are partly generated by the actions and<br />
expected behavior of other actors; thus, it remains close to its stakeholders who<br />
enable it to remain connected to the world around it.<br />
The company plans for the long term by focusing on long-run goals, understands<br />
the interdependence of current and future benefits, maintains a long‐term<br />
relationship.<br />
The company <strong>is</strong> anchored to a business context that transcends personal,<br />
organizational and geographic boundaries, and aims to contribute to societal<br />
wellbeing by protecting and improving the environment and quality of life of<br />
stakeholders while respecting values, norms and traditions.<br />
Delivering refers to how external constituents perceive a firm’s ability to maintain its commitments.<br />
It has two dimensions that come from the authentic marketing and communications literature.<br />
These dimensions are cons<strong>is</strong>tency and reliability and are defined as follows:<br />
Dimension<br />
Cons<strong>is</strong>tency<br />
Reliability<br />
Description<br />
The company honors its heritage, actively creating connections with its origins,<br />
and also creating an internal cons<strong>is</strong>tency and continuity that enables it to stay<br />
true to a clearly stated corporate purpose over time.<br />
The company cons<strong>is</strong>tently pursues its purpose over time, making reliable<br />
prom<strong>is</strong>es and delivering on them, no matter how challenging the business<br />
context, while either meeting or exceeding its stated objectives.<br />
Differentiating refers to the firm’s ability to be seen as unique and d<strong>is</strong>tinct from other firms in the<br />
marketplace. The three dimensions of differentiating – reputation, passion and originality – come<br />
from the authentic branding literature and are defined as follows:<br />
Dimension<br />
Reputation<br />
Passion<br />
Originality<br />
Description<br />
The company can gauge how outsiders are judging it, has a good reputation in<br />
the community, among customers and in the industry as a whole, <strong>is</strong> actively<br />
involved in the community and <strong>is</strong> known as a good place to work.<br />
The company has a sense of purpose that inspires passion and that people like,<br />
find important and in which they invest time and energy. The company appears<br />
highly motivated to excel in everything it does.<br />
The company has a unique corporate purpose that stands out because it <strong>is</strong> fresh,<br />
creative, original and different to that of other companies in the same industry,<br />
and it cannot be easily replicated.<br />
As d<strong>is</strong>cussed in Section 5, our confirmatory factor analys<strong>is</strong> establ<strong>is</strong>hed that each one of these twelve<br />
dimensions <strong>is</strong> an important determinant of an authentic corporate purpose. <strong>How</strong>ever, before<br />
proceeding with a more detailed d<strong>is</strong>cussion of the individual dimensions, we first highlight some<br />
more general themes that emerged from the quantitative study.<br />
14
4. Survey Results and Key Findings<br />
4.1 Response sample<br />
Appendices V, VI and VII present the character<strong>is</strong>tics of our executive respondents and the firms they<br />
represented. The executives were in the high middle to upper levels of management, with an<br />
average age of 51. The firms they represented were from a broad section of business an industry<br />
4.2 The challenge of establ<strong>is</strong>hing an authentic corporate purpose<br />
Although we were able to identify the core dimensions of an authentic corporate purpose, on the<br />
whole, our research suggests that an authentic corporate purpose may in fact be a rather elusive<br />
concept. In fact, as illustrated in Figure 2, our study found that almost a third of the executives<br />
surveyed had considerable difficulty in identifying a single company that they perceived as having an<br />
authentic corporate purpose.<br />
Figure 2: Challenge in Identifying a Company with an <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong><br />
To illustrate the difficulty in identifying a firm with an authentic corporate purpose, one respondent<br />
wrote:<br />
Absolutely no name comes to my mind in th<strong>is</strong> context, not even Google, Amazon, <strong>BM</strong>W,<br />
Deutsche Bank, or any other.<br />
Furthermore, in those instances where a company could be identified as having an authentic<br />
corporate purpose, no one single company emerged as a clear leader. For example, as can be seen in<br />
Figure 3, only five companies received more than five mentions each. These were Google, Nestle,<br />
Apple, IKEA and Patagonia (refer also to Appendix VIII for a ranking of companies perceived as<br />
having an authentic corporate purpose). In addition, there was a very long tail in that a total of over<br />
181 companies received at least one mention suggesting very diverse and unique individual<br />
perceptions of the authenticity of an organization’s corporate purpose (refer to Appendix IX for<br />
companies identified as having an authentic corporate purpose and receiving at least one mention).<br />
15
Figure 3: Top Five Companies with an <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> – Unsolicited<br />
10<br />
Top 5 Companies Mentioned by Executives<br />
9<br />
8<br />
7<br />
6<br />
5<br />
4<br />
Count<br />
Percent<br />
3<br />
2<br />
1<br />
0<br />
Google Nestlé Apple IKEA Patagonia<br />
To supplement our first open-ended question, we also asked respondents to rate the corporate<br />
purpose authenticity of a predetermined l<strong>is</strong>t of 30 companies. For th<strong>is</strong> l<strong>is</strong>t, we selected organizations<br />
that have been previously ranked as highly reputable businesses by <strong>Corporate</strong> Knights, Global ESG<br />
100, Eth<strong>is</strong>phere, Fortune’s Most Reputable Companies and the Dow Jones Sustainability Index.<br />
Again, we found that no single company emerged as a clear “winner.” On the whole, respondents<br />
did not “strongly agree” (7) that any one company stood out from other companies on the l<strong>is</strong>t in<br />
terms of the authenticity of their corporate purpose. As can be seen in Figure 4, the highest-rated<br />
solicited company was <strong>BM</strong>W with a score of 5.87 (refer to Appendix X for data). <strong>How</strong>ever, the<br />
difference in mean values between companies <strong>is</strong> not great, in that the number 5 company, Michelin,<br />
scored a 5.64. Interestingly, however, both Nestlé and Patagonia appeared in both the unsolicited<br />
and solicited l<strong>is</strong>ts suggesting that these two companies, despite only marginally higher ratings, may<br />
nonetheless represent current best in class organizations for authenticity of corporate purpose (refer<br />
to Appendix XI for the ranking of full l<strong>is</strong>t of 30 companies solicited).<br />
16
Figure 4: Top Five Companies with an <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> – Solicited<br />
Q: In <strong>your</strong> opinion, to what extent do you believe that the<br />
following companies have an authentic corporate purpose?<br />
Top 5 Ranked Companies: Average Score<br />
(1-Strongly D<strong>is</strong>agree; 7-Strongly Agree)<br />
<strong>BM</strong>W<br />
Patagonia<br />
Nestlé<br />
Volkswagen<br />
Unilever<br />
Michelin<br />
5.45 5.50 5.55 5.60 5.65 5.70 5.75 5.80 5.85 5.90<br />
Based on our research, we suggest several reasons why it may be so difficult to identify a company<br />
with an authentic corporate purpose. When we asked respondents whether the company they<br />
selected as having an authentic corporate purpose uses its purpose to guide its strategic dec<strong>is</strong>ionmaking,<br />
the executives as a group generally agreed that th<strong>is</strong> was the case (average score of 5.91). As<br />
such, the alignment between a firm’s stated corporate purpose and the strategic dec<strong>is</strong>ions the firm<br />
makes seems to be a very important determinant of authenticity. Given th<strong>is</strong> finding, we might<br />
conclude that either:<br />
1) There may in fact not be that many companies with corporate purposes that are seen to be<br />
completely aligned with their strategic actions. In th<strong>is</strong> situation, even though the company<br />
says one thing, it behaves in a different way (in other words, the “walking the talk” part of<br />
the equation <strong>is</strong> not operational). Th<strong>is</strong> makes external stakeholders view the company’s<br />
corporate purpose as untruthful, and therefore they cannot view the firm as having an<br />
authentic corporate purpose.<br />
Or:<br />
2) In general, a significant number of companies may not be effectively communicating their<br />
corporate purposes to the external world (in other words, the “talking the walk” part of the<br />
equation <strong>is</strong> not operational). In th<strong>is</strong> case, external constituents do not have enough<br />
information to connect a company’s strategic actions to its corporate purpose. Thus, the<br />
external stakeholders do not see the firm as having an authentic corporate purpose.<br />
17
4.3 The current state of authentic corporate purpose among organizations<br />
Given that it <strong>is</strong> so difficult to identify a single organization that most respondents would unprompted<br />
identify as having an authentic corporate purpose, we were keen to understand how respondents<br />
saw the authenticity of their own company’s corporate purpose. As such, we asked executives two<br />
questions about the corporate purpose of their organizations: First, we asked respondents to rate<br />
the authenticity of their organizations’ corporate purpose, and second, we asked them how often<br />
their organizations’ corporate purpose guided their dec<strong>is</strong>ion-making.<br />
With respect to their own organizations, the executives generally “agreed” that their own<br />
organizations had an authentic corporate purpose. On a scale from 1 (Strongly D<strong>is</strong>agree) to 7<br />
(Strongly Agree), the average score was 5.60 (refer to Appendix XII for survey data related to the<br />
presence of authentic purpose in respondents companies). <strong>How</strong>ever, slightly fewer respondents<br />
agreed that their corporate purpose guides the dec<strong>is</strong>ion-making in their organizations (5.3). In fact,<br />
only 14% of executives stated that corporate purpose “always” guides the dec<strong>is</strong>ion-making in their<br />
firms (refer to Appendix XIII for a breakdown of responses to these questions and to Appendix XIV<br />
for data on the influence of corporate purpose on dec<strong>is</strong>ion-making).<br />
As per our definition, for a corporate purpose to be seen as authentic, the company’s perceived<br />
corporate purpose and the actual strategic dec<strong>is</strong>ions and actions that the firm takes must be aligned.<br />
Therefore, the gap between purpose and corporate dec<strong>is</strong>ion-making <strong>is</strong> an important finding<br />
supporting the general difficulty in identifying organizations that have an authentic corporate<br />
purpose.<br />
4.4 The role of leadership in driving an authentic corporate purpose<br />
We also deliberately set out to understand the role of leadership in establ<strong>is</strong>hing and maintaining an<br />
authentic corporate purpose. Leadership <strong>is</strong> central to organizations overcoming barriers such as<br />
short-term financial and competitive market pressures that can derail dec<strong>is</strong>ion-makings alignment<br />
with corporate purpose. Our study suggests that as organizations grow in scale and across<br />
geographies, it becomes increasingly challenging for leaders to ensure that authenticity of corporate<br />
purpose <strong>is</strong> maintained by aligning purpose with dec<strong>is</strong>ion-making.<br />
We asked several questions with respect to the leader’s role in ensuring their company’s<br />
authenticity of corporate purpose. First, we asked respondent’s directly about the effectiveness of<br />
the leadership of those organizations they identified as having an authentic corporate purpose. As<br />
Table 1 shows, in general, executives feel that the leaders of organizations with an authentic<br />
corporate purpose are effective, capable and leading operations sat<strong>is</strong>factorily.<br />
Table 1: Leaders of Companies with an <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong><br />
Question<br />
Average<br />
In <strong>your</strong> opinion, to what extent <strong>is</strong> the overall functioning of th<strong>is</strong> company's leader 6.14<br />
sat<strong>is</strong>factory?<br />
In <strong>your</strong> opinion, how effective <strong>is</strong> th<strong>is</strong> company's leader? 6.05<br />
In <strong>your</strong> opinion, how capable <strong>is</strong> th<strong>is</strong> company's leader? 6.20<br />
(1-Not at all to 7- Very Much So)<br />
18
We then asked more specifically for respondents’ opinions about the relationship between<br />
leadership and the authenticity of a firm’s corporate purpose. As indicated in Table 2, the executives<br />
in our study strongly agreed that leadership <strong>is</strong> an important factor in establ<strong>is</strong>hing the authenticity of<br />
a firm’s corporate purpose. Th<strong>is</strong> <strong>is</strong> not surpr<strong>is</strong>ing because the leader sets both the direction and the<br />
overall objectives of the company. In addition, the leader personifies the company’s identity and<br />
image through h<strong>is</strong>/her communications with stakeholders. Th<strong>is</strong> supports the idea that corporate<br />
purpose must be cons<strong>is</strong>tent with both corporate leadership and action (i.e. both “walking the talk<br />
AND talking the walk”).<br />
Table 2: Leadership and <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong><br />
Questions<br />
In <strong>your</strong> opinion, how important <strong>is</strong> the role of leadership in establ<strong>is</strong>hing the<br />
authenticity of a firm’s corporate purpose?<br />
Average<br />
6.62<br />
(1-Very Unimportant to 7- Very Important)<br />
We explore the relationship between leadership and authentic corporate purpose in more detail in<br />
Section 6.<br />
5. Testing the <strong>Authentic</strong>ity of <strong>Corporate</strong> <strong>Purpose</strong> Model<br />
Having identified the challenges with establ<strong>is</strong>hing an authentic corporate purpose and the role of<br />
leadership in driving th<strong>is</strong> process, we now turn to empirically specifying the dimensions of authentic<br />
corporate purpose.<br />
In section 3, we outlined our general conceptual model of authentic corporate purpose, which<br />
cons<strong>is</strong>ted of both an internal and external component and four organizational activities: leading<br />
(balance, awareness, transparency and self-regulation), stewarding (embeddedness, long-term<br />
orientation and connectedness), delivering (reliability and cons<strong>is</strong>tency) and differentiating<br />
(reputation, passion and originality).<br />
Using the survey responses, we then conducted a confirmatory factor analys<strong>is</strong> (CFA) to test the<br />
relationship between these 12 dimensions and the construct of “authentic corporate purpose”<br />
(N=199).<br />
19
Figure 5: The 12 Dimensions of “<strong>Authentic</strong>ity of <strong>Corporate</strong> <strong>Purpose</strong>”<br />
.90***<br />
.83***<br />
.98***<br />
.84***<br />
.93***<br />
.96***<br />
.86***<br />
.86***<br />
.94***<br />
.59***<br />
.90***<br />
.90***<br />
Figure 5 reports the test results of the 12 dimensions and shows how each dimension relates to the<br />
construct of authentic corporate purpose. The relationship between the dimensions <strong>is</strong> expressed in<br />
terms of standardized factor loadings, which reflect the strength of the relationship between the<br />
dimension and the construct of authentic corporate purpose 3 .<br />
Since all of the 12 dimensions are significant at the 1% level, it <strong>is</strong> clear that each of the dimensions<br />
presented has a role to play in establ<strong>is</strong>hing and maintaining an organization’s authentic corporate<br />
purpose. <strong>How</strong>ever, as the numbers reported in Figure 5 show, not all the dimensions have the same<br />
impact. For example, the originality dimension scored lower than the other 11 dimensions with a<br />
standardized factor loading of 0.59, while awareness <strong>is</strong> highly correlated to authenticity of corporate<br />
purpose with a standardized factor loading of 0.98. In addition, not all dimensions were equally<br />
strong in terms of the internal cons<strong>is</strong>tency and composite reliabilities of their measures 4 . As such, it<br />
<strong>is</strong> possible that a more parsimonious empirical model ex<strong>is</strong>ts. For the purposes of th<strong>is</strong> report,<br />
however, the full theoretical model <strong>is</strong> retained in d<strong>is</strong>cussing the different dimensions of authentic<br />
corporate purpose.<br />
3 We tested several different models to ascertain the dimensionality of the ACP construct determining that the<br />
second order factor model represented the best model fit.<br />
4 See Appendix XVI for the standardized factor loadings for each item and Appendix XVII for the internal<br />
cons<strong>is</strong>tency and composite reliability of each dimension.<br />
20
6. Leadership and <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong><br />
Having establ<strong>is</strong>hed the twelve dimensions of the <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> (ACP) construct, we<br />
next examined the relationship between leadership and ACP in more detail. A review of the<br />
literature reveals that the role of leadership <strong>is</strong> considered crucial to setting the direction, v<strong>is</strong>ion and<br />
m<strong>is</strong>sion of the organization in a manner that defines the organizations corporate purpose. While<br />
much has been written about how different types of leadership (e.g. transformational, transactional,<br />
transcendent, servant, spiritual, primal etc.) affect dimensions of organizational performance, here,<br />
we were interested in the degree to which effective leadership matters to perceptions of<br />
authenticity of corporate purpose specifically.<br />
As such, we estimated several structural equation models linking our effective leadership variables<br />
to ACP. Overall, we found very strong support for leadership as predictor of ACP as can be seen in<br />
Figure 6. With a β = .70, almost 50% of the variance in ACP can be explained by the leadership factor.<br />
Th<strong>is</strong> suggests that effective leadership <strong>is</strong> in fact essential to establ<strong>is</strong>hing an authentic corporate<br />
purpose. Th<strong>is</strong> finding was also reiterated in our qualitative interviews d<strong>is</strong>cussed in the next section.<br />
21
Figure 6: Leadership and <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong><br />
Balance<br />
λ = .83<br />
Awareness<br />
λ = .97<br />
Transparency<br />
λ = .93<br />
Self-<br />
Regulation<br />
λ = .85<br />
Reliability<br />
λ = .91<br />
Leadership<br />
β = .70<br />
ACP<br />
Cons<strong>is</strong>tency<br />
λ = .90<br />
Originality<br />
λ = .89<br />
Passion<br />
λ = .95<br />
Reputation<br />
λ = .86<br />
Embeddedness<br />
λ = .95<br />
Long Term<br />
Orientation<br />
λ = .85<br />
Connectedness<br />
λ = .90<br />
22
7. Qualitative Research Findings<br />
In order to lend some richness and depth to the quantitative survey, we conducted interviews with<br />
several of the companies identified in the survey as having an authentic corporate purpose. We<br />
were interested to know how these companies define corporate purpose, what they see as the<br />
internal and external impacts of having an authentic corporate purpose, how they use corporate<br />
purpose in dec<strong>is</strong>ion-making processes in their companies, as well as what are the barriers and<br />
enablers to living an authentic corporate purpose. Rather than probe each organization specifically<br />
regarding the twelve dimensions of ACP that we identified from the literature, instead, we l<strong>is</strong>tened<br />
for the emergence of these dimensions in their responses to our semi-structured interview<br />
questions.<br />
These interviews were conducted with senior executives from functions such as communications,<br />
procurement, sustainability and compliance and provided further insight into how companies view<br />
the importance of authenticity of corporate purpose and its influence at both the strategic and<br />
operational levels.<br />
7.1 Defining authentic corporate purpose<br />
All interviewees identified authentic corporate purpose as being extremely important to their<br />
company. What <strong>is</strong> an authentic corporate purpose and how <strong>is</strong> it expressed by companies? While<br />
some companies did not d<strong>is</strong>tingu<strong>is</strong>h between corporate purpose and m<strong>is</strong>sion statement, others<br />
suggested that while corporate purpose was something internal – driving the company’s<br />
understanding of itself and how it operates – a m<strong>is</strong>sion statement was a way to communicate the<br />
company’s purpose externally. Sustainability (generally defined as the ability to create economic<br />
value over the long term while protecting the natural environment and positively impacting<br />
societies) <strong>is</strong> central to the corporate purpose of five of the nine companies interviewed; three<br />
companies expressed their purpose as effecting positive change at the societal level. Several<br />
companies view purpose as being the central idea linking the company’s activities, and creating<br />
cons<strong>is</strong>tency between a company’s strategy, positioning and operations. One company defined<br />
purpose as being the internal driver of passion by building employee engagement and commitment<br />
to the company’s key activities.<br />
When d<strong>is</strong>cussing their individual companies, interviewees expressed corporate purpose in two main<br />
ways: (1) as a function of the company’s impact on customers or (2) how the company has a positive<br />
impact on broader society. We d<strong>is</strong>covered that many companies have an explicitly stated purpose,<br />
whereas a more expanded implicit purpose emerges from d<strong>is</strong>cussions with their executives. For<br />
example, Google’s stated purpose <strong>is</strong> to affect positive change in various aspects of the world, whilst<br />
employees may express purpose as, for example “bringing people together, enabling them to work<br />
on <strong>is</strong>sues that they believe will effect positive change, contribute to building knowledge and making<br />
good things happen at scale”. <strong>BM</strong>W’s explicit purpose <strong>is</strong> expressed as being “the most successful<br />
provider of premium mobility products and services” while more implicit expanded purpose<br />
emerges in d<strong>is</strong>cussions with employees such as “being a leader in the iconic change occurring in<br />
society around mobility, understanding the company’s social and environmental context, and<br />
23
engaging with all stakeholders in a transparent manner”. Most of the interviewees mentioned that<br />
corporate purpose had been present since the founding of their company, and that purpose was<br />
core to the long-term v<strong>is</strong>ion of the company. In the few instances where purpose had been<br />
articulated more recently, th<strong>is</strong> had been done as the result of a strategic dec<strong>is</strong>ion.<br />
Why do some companies lead the way in paying attention to authenticity, while others do not?<br />
Several cited the importance of a clearly thought out long-term v<strong>is</strong>ion, the embedding of values in<br />
the company culture, and establ<strong>is</strong>hed attitudes and beliefs in what the future looks like, as well as<br />
what the company’s role in society should be. Interviewees concurred that family owned companies<br />
found th<strong>is</strong> easier to instill; a founder with a v<strong>is</strong>ion and continued involvement of the family owners in<br />
the business contributes to keeping these values present and alive in the business activities.<br />
<strong>How</strong>ever, other companies have chosen to focus on relating corporate purpose to their business<br />
because they believe it <strong>is</strong> good for business – both in terms of brand building and mitigating<br />
reputational r<strong>is</strong>k, as well as representing a real long-term business dec<strong>is</strong>ion. For example, IKEA – a<br />
family owned company, thus without short-term shareholder constraints – <strong>is</strong> able to invest heavily in<br />
renewable energies such as wind farms and <strong>is</strong> committed to becoming totally carbon-neutral by<br />
2020 because it believes th<strong>is</strong> <strong>is</strong> the soundest long-term business dec<strong>is</strong>ion in alignment with its<br />
corporate purpose.<br />
7.2 Impact<br />
Internal<br />
<strong>Corporate</strong> purpose seems to have two main types of impact on internal stakeholders. On the one<br />
hand, it provides cons<strong>is</strong>tency, unifies employees and serves to anchor them in firm values when<br />
making operational dec<strong>is</strong>ions. Equally important <strong>is</strong> the impact purpose has on creating passion and<br />
engagement among employees, resonating at a deeper and more individual emotional level, which<br />
builds and strengthens a personal commitment to the company’s work. Contributing to something<br />
larger <strong>is</strong> something employees feel proud of and it creates energy. Several companies also<br />
mentioned how purpose helps to attract and retain talent, as people who are aligned with the<br />
purpose are drawn to the company.<br />
External<br />
<strong>Corporate</strong> purpose has a diversity of impacts on external stakeholders. First, when companies<br />
participate proactively in conversations about their broader impact, they ensure that they can<br />
actively influence higher-level agendas (such as sustainability) and address concerns proactively,<br />
heading off potentially controversial and damaging <strong>is</strong>sues before they ar<strong>is</strong>e. Second, the cons<strong>is</strong>tency<br />
afforded by having an authentic purpose contributes to building the company brand among<br />
consumers; in an increasingly transparent world with consumers who are both aware and concerned<br />
about the impact companies have on society, th<strong>is</strong> <strong>is</strong> critical. In a world in which social media ensures<br />
that conversations are happening all the time, across a broad variety of platforms, hardwiring the<br />
company brand through a strongly articulated corporate purpose <strong>is</strong> becoming increasingly critical.<br />
“While we are sleeping, someone else <strong>is</strong> awake,” commented a director at <strong>BM</strong>W.<br />
24
One executive described the “double-edged sword” dimension in th<strong>is</strong> way:<br />
<strong>Authentic</strong> corporate purpose <strong>is</strong> one of the most important ways a corporation in today’s world<br />
can communicate in a world characterized by a barrage of ideas. It helps people to understand<br />
why a corporation ex<strong>is</strong>ts and why people should care if it went away tomorrow. With the degree<br />
of information chaos, citizen journal<strong>is</strong>ts and content circulating on digital media – if <strong>your</strong><br />
purpose <strong>is</strong> not authentic, you will be found out quickly.<br />
Finally, by having a purpose and reliably delivering upon it, companies establ<strong>is</strong>h credibility and build<br />
trust as a partner in strategic partnerships.<br />
7.3 Integrating corporate purpose into dec<strong>is</strong>ion-making<br />
<strong>Corporate</strong> purpose <strong>is</strong> strongly integrated into the dec<strong>is</strong>ion-making processes of the companies<br />
interviewed at many levels – from the strategic to the operational. There are many examples of th<strong>is</strong>.<br />
At Tetra Pak, purpose translates into a strategic priority, with environmental excellence being one of<br />
the company’s four strategic pillars. At Google, having a positive impact on society drove the<br />
company to invest in the Google Food Innovation Lab, which looks at how Google can make a<br />
positive contribution to the whole food system. At several companies, corporate purpose guides<br />
investment dec<strong>is</strong>ions; proposals for new projects need to report on how they fulfil corporate<br />
purpose. At <strong>BM</strong>W, documentation submitted to the board needs to include sustainability measures.<br />
All of the projects selected for Holcim’s innovation fund are chosen based on how they can help<br />
achieve the long-term sustainability agenda (core to the firm’s purpose). At Toyota, the mobility<br />
project, which includes investment in fuel cell technology, <strong>is</strong> central to its long-term purpose of<br />
leading the way to future hol<strong>is</strong>tic mobility solutions on a systemic level. At Unilever, carbon and<br />
water footprint targets as well as sustainable sourcing targets are the direct result of objectives<br />
establ<strong>is</strong>hed based on the organization’s corporate purpose. Roche has invested heavily in <strong>is</strong>sues<br />
related to d<strong>is</strong>eases neglected in developing countries, an example being its Global Access Program to<br />
dramatically lower the price of HIV viral load tests in low- and middle-income countries. IKEA helps<br />
to set the global standard for forestry through the Forest Stewardship Council to ensure that forests<br />
will be present in the longer term.<br />
Most interviewees mentioned how corporate purpose <strong>is</strong> core to operational dec<strong>is</strong>ion-making or<br />
corporate culture. For example, at IKEA, corporate purpose drives employee behavior:<br />
Enablers<br />
<strong>Purpose</strong> <strong>is</strong> at the core of how employees think about what’s right and what’s wrong, how they<br />
should behave inside th<strong>is</strong> company in their day-to-day job. So it’s absolutely fundamental for<br />
people to navigate in their daily lives and what it takes to be a good employee in the context of<br />
an IKEA purpose and an IKEA core strategy.<br />
Companies cited a variety of enabling factors to explain the degree to which corporate purpose <strong>is</strong><br />
embedded at the organizational level. Top-level indicators included long-term v<strong>is</strong>ion, private<br />
ownership, focus and leadership. At Tetra Pak, private ownership provides the continuity required to<br />
embed purpose. At <strong>BM</strong>W, the board, for example, has ensured that purpose has been translated<br />
into supportive human resource policies. At Roche, family owners (including two board members)<br />
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live the values, determine the strategy and take on the role of ensuring that long-term investment<br />
dec<strong>is</strong>ions reflect the core purpose.<br />
The degree of operational alignment <strong>is</strong> also important in purpose-driven organizations, including<br />
cons<strong>is</strong>tency between brands, purpose, supply chain and marketing. At Unilever, sustainable sourcing<br />
policies guide all dec<strong>is</strong>ions so that they are aligned with purpose. For example, wherever possible,<br />
ingredients are sourced from the country where the food <strong>is</strong> being produced, so that value <strong>is</strong> retained<br />
in the producing country and eco-efficiencies are exploited.<br />
HR practices including recruitment and training are central to attracting and retaining talent that<br />
shares the organizational values and lives the corporate purpose. Toyota ensures that corporate<br />
purpose <strong>is</strong> a key consideration in dec<strong>is</strong>ions at all levels by differentiating between organizational<br />
roles; those in charge of operations have a day-to-day focus while experts are explicitly tasked with<br />
taking a long-term view. In th<strong>is</strong> way, it creates accountability for purpose at the individual level. At<br />
the board level, Toyota’s chairman has also explicitly taken on the role of taking a long-term view.<br />
Google gives employees 20% of their time to work on their own projects, and provides the<br />
opportunity to communicate and articulate how their innovation projects are aligned with corporate<br />
purpose.<br />
Barriers<br />
Half of the companies interviewed cited financial short-term pressures as a barrier to implementing<br />
purpose authentically. Executives referred to pressure to “make the numbers,” as well as consumer<br />
pressure on cost and/or failure to recognize externalities. A few executives mentioned<br />
internationalization as a barrier; as the company globalizes, making sure that local operations and<br />
partners remain aligned with corporate purpose can be a challenge.<br />
In order to overcome these barriers, companies are taking a combination of internal and external<br />
measures.<br />
Internal measures<br />
There are a number of efforts to ensure that human resource (HR) practices, including recruitment,<br />
training, performance evaluation and incentives, are aligned with corporate purpose. Th<strong>is</strong> helps to<br />
mainstream corporate purpose into the organization. When selecting talent, one executive at<br />
Google said, “You need individuals who see the opportunity, are able and willing to connect the<br />
dots, be challenged frequently and be made very uncomfortable.” Some companies (including Tetra<br />
Pak and Unilever) include clear targets to reward contributions to corporate purpose.<br />
A clearly communicated purpose, including how to translate it operationally, helps employees have a<br />
clear mandate for action. A focused message <strong>is</strong> key. While purpose <strong>is</strong> by nature aspirational, it needs<br />
to be real<strong>is</strong>tic and credible.<br />
External measures<br />
Three of the companies interviewed mentioned the importance of engaging with external<br />
stakeholders. For example, Unilever has developed several platforms with external stakeholders.<br />
One such platform <strong>is</strong> the Sustainable Agriculture Initiative Platform, which has 60 food and drink<br />
26
companies as members. Other such forums include the Roundtable for Sustainable Palm Oil and the<br />
Roundtable for Sustainable Soy. A Unilever executive mentioned its clear focus in th<strong>is</strong> regard, with a<br />
view to fulfilling purpose and having impact: “You always try to get more industries around the table<br />
to work on sustainable solutions in value chains. And then <strong>your</strong> impacts can be much, much bigger.”<br />
In th<strong>is</strong> way, Unilever has developed the partnerships it needs to make the positive impact it seeks.<br />
When engaging with partners, having deep and extensive knowledge related to the areas touching<br />
corporate purpose <strong>is</strong> important. Tetra Pak, for example, researches how its partners can improve on<br />
sustainability indicators and works with them to do so. For instance, it seeks to understand the<br />
drivers of the carbon footprints of its preferred suppliers so that it can work with them to<br />
understand and reduce their carbon footprints.<br />
Also, authenticity <strong>is</strong> important for building trust, as <strong>is</strong> addressing the very specific concerns of<br />
different stakeholder groups. Lack of authenticity can very quickly erode trust. As stated by one<br />
executive at DuPont:<br />
<strong>Authentic</strong>ity <strong>is</strong> in the eye of the beholder. NGOs don’t care if – from the company point of view –<br />
they are trusted suppliers who deliver on-time and on-budget. It depends on the audience. You<br />
have to build credibility. It takes a long time to build credibility, but just one error to wipe it out.<br />
7.4 The role of leadership<br />
All the companies interviewed agreed that the role of leadership was critical to ensuring that<br />
organizations lived their corporate purpose. By providing the long-term v<strong>is</strong>ion, articulating and<br />
communicating the purpose internally and externally, leaders provide the direction and clarity and<br />
set the course. By ensuring their behavior <strong>is</strong> cons<strong>is</strong>tent with the values espoused, leaders inspire<br />
those inside organizations to live the purpose and thus provide credibility externally. The leader <strong>is</strong><br />
the initiator and challenger, providing the organization with the continuity required to stay the<br />
course.<br />
7.5 Recommendations<br />
Nearly all of the companies we interviewed mentioned the importance of the founder in clearly<br />
articulating the purpose when setting up the company. Can companies who have not benefited from<br />
such clarity of intent from the outset set a corporate purpose? If so, what are key ingredients to<br />
ensuring that they are successful in doing so? Executives repeatedly mentioned the following<br />
elements.<br />
<br />
<br />
<br />
Know thyself: Companies need to have a clear knowledge of what they are and where they<br />
want to go, and they need to conduct a careful analys<strong>is</strong> of where they can make an impact.<br />
Focus: Companies that have an authentic corporate purpose are aspirational in the impact<br />
they want to make while retaining enough focus to ensure they can retain credibility.<br />
Resonance: To ring true, a corporate purpose needs to resonate with its audience, whether<br />
it <strong>is</strong> external (e.g. customers), internal (e.g. employees) or other stakeholders.<br />
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Strategic embedding: When purpose <strong>is</strong> deeply engrained in organizational dec<strong>is</strong>ion-making,<br />
both at the operational and strategic levels, it becomes an integral part of the organizational<br />
make-up, leaving no doubt about how it translates into action in every situation.<br />
Clear and continuing v<strong>is</strong>ion: Strong leaders who are both convinced and convincing continue<br />
to guide and inspire, helping to ensure the organization continues to stay the course and live<br />
its purpose over the long term rather than becoming complacent.<br />
The interviewees ra<strong>is</strong>ed some interesting questions: Will authenticity become more of a strategic<br />
challenge in the future as companies make a broader corporate purpose central to their strategy?<br />
<strong>How</strong> can they ensure they communicate th<strong>is</strong> effectively? With the proliferation of conversations<br />
happening at increasing speed and across time zones on social media platforms, how can companies<br />
be sure that what they project externally reflects their authentic corporate purpose?<br />
8. Understanding the Dimensions of <strong>Authentic</strong>ity<br />
In th<strong>is</strong> section, we explore some of the most important dimensions when it comes to establ<strong>is</strong>hing an<br />
authentic corporate purpose – bearing in mind that all twelve dimensions are important for<br />
authenticity. We then look at how leaders and other stakeholders can use these dimensions to<br />
establ<strong>is</strong>h and maintain an authentic corporate purpose.<br />
Dimension<br />
Awareness<br />
Embeddedness<br />
Transparency<br />
Description<br />
The company – through direct interactions with its stakeholders – has acquired a<br />
deep understanding of its strengths and weaknesses, what drives or motivates its<br />
actions and how it impacts stakeholders and the environment.<br />
The company’s choices and actions are partly generated by the actions and<br />
expected behaviour of other actors, and thus it remains close to its stakeholders<br />
who enable it to remain connected to the world around it.<br />
The company promotes trust by openly sharing information with its stakeholders,<br />
demonstrating coherence between “talk” and “walk,” <strong>is</strong> honest and truthful about<br />
its activities, admits m<strong>is</strong>takes when they are made and does not pretend to be<br />
something it <strong>is</strong> not.<br />
8.1 Awareness<br />
Organizations that are aware have a deep understanding of their own strengths and weaknesses.<br />
The questions included in our questionnaire and designed to throw light on our understanding of the<br />
relationship between an organization’s awareness and its authenticity in corporate purpose were as<br />
follow:<br />
- Does the organization seek feedback to improve its interactions with stakeholders?<br />
- Does the organization accurately describe how stakeholders view its actions?<br />
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- Is the organization aware of the impact it has on its stakeholders?<br />
- Is the organization aware of why it does the things it does?<br />
- Is the organization aware of what drives or motivates its actions?<br />
- Is the organization aware of what it finds truly important?<br />
Case story: Tetra Pak<br />
Establ<strong>is</strong>hed in 1952 in Lund Sweden by Ruben Rausing, Tetra Pak, the world leader in liquid food<br />
processing and packaging, <strong>is</strong> part of the privately held Tetra Laval group. In December 2013, Tetra<br />
Pak operated in more than 170 countries around the globe, employing almost 23,500 people. Its<br />
customers come from different parts of the food industry, such as the dairy, cheese, ice cream,<br />
beverage and prepared food sectors. Tetra Pak’s stated m<strong>is</strong>sion <strong>is</strong> to “make food safe and available,<br />
everywhere.” The company translates its purpose at the organizational level through its core values,<br />
to reinforce its culture. Its core values cons<strong>is</strong>t of four pairs:<br />
<br />
<br />
<br />
<br />
Customer focus & long-term view<br />
Quality & innovation<br />
Freedom & responsibility<br />
Partnership & fun<br />
Tetra Pak sees its purpose as making food available, affordable and attainable across different<br />
geographies and aspects of society. Th<strong>is</strong> <strong>is</strong> the underlying reason for its involvement for 50 years in<br />
school milk and feeding programs around the world through its Food for Development Office (FfDO).<br />
The company has partnered with governments, development agencies, NGOs, local dairies and<br />
farmers. For example, FfDO delivered milk and other nutritious drinks to 64 million schoolchildren in<br />
2013.<br />
Tetra Pak also has an underlying unstated purpose, which results from a statement by its founder<br />
that the package should save more than it costs, i.e. the resources Tetra Pak uses to manufacture its<br />
products should be less than what <strong>is</strong> saved from the products’ use. Th<strong>is</strong> has resulted in a strong<br />
focus on environmental impact. Th<strong>is</strong> <strong>is</strong> deeply internalized in the organization, driving dec<strong>is</strong>ionmaking<br />
processes, strategy and innovation. The company uses a balanced scorecard approach – for<br />
example – to ensure that its HR practices reflect environmental performance targets, with specific<br />
goals integral to the reward system.<br />
In 2010, a 10-year business strategy was launched: Strategy 2020. One of the four strategic priorities<br />
articulated was the driving of environmental excellence. Tetra Pak made a number of commitments<br />
to deliver on goals even where there was a great deal of uncertainty, for example, greenhouse<br />
commitments that had not yet been finalized at the international level. The leadership team<br />
endorsed a strong company-wide conviction that even if the path was not very well defined, the<br />
ultimate defined goals and underlying ambition behind them were correct. Th<strong>is</strong> top-level support<br />
and the resulting articulation of environment as a strategic priority was a key enabler.<br />
The role of the Tetra Pak founder continues to have a strong influence on the authenticity of the<br />
company’s purpose and drives its long-term perspective. Th<strong>is</strong> longer-term perspective has lent Tetra<br />
Pak a great deal of stability and guided its relationships with its external stakeholders, such as its<br />
suppliers. As a director at Tetra Pak commented:<br />
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We buy from suppliers with whom we’ve had a relationship for years and with whom we want to<br />
continue having a relationship for many years to come. Many years might mean 20–30 years.<br />
The continuity of the company and th<strong>is</strong> long-term perspective requires a rooted sense of<br />
underlying corporate purpose, because we have been there and we will be there. We are in th<strong>is</strong><br />
market niche for the long-run, so we have to be really true about it, to be perceived as we want<br />
to be perceived … as a long-term player.<br />
Inter-dependence of purpose and external stakeholder relationships<br />
Tetra Pak’s primary external stakeholders are its customers. Much of its sustainability work <strong>is</strong><br />
done with the perspective of helping the future of its customer’s businesses. The company has<br />
realized that in order to be a supplier of choice for its customers, it also needed to contribute<br />
to their environmental performance. The above-mentioned director describes the centrality of<br />
purpose to its customer relationships as follows:<br />
In our relationship with our customers, the purpose and the continuity are very important and<br />
th<strong>is</strong> has become part of our values. In every business relationship, you are also using <strong>your</strong> values<br />
as part of <strong>your</strong> selling proposition. The sustainability values come from the real intent of the<br />
company, of its purpose. They can be validated by being part of what you represent to <strong>your</strong><br />
customers.<br />
Achieving recognition from customers <strong>is</strong> a challenge. While some customers value a lower carbon or<br />
water footprint, most are not willing to pay a higher price tag associated with them. To be as<br />
creative as possible with solutions and increase the chances of success, there are a number of<br />
challenges. Organizations must acquire new levels of creativity, deeper knowledge and internal<br />
competences that will enable them to collaborate with a variety of external stakeholders. In th<strong>is</strong><br />
way, the company understands better what the possible solutions can be. Th<strong>is</strong> has lent itself to a<br />
collaborative approach, and Tetra Pak remains close to its stakeholders to find solutions:<br />
We need to understand what the possibilities are, not just by asking the supplier a question or a<br />
number of questions about carbon footprints, but by understanding what makes up the carbon<br />
footprint of their product and then working with them to reduce that carbon footprint. And if<br />
they are the supplier we want to work with from a business, commercial and r<strong>is</strong>k perspective, it’s<br />
not only price that counts – it’s about r<strong>is</strong>k, it’s about engagement, it’s about sharing goals for the<br />
future. Then by working with them we can find an optimized value chain for th<strong>is</strong> supplier that<br />
reduces their carbon footprint rather than just buying from someone else.<br />
Tetra Pak views developing and sharing knowledge with its peers, to better understand how to move<br />
forward in a way that <strong>is</strong> cons<strong>is</strong>tent with its purpose, as a fundamental differentiation factor. As a<br />
result of its continuing engagement with its stakeholders, Tetra Pak has acquired a deep – difficult to<br />
replicate – awareness of its purpose, as well as a commitment to pursuing it.<br />
We often make presentations to customers, to internal stakeholders, to government teams of<br />
other organizations or within Tetra Pak where we try to present why we are doing th<strong>is</strong> and why<br />
we think th<strong>is</strong> <strong>is</strong> the right way forward. We try to present on a peer-to-peer bas<strong>is</strong>, in order to offer<br />
support. Tetra Pak <strong>is</strong> very open and people are free to speak. It’s a very Scandinavian culture. If<br />
people have an opinion, we are going to hear that and engage in a conversation.<br />
Recommendations for Increasing Organizational Awareness<br />
To build th<strong>is</strong> capability, leaders and stakeholders should pay special attention to the following:<br />
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1) Seeking feedback from stakeholders.<br />
2) Being aware of the impact the organization has on its stakeholders.<br />
3) Understanding the reason behind the organization’s actions.<br />
4) Understanding what drives and motivates the organization.<br />
5) Understanding what the organization finds truly important.<br />
8.2 Embeddedness<br />
An organization that <strong>is</strong> “embedded” has a close relationship with its stakeholders and the world<br />
around it. Leaders and stakeholders concerned about embeddedness should first ask themselves<br />
these questions:<br />
- Is the organization d<strong>is</strong>connected from the world around it?<br />
- Is the organization d<strong>is</strong>tant from its stakeholders?<br />
- Does the organization have a sense of connectedness with society?<br />
- Does the organization have a relationship with its environment?<br />
Case story: Google Innovation Lab for Food Experiences<br />
Google <strong>is</strong> a global technology leader focused on improving the ways people connect with<br />
information. In 2013, Google has 70 offices in more than 40 countries around the globe, its products<br />
and services were available in over 100 languages and 50 countries. It had $60 billion of revenues<br />
(90% of which were generated from advert<strong>is</strong>ers), with the US accounting for 45% of its revenues.<br />
Google’s business <strong>is</strong> primarily focused around the following key areas: search and d<strong>is</strong>play<br />
advert<strong>is</strong>ing, the Android operating system platform, consumer content through Google Play,<br />
enterpr<strong>is</strong>e, commerce and hardware products. Google had 47,756 full-time employees in 2013.<br />
Larry Page and Sergey Brin started the company as a result of Page’s doctoral research project in<br />
1998. Google’s initial public offering took place in 2004, ra<strong>is</strong>ing US$1.67 billion and providing Google<br />
with a market capitalization of more than $23 billion. Its founders retained a strong involvement in<br />
the business and had intentionally done so in order to retain control and lend continuity to Google’s<br />
activities and contribute to its corporate purpose.<br />
Google’s m<strong>is</strong>sion <strong>is</strong> “organizing the world's information and making it universally accessible and<br />
useful.” While it <strong>is</strong> well known for having revolutionized online searches, Google sees its purpose as<br />
being broader: using information technology and data to address broader global <strong>is</strong>sues and, as one<br />
executive put it, “make the world a better place.” Thus, purpose <strong>is</strong> at the core of Google’s<br />
recruitment and HR practices; it attributes its ability to attract talent to the belief that the<br />
organization <strong>is</strong> working on effecting positive change in the world. Google also allows its employees<br />
the freedom to work on projects they believe will have a positive impact on the world. Its 47,756<br />
full-time employees (Googlers) may use 20% of their time to work on innovation projects that they<br />
have selected themselves and that they are passionate about. Such projects have resulted in<br />
successful Google innovations including Gmail, Adsense, Google Transit and Google Talk.<br />
Th<strong>is</strong> open innovation approach also encourages the development of leaders within Google, by<br />
helping them to work in a non-hierarchical way. In addition, Google leaders are empowered to make<br />
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changes at a level they have never experienced before, and they are given the trust and resources to<br />
figure out what the changes should be. To be successful with their initiatives, Googlers need to<br />
develop an ability to articulate how the opportunity resonates with the corporate purpose, thereby<br />
attracting the talent to work on these projects. Th<strong>is</strong> in turn has an impact on commitment within the<br />
firm; when employees work on projects they are passionate about, they are energized by them.<br />
Leaders are given significant latitude to maximize opportunities within the overall scope of their<br />
program or budget; in th<strong>is</strong> way, they can allocate resources to partners or projects where they can<br />
have a broader long-term impact. Externally, the fact that Google has built a reputation for using the<br />
opportunities that it has to make a broader contribution, by being knowledgeable and thoughtful, as<br />
well as inclusive in its approach, means that it <strong>is</strong> perceived as a valuable contributor to d<strong>is</strong>cussions<br />
by its external stakeholders. One such example <strong>is</strong> Google’s ambitions when it comes to the<br />
sustainability and quality of food that it feeds its employees – free of charge - for breakfast, lunch<br />
and dinner, as well as snacks throughout the day.<br />
Google’s Food Program<br />
Google’s 500,000-square-foot headquarters in Mountain View, California (known as the North<br />
Bayshore campus) has gardens, free restaurants, a basketball court, yoga classes, massage services,<br />
napping pods and dry-cleaning services. It also has 25 cafés as well as “micro-kitchens” throughout<br />
the workspace. Google has one global program chef as well as restaurant chefs for each of its cafés.<br />
They focus on providing “delicious, nutritious and healthy” food. The company maintains that it <strong>is</strong><br />
essential to nour<strong>is</strong>h the body (and mind) with healthy food. Google also tries to encourage portion<br />
control. The many micro-kitchens are stocked with healthy snacks. Each café has its own d<strong>is</strong>tinctive<br />
menu, with items in line with its concept. Most serve breakfast, lunch and dinner, and some are<br />
open on weekends. The supply chain includes community-sponsored agriculture organizations<br />
(CSAs) and community-supported f<strong>is</strong>heries (CSFs). In addition to being healthy, the food offering<br />
aspires to be appealing, with flavor and variety as key considerations.<br />
The food team at Google <strong>is</strong> responsible for providing nutritious, food-filled experiences to those who<br />
are at Google, including Googlers, temporary staff, vendor partners and contractors. On a daily bas<strong>is</strong>,<br />
Google serves over 60,000 people around the world. Traditionally corporate (and other)<br />
organizations have tried to serve food in the most economically efficient way, focusing on reducing<br />
the overall spend. Google, however, <strong>is</strong> concerned with the impact of food on the health and wellbeing<br />
of its employees. It examines the hol<strong>is</strong>tic intersection of food, health, fitness and well-being.<br />
The result <strong>is</strong> a food program that looks at the impact on Googlers, as well as the extended impact on<br />
the families of Googlers.<br />
Google sees the impact that it could have with its food program <strong>is</strong> beyond just its employees, their<br />
families and even its partners present on its campus. A senior Googler explains:<br />
We believe that we have the power as of today to bring a wide variety of partners both<br />
internally and externally together to think through how food can help people to be at their best<br />
in the short as well as long-term. Because it fits in the broader Google goal, we have the freedom<br />
to spend a significant amount of our time and our capacity on building our relationships and<br />
partnerships with organizations outside Google, and to develop knowledge and insight, and<br />
ultimately make th<strong>is</strong> available to the broader world as well. So whatever we have learnt and<br />
continued to learn about how people can make better food choices … that ultimately becomes<br />
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knowledge for the broader good. That <strong>is</strong> what makes us different. It <strong>is</strong> about using the<br />
opportunity that you have to contribute to a broader good.<br />
The result <strong>is</strong> a platform called the Google Innovation Lab for Food Experiences, which meets twice a<br />
year. It brings people together from a diverse group of global companies and NGOs, who share the<br />
core belief that together they can do more to make a contribution to affect positive change in the<br />
overall food system, to feed the 8 or 9 billion people in the years to come in a way that considers the<br />
intersection of health and environment. “The fact that we have the ability and the freedom to do<br />
th<strong>is</strong> within our organization <strong>is</strong> a part of our authentic corporate purpose,” explains a senior Googler.<br />
Case Story: Toyota<br />
Toyota Motor Corp. <strong>is</strong> a Japanese automotive manufacturer headquartered in Toyota, Japan.<br />
Kiichiro Toyoda founded the company in 1937, starting the automotive business from scratch.<br />
Since at that time, there was no automotive expert<strong>is</strong>e in Japan, the company executives of the time<br />
were sent to the US to actually learn how cars were produced.<br />
The company nearly collapsed during the 1950 recession and became heavily dependent on banks.<br />
The result was a focus on reducing r<strong>is</strong>k as well as a commitment to organic growth, in order to<br />
reduce reliance on external finance. In 2013 Toyota’s net revenues were $222 billion; it had 333,498<br />
employees worldwide and was the largest automobile manufacturer by production.<br />
Toyota’s stated purpose <strong>is</strong>; “Toyota will lead the way to the future of mobility, enriching lives around<br />
the world with the safest and most responsible ways of moving people.” It sees its purpose as being<br />
to serve society: to understand fully the impact that the company has on the environment, but also<br />
how it helps people gain access to where they need to go and improve their mobility. Internally, it<br />
seeks to make th<strong>is</strong> as cons<strong>is</strong>tent as possible throughout the organization, making sure that all<br />
entities globally are aligned. Toyota’s ability to be cons<strong>is</strong>tent in reliably delivering on its purpose<br />
means that its external stakeholders respect it as a credible partner. On a number of occasions,<br />
policymakers or stakeholders have sought the company’s advice on different <strong>is</strong>sues. Therefore, it<br />
places great importance on cons<strong>is</strong>tency, making sure employees fully understand what the company<br />
purpose and m<strong>is</strong>sion <strong>is</strong>, through training and communication.<br />
The founder’s v<strong>is</strong>ion continues to exert a strong influence on the company. Climate change was<br />
always high on the agenda and therefore it has attended all the Climate Change conferences to date.<br />
The corporate purpose <strong>is</strong> institutionalized and deeply embedded in the culture. Taking a long-term<br />
view – an inherently Japanese cultural approach - <strong>is</strong> institutionalized at Toyota through an<br />
interestingly differentiated approach. Some roles are clearly operational (encompassing a short-term<br />
view) while others are deemed experts with also a thought leadership mandate (and are tasked with<br />
taking a long-term perspective). The fact that the chairman of the board, for example, <strong>is</strong> tasked with<br />
actively taking a long-term perspective on any strategic dec<strong>is</strong>ion helps to ensure the company<br />
retains its focus on long-run goals, understands the interdependence of current and future benefits<br />
and preserves a long-term relationship with its stakeholders for future success.<br />
Toyota, like many other companies, has experienced difficulty during the ongoing economic cr<strong>is</strong><strong>is</strong><br />
which started in 2008, and has faced strong pressure to shift its focus to shorter-term results. During<br />
such periods of uncertainty, while parts of the organization needed to have a short-term view to<br />
33
adequately assess the r<strong>is</strong>k, Toyota continued to maintain its long-term focus and kept working on<br />
long-term projects, such as the mobility project, described below.<br />
Mobility project<br />
Toyota’s mobility project provides a clear example of how purpose affects dec<strong>is</strong>ion-making. As part<br />
of its contribution to society, Toyota views its role as leading the way to the mobility solutions of the<br />
future. Out of conviction that truly sustainable future mobility can only be achieved if it works<br />
together cross-sectorally with other industries to improve the mobility system overall, Toyota<br />
initiated a sustainable mobility project within the working frameworks provided by the World<br />
Business Council for Sustainable Development. The project seeks to align different sectors involved<br />
in mobility such as, infrastructure providers, public transport operators, automotive industry and so<br />
on, and to facilitate all parties to work in one direction, in order to take an integrated approach to<br />
<strong>is</strong>sues such as mobility, energy, information, and citizens’ behavior and choices. Another example <strong>is</strong><br />
Toyota’s commitment to the fuel cell. There <strong>is</strong> a great deal of res<strong>is</strong>tance to changing business models<br />
in the market currently, and there might be other solutions that help to reduce CO2 in the shorterterm.<br />
<strong>How</strong>ever, when evaluating resource availability in the long-term, Toyota considers the fuel cell<br />
to be the better option. The fact that Toyota takes a long-term view (looking ahead 20-30 years) <strong>is</strong><br />
the driver behind its dec<strong>is</strong>ion to introduce and invest in the fuel cell today.<br />
The company feels it <strong>is</strong> important to understand the practical elements of the barriers to its longterm<br />
projects – and how to overcome these. It used the word Genba to describe th<strong>is</strong>; a Japanese<br />
term meaning “the real place.” For example, it volunteered to run the mobility project “hands-on” in<br />
Bangkok, in order to deepen its understanding of how to change the behavior of people using roads<br />
and mobility solutions in that area. Th<strong>is</strong> focus and experience will allow it to find the right tools and<br />
methodologies to achieve its v<strong>is</strong>ion. “It’s not just an abstract v<strong>is</strong>ion, but it’s combined with very<br />
practical hands-on experience”; in the words of a General Manager interviewed at Toyota Motor<br />
Europe.<br />
Recommendations to increase organization’s “embeddedness”<br />
In order to build the ability to remain connected to other actors, an organization’s leaders and<br />
stakeholders should focus on:<br />
1) Making sure the organization <strong>is</strong> connected with the external world.<br />
2) Taking care not to d<strong>is</strong>tance the organization from its stakeholders.<br />
3) Making sure the organization <strong>is</strong> connected with society at large.<br />
4) Relating the organization to the environment it serves.<br />
8.3 Transparency<br />
An organization that <strong>is</strong> transparent openly shares information with its stakeholders. Leaders and<br />
stakeholders concerned about transparency should ask themselves these questions:<br />
- Does the organization tell the truth?<br />
- Does the organization admit m<strong>is</strong>takes when they are made?<br />
34
- Does the organization openly share information with stakeholders?<br />
- Does the organization pretend to be something that it <strong>is</strong> not?<br />
Case story: <strong>BM</strong>W<br />
In the premium segment of the automobile market, the <strong>BM</strong>W Group manufactures automobiles and<br />
motorcycles and <strong>is</strong> based in Munich, Germany. The company sells <strong>BM</strong>W, Rolls-Royce and Mini cars,<br />
as well as <strong>BM</strong>W Motorrad motorcycles. In 2012, Forbes announced the <strong>BM</strong>W Group as the most<br />
reputable business in the world. Its 2013 revenues were € 76.058 billion and 110,351 employees.<br />
The <strong>BM</strong>W Group <strong>is</strong> a global company that sells its products in more than 140 countries and<br />
production facilities in 13 countries. Its m<strong>is</strong>sion statement <strong>is</strong> to be “the world’s leading provider of<br />
premium products and premium services for individual mobility”. The <strong>BM</strong>W Group’s strong sense of<br />
purpose has positive impacts both internally and externally. The impact of purpose on internal<br />
stakeholders <strong>is</strong> that it fosters employee commitment and pride. The <strong>BM</strong>W Group’s sense of purpose<br />
also allows it to have a more open dialogue with external stakeholders. It holds stakeholder<br />
dialogues with different stakeholder groups, to d<strong>is</strong>cuss different topics in a world café-style format<br />
to ensure that it hears very diverse views. The openness of the format ensures that stakeholders are<br />
l<strong>is</strong>tened to and heard, which they appreciate. As described by a senior executive at the <strong>BM</strong>W Group:<br />
We receive feedback which <strong>is</strong> very cons<strong>is</strong>tent across regions and <strong>is</strong> positive about our openness<br />
and we are putting so much emphas<strong>is</strong> on l<strong>is</strong>tening. The authenticity allows th<strong>is</strong> openness and<br />
trust to develop step by step with our brand stakeholder base.<br />
Integrating purpose into dec<strong>is</strong>ion-making at the <strong>BM</strong>W Group<br />
The <strong>BM</strong>W Group implemented Strategy Number ONE in 2007, to align the group with two targets: 1.<br />
to be profitable and 2. to enhance long-term value in times of change. Th<strong>is</strong> strategy applied to the<br />
technological, structural as well as cultural aspects of the <strong>BM</strong>W Group and helped all managers to<br />
adopt a more hol<strong>is</strong>tic view when making dec<strong>is</strong>ions. In other words, the company’s dec<strong>is</strong>ion-making<br />
process integrated its purpose in a cascaded manner from the board level downwards. For example<br />
– today - when presenting a new project to the board for approval, part of the documentation<br />
required <strong>is</strong> an assessment of the sustainability impact as well as financial and human resource<br />
implications. In th<strong>is</strong> way, all projects are considered in the context of their broader context and<br />
impact. “The company <strong>is</strong> placing the focus on whether employees are not only looking at their direct<br />
task and responsibility, but also whether they take dec<strong>is</strong>ions based on the company context as a<br />
whole.”<br />
A key enabler of the <strong>BM</strong>W Group’s purpose <strong>is</strong> its people. Within the recruitment process, there <strong>is</strong> a<br />
clear criterion that a future employee has to fit into - the <strong>BM</strong>W Group culture as already described.<br />
The leadership component <strong>is</strong> also critical. Stability at the top-management level has allowed for<br />
establ<strong>is</strong>hing continuity in the company’s ability to live its purpose over time. Six of the eight board<br />
members have grown up and evolved their professional activities within the <strong>BM</strong>W company, and<br />
around 46% of the shares are held by one family. In addition to providing continuity, stable<br />
leadership allows the <strong>BM</strong>W Group to take a very long-term view, consciously making dec<strong>is</strong>ions that<br />
underscore the company’s desire to lead iconic change. The tone <strong>is</strong> set at the top, with the board a<br />
key champion of corporate purpose: “The board contributes a lot to setting the tone, leading by<br />
example in terms of the kinds of behaviors they promote and the leaders they hire.”<br />
35
As the <strong>BM</strong>W Group has grown and internationalized, it needed to ensure its purpose was being lived<br />
in all parts of the company, and in a truly authentic way. To ensure that purpose <strong>is</strong> cons<strong>is</strong>tently lived<br />
across geographies, for any new production site or joint ventures in other countries, the <strong>BM</strong>W<br />
Group makes sure that managers are experienced in working at the Group’s headquarters as well as<br />
in markets abroad. When the center or “hub” <strong>is</strong> so connected to the sum of its parts, th<strong>is</strong> helps all<br />
parts of the <strong>BM</strong>W Group globally to remain cons<strong>is</strong>tent and cohesive. At the same time, the <strong>BM</strong>W<br />
Group values diversity and respect for individual differences. If purpose and trust are present, teams<br />
can leverage their diversity to come up with the solutions that work best for the company in line<br />
with the company’s purpose and objectives.<br />
The <strong>BM</strong>W Group recognizes the importance of communicating effectively and authentically in<br />
particular in the digital age. The speed of digital channels and the global nature of connectedness<br />
mean that news travels fast – and ceaselessly. “If all parts of the organization understand the<br />
purpose, employees are empowered to make dec<strong>is</strong>ions autonomously while being aligned with the<br />
<strong>BM</strong>W Group’s corporate purpose.<br />
Recommendations to increase organization’s “transparency”<br />
Leaders and stakeholders should work towards the following:<br />
1) Telling the truth.<br />
2) Allowing the organization to admit m<strong>is</strong>takes when they are made.<br />
3) Openly sharing information with shareholders.<br />
4) Making sure the organization <strong>is</strong> being true to itself and <strong>is</strong> not pretending to be what the<br />
organization <strong>is</strong> not.<br />
8.4 Checking the authenticity of corporate purpose against 12 dimensions<br />
In Sections 8.1, 8.2 and .3, we suggest how it <strong>is</strong> possible for our “top three” dimensions – awareness,<br />
embeddedness and transparency – to generate a diagnostic toolset from our research with key<br />
questions that firms can ask themselves about each dimension in order to assess authenticity. A set<br />
of relevant questions can be asked against each one of the twelve dimensions of authenticity in<br />
corporate purpose that our research identified. It behooves companies to do so, given that all<br />
twelve of these dimensions count when it comes to having a truly authentic corporate purpose.<br />
9. Executive Benchmarking Session<br />
In addition to the survey and interviews described above, we tested our work with a group of 20+<br />
executives from various functional d<strong>is</strong>ciplines in several corporate organizations over the course of<br />
an executive session. The executives were unaware of the topic before coming to the session and<br />
did not receive any pre-reading material. Some preliminary results of the project were shared as<br />
input to a group workshop around the question: What needs to happen for companies to become<br />
better at being authentic with their corporate purpose? During the session, the participants were<br />
divided into five groups to d<strong>is</strong>cuss the topic of authentic corporate purpose. The d<strong>is</strong>cussions brought<br />
forth some interesting ideas and reflections on the concept of authenticity and corporate purpose. A<br />
number of themes emerged across the five groups, as follows:<br />
36
• Strategy has to illustrate purpose both in the long and short term.<br />
• Companies need to have a clearly articulated business case for purpose.<br />
• Executives need to communicate internally but with radical transparency,<br />
i.e. being radically open.<br />
• Leadership at all levels needs to live the purpose.<br />
• Businesses need to connect purpose with people (their stakeholders),<br />
whether internal or external.<br />
• Leaders need to work with HR to integrate purpose with the employees.<br />
• Companies need to create incentives to integrate purpose into the corporate culture.<br />
• Companies need to work to co-create purpose with employees and customers.<br />
10. Implications for Leaders<br />
What do all of these findings mean for leaders? Given that almost fifty percent of the variance in<br />
authentic corporate purpose <strong>is</strong> driven by effective leadership, by considering the different<br />
dimensions of authentic corporate purpose, leaders can better assess the following:<br />
1) Which of the dimensions of corporate purpose does <strong>your</strong> organization excel? In which areas<br />
might you not be as strong? What could you do to help reinforce the authenticity of <strong>your</strong><br />
corporate purpose among stakeholders both inside and outside the company?<br />
2) Does <strong>your</strong> corporate purpose cover the various different components of authenticity:<br />
leading, stewarding, delivering and differentiating?<br />
3) Does the corporate purpose reflect the company’s identity authentically? Is th<strong>is</strong> cons<strong>is</strong>tent<br />
with the image the organization has externally? Are all aspects of the organization’s<br />
operations aligned with purpose?<br />
Next, the leader needs to ensure that their corporate purpose <strong>is</strong> communicated appropriately. Are<br />
external stakeholders getting the information they need in a transparent and timely manner to build<br />
their perception of the company as a credible partner? Is the company paying enough attention to<br />
social media – which needs to be given particular attention in a world where there <strong>is</strong> increasing<br />
no<strong>is</strong>e, and decreasing attention levels. Internally, <strong>is</strong> behavior that <strong>is</strong> aligned with purpose being<br />
rewarded and <strong>is</strong> that which diverges being held accountable? Does every employee have a clear<br />
understanding of what dec<strong>is</strong>ions and actions are right and wrong, i.e. aligned with purpose?<br />
Finally, the leader needs to set a clear example by ensuring all strategic dec<strong>is</strong>ions are guided by the<br />
corporate purpose. The survey findings seem to suggest that many executives fail to use the<br />
corporate purpose to “always guide” their dec<strong>is</strong>ion-making. Th<strong>is</strong> gap leads to m<strong>is</strong>alignment between<br />
corporate actions and corporate purpose.<br />
By providing the long-term v<strong>is</strong>ion and articulating and communicating the purpose internally and<br />
externally, leaders provide the direction and clarity and set the course. By ensuring their behavior <strong>is</strong><br />
cons<strong>is</strong>tent with the values espoused, leaders inspire those inside organizations to live the purpose<br />
and provide external credibility. The leader <strong>is</strong> the initiator and challenger, providing the organization<br />
with the continuity required to stay the course.<br />
37
11. Conclusion<br />
Th<strong>is</strong> study researched the relationship between “authenticity” and “corporate purpose.” The<br />
contention was that if a corporate purpose <strong>is</strong> not considered “authentic” then stakeholders will view<br />
the company and the company’s corporate purpose with m<strong>is</strong>trust, skeptic<strong>is</strong>m and cynic<strong>is</strong>m. Th<strong>is</strong><br />
then has clear reputational and brand value implications that, according to our previous research on<br />
corporate purpose, will certainly be played out through effects on financial performance. Although<br />
difficult – even impossible – to quantify exactly (since there are many factors influencing these<br />
aspects at any one time), such impacts on brand value and reputation are increasingly important<br />
considerations in high-level dec<strong>is</strong>ion-making in companies.<br />
Based on the authenticity research in a diverse field of business literature, 12 dimensions were<br />
theorized to constitute an organization’s “authenticity of corporate purpose.” The survey results of<br />
over 200+ executives from 46 different nations and 43 different industries supported th<strong>is</strong> theory.<br />
The support of the 12 dimensions gives validity to the overall conceptual model.<br />
The survey uncovered a number of findings that are worth repeating here:<br />
<br />
<br />
<br />
Many executives had considerable difficulty in identifying a company with an authentic<br />
corporate purpose. Th<strong>is</strong> may be because corporate purpose <strong>is</strong> often received with m<strong>is</strong>trust,<br />
skeptic<strong>is</strong>m and cynic<strong>is</strong>m. Many companies may “talk the talk” but they do not “walk the<br />
walk.”<br />
Not one company stood out from the pack on authenticity of corporate purpose. Most of<br />
the companies in our study only received only one mention. The top three companies<br />
identified by the respondents – Google, Nestle and Apple – received a small number of<br />
multiple mentions, nine at the most. There were no companies that the executives<br />
resoundingly believed exhibited an ideal authentic corporate purpose.<br />
There ex<strong>is</strong>ts a gap between a company’s corporate purpose and managerial attitudes. While<br />
executives generally “agreed” that their own company has an authentic corporate purpose,<br />
they do not “always” rely on their company’s corporate purpose to guide their dec<strong>is</strong>ion-<br />
38
making process. If managers are not using the organization’s corporate purpose to guide<br />
their dec<strong>is</strong>ion-making, then the organization’s corporate purpose will never be perceived as<br />
truly “authentic.”<br />
<br />
<br />
Leadership <strong>is</strong> an important part of maintaining and establ<strong>is</strong>hing an authentic corporate<br />
purpose. Results of our structural equation modeling demonstrate that effective leadership<br />
<strong>is</strong> an important predictor of authentic corporate purpose.. Strong leaders who are convinced<br />
and convincing continue to guide and inspire, helping to ensure the organization does not<br />
get complacent but rather continues to stay the course and live its purpose over the longterm.<br />
Companies can diagnose and manage their “authenticity of corporate purpose” with the<br />
help of our model and the diagnostic toolset it has helped to generate. The model details the<br />
different types of activities that contribute to perceptions of authenticity: stewarding,<br />
leading, differentiating and delivering. Each of these sets of activities cons<strong>is</strong>ts of several<br />
dimensions including: awareness, balance, connectedness, cons<strong>is</strong>tency, embeddedness,<br />
long-term orientation, originality, passion, reliability, reputation, self-regulation and<br />
transparency<br />
Th<strong>is</strong> study <strong>is</strong> the first empirical study conducted on the “authenticity of corporate purpose.” It<br />
became clear from th<strong>is</strong> piece of research that much work still needs to be done in th<strong>is</strong> area. For<br />
example, further work can be performed on the role that brands play on establ<strong>is</strong>hing and<br />
maintaining an authentic corporate purpose. Despite no one clear brand winner, it may be worth<br />
examining if brand strength can help establ<strong>is</strong>h and maintain an organization’s “authenticity of<br />
corporate purpose”? Or can it be a hindrance?<br />
It <strong>is</strong> important to understand when and on what occasions managers choose not to use corporate<br />
purpose to guide their strategic dec<strong>is</strong>ion-making. For example, <strong>is</strong> corporate purpose ignored when<br />
managers are making important dec<strong>is</strong>ions or in cr<strong>is</strong>es? And if so, how often does th<strong>is</strong> occur? What <strong>is</strong><br />
then, the subsequent impact on authenticity?<br />
Also, it <strong>is</strong> important to understand how these dimensions interact with each other. Is it possible for<br />
firms to work on parts of the model and still be perceived as (mostly) authentic? And if so which<br />
parts of the model best interact? Are some dimensions significantly more important than others in<br />
establ<strong>is</strong>hing an authentic corporate purpose?<br />
Lastly, th<strong>is</strong> project mostly examined external views of authentic corporate purpose. <strong>How</strong>ever,<br />
Barnard wrote, “A purpose does not incite co-operative activity unless it <strong>is</strong> accepted by those whose<br />
efforts will constitute the organization.” (1938: 86). Future research could study how employees<br />
view authentic corporate purpose to uncover similarities and differences between external and<br />
internal views.<br />
These areas/questions are beyond the scope of th<strong>is</strong> research project. We hope that both<br />
practitioners and scholars will be interested in continuing to work in th<strong>is</strong> area in the future.<br />
39
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Leadership: Development, Analys<strong>is</strong>, and Implications for Research. Journal of Business Ethics. 101:<br />
415–434.<br />
Riordan, C. M., Gatewood, R. D., & Bill, J. B. (1997). <strong>Corporate</strong> image: Employee reactions and<br />
implications for managing corporate social performance. Journal of Business Ethics, 16(4), 401-412.<br />
Shen, H and Kim, J.N. (2012) The <strong>Authentic</strong> Enterpr<strong>is</strong>e: Another Buzz Work or a True Driver of Quality<br />
Relationship? Journal of Public Relations Research. 24: 371–389.<br />
Susing, I., Green, S. and Grant , A.M. (2011) The Potential Use of the <strong>Authentic</strong>ity Scale as an<br />
Outcome Measure in Executive Education. The Coaching Psycholog<strong>is</strong>t. 7(1): 16–25.<br />
Tate, B. (2008) A Longitudinal Study of the Relationships Among Self-Monitoring, <strong>Authentic</strong><br />
Leadership, and Perceptions of Leadership. Journal of Leadership and Organizational Studies. 15(1):<br />
16–29.<br />
Turker, D. (2008) Measuring <strong>Corporate</strong> Social Responsibility: A Scale Development Study. Journal of<br />
Business Ethics. 85: 411–427.<br />
Walumba, F.O., Avolio, B.J., Gardner, W.L., Wernsing, T.S., and Peterson, S.J. (2008) <strong>Authentic</strong><br />
Leadership: Development and Validation of a Theory-Based Measure? Journal of Management.<br />
34(1): 89–126.<br />
Yammarino, F.J., Dionne, S.D., Schriesheim, C.A., and Dansereau, Fred. (2008) <strong>Authentic</strong> Leadership<br />
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19: 693–707.<br />
42
Leading<br />
13. Appendices<br />
Appendix I: Survey Questionnaire<br />
Below are the questions that were included in the final quantitative survey questionnaire. 5<br />
<strong>Corporate</strong> purpose <strong>is</strong> a company's core "reason for being." It <strong>is</strong> the organization’s single underlying<br />
objective that unifies all stakeholders and embodies its ultimate role in the broader economic,<br />
societal and environmental context. <strong>Corporate</strong> purpose <strong>is</strong> often communicated through a company's<br />
m<strong>is</strong>sion or v<strong>is</strong>ion statements, but may also remain informal and unarticulated.<br />
<strong>How</strong>ever, corporate purpose can sometimes be viewed with m<strong>is</strong>trust and skeptic<strong>is</strong>m and perceived as<br />
mere “window dressing” if it does not match the firm's actual actions.<br />
Through th<strong>is</strong> study, we are interested in understanding what determines the authenticity of a firm’s<br />
corporate purpose. Since “authenticity” <strong>is</strong> generally defined as being “true to oneself,” we define<br />
authenticity of corporate purpose as the alignment between a firm’s perceived corporate purpose<br />
and the actual strategic dec<strong>is</strong>ions and actions that a firm takes.<br />
Given the definition in the introduction, please think of a company that you believe has an <strong>Authentic</strong><br />
<strong>Corporate</strong> <strong>Purpose</strong>.<br />
______________________________<br />
On a scale from 1 to 7, where 1 <strong>is</strong> "Strongly D<strong>is</strong>agree" and 7 <strong>is</strong> "Strongly Agree," to what extent do<br />
the following statements describe the company you chose for Question # 1.<br />
Dimension<br />
Balance<br />
Awareness<br />
Transparency<br />
Self‐regulation<br />
Questionnaire Items: The Company…<br />
...solicits views that challenge its deeply held positions.<br />
...analyzes all relevant data, regardless of source, before making a dec<strong>is</strong>ion.<br />
...does not l<strong>is</strong>ten carefully to different points of view before coming to a dec<strong>is</strong>ion.<br />
...does not like to be confronted with its limitations and shortcomings.<br />
…seeks feedback to improve its interactions with stakeholders.<br />
...accurately describes how stakeholders view its actions.<br />
...<strong>is</strong> not aware of the impact it has on its stakeholders.<br />
...<strong>is</strong> aware of why it does the things it does.<br />
...<strong>is</strong> aware of what drives or motivates its actions.<br />
...<strong>is</strong> not aware of what it finds truly important.<br />
...tells the truth.<br />
...admits m<strong>is</strong>takes when they are made.<br />
... does not openly share information with stakeholders.<br />
...does not pretend to be something that it <strong>is</strong> not.<br />
...monitors its actions to ensure that it does not violate any legal or ethical norms.<br />
...exhibits restraint with regard to growth and profit ambitions by taking its<br />
impact on stakeholders into account.<br />
...does not make dec<strong>is</strong>ions that are true to its corporate purpose.<br />
...res<strong>is</strong>ts pressure to do things contrary to its corporate purpose.<br />
...acts according to its corporate purpose even if others criticize it for it.<br />
5 Note that for purposes of clarity, the questions described herein are grouped by their respective dimensions. In the<br />
actual survey, the questions were presented to responders in random order.<br />
43
Differentiating<br />
Delivering<br />
Stewarding<br />
Embeddedness<br />
Long‐term<br />
Orientation<br />
Connectedness<br />
Cons<strong>is</strong>tency<br />
Reliability<br />
Reputation<br />
Passion<br />
Originality<br />
...<strong>is</strong> d<strong>is</strong>connected from the world around it.<br />
...<strong>is</strong> d<strong>is</strong>tant from its stakeholders.<br />
...has lost all sense of connectedness with society.<br />
...<strong>is</strong> not related to its environment.<br />
...considers maintaining a long-term relationship with its stakeholders important.<br />
...expects to be working with its stakeholders for a long time.<br />
... does not plan for the long term.<br />
...works hard for success in the future.<br />
…does not aim to protect and improve the quality of the local community.<br />
...aims to create a better life for future generations.<br />
...contributes to the well-being of society.<br />
...does not aim to protect and improve the quality of the local environment.<br />
...respects the values, norms and traditions of the communities in which it<br />
operates.<br />
...stays true to its corporate purpose.<br />
...does not offer continuity.<br />
...has a clear corporate purpose that it pursues.<br />
...has a corporate purpose that <strong>is</strong> cons<strong>is</strong>tent over time.<br />
...has shown me that it keeps its prom<strong>is</strong>es.<br />
...delivers on what it prom<strong>is</strong>es.<br />
...makes prom<strong>is</strong>es that are not credible.<br />
...makes reliable prom<strong>is</strong>es.<br />
...has a good reputation in the community.<br />
...has a good reputation in the industry.<br />
...<strong>is</strong> not actively involved in the community.<br />
...<strong>is</strong> known as a good place to work.<br />
...has a good reputation among its customers.<br />
...seems passionate about what it does.<br />
...appears highly motivated to excel in everything it does.<br />
... does not appear to have a sense of purpose.<br />
...<strong>is</strong> a compassionate organization.<br />
...has a corporate purpose that <strong>is</strong> different from other companies.<br />
...has a corporate purpose that stands out from other companies in the same<br />
industry.<br />
...has a corporate purpose that <strong>is</strong> not unique.<br />
...has a corporate purpose that clearly d<strong>is</strong>tingu<strong>is</strong>hes it from other companies.<br />
In <strong>your</strong> opinion, to what extent <strong>is</strong> the overall functioning of th<strong>is</strong> company's leader sat<strong>is</strong>factory?<br />
In <strong>your</strong> opinion, how effective <strong>is</strong> th<strong>is</strong> company's leader?<br />
In <strong>your</strong> opinion, how capable <strong>is</strong> th<strong>is</strong> company's leader?<br />
In <strong>your</strong> opinion, how important <strong>is</strong> the role of leadership in establ<strong>is</strong>hing the authenticity of a firm's<br />
corporate purpose?<br />
44
Appendix II: Qualitative Interview Protocol<br />
Below <strong>is</strong> the interview protocol followed for each of the interviews.<br />
---<br />
Introduction<br />
Thank you for taking the time to meet with us today.<br />
Our research project aims to bring increased understanding of the determinants of the authenticity<br />
of a firm’s corporate purpose. By corporate purpose, we mean a company's core "reason for being”<br />
or the organization’s single underlying objective that unifies all stakeholders and embodies its<br />
ultimate role in the broader economic, societal and environmental context. It might be<br />
communicated through <strong>your</strong> company's m<strong>is</strong>sion or v<strong>is</strong>ion statements, but may also remain informal<br />
and unarticulated.<br />
Your firm was identified in our recent survey as scoring highly on having an authentic corporate<br />
purpose. As such, we would like to hear how <strong>your</strong> company sees the importance of corporate<br />
purpose and how th<strong>is</strong> <strong>is</strong> used in dec<strong>is</strong>ion-making processes here at ___________.<br />
The interview should take 45 minutes and with <strong>your</strong> perm<strong>is</strong>sion, we will be recording the session. All<br />
responses will be kept confidential. Th<strong>is</strong> means that unless we get <strong>your</strong> consent, <strong>your</strong> interview<br />
responses will only be shared with research team members and we will ensure that any information<br />
we include in our report does not identify you as the respondent. You don’t have to talk about<br />
anything you don’t want to and you may end the interview at any time.<br />
Are there any questions before we begin?<br />
Questions<br />
1. On a scale of 1 to 7, how important would you say <strong>is</strong> the idea of an authentic corporate<br />
purpose at _(insert company name)_?<br />
2. <strong>How</strong> would you define the idea of an authentic corporate purpose?<br />
3. What <strong>is</strong> <strong>your</strong> company’s corporate purpose?<br />
4. What impact, if any, do you feel that the authenticity of <strong>your</strong> corporate purpose has had on<br />
the organization’s internal and external stakeholders?<br />
5. Why do you think that some companies actively pay attention to the authenticity of their<br />
corporate purpose while others do not?<br />
6. Do you remember when <strong>your</strong> organization began to focus on authenticity? Why did th<strong>is</strong><br />
occur?<br />
7. Can you give an example of how <strong>your</strong> corporate purpose has influenced the dec<strong>is</strong>ion-making<br />
process here at _(insert company name)__?<br />
45
8. What helped or enabled th<strong>is</strong> dec<strong>is</strong>ion to be made?<br />
9. What have been some of the barriers, if any, that you have encountered when trying to be<br />
authentic in <strong>your</strong> corporate purpose?<br />
10. <strong>How</strong> did you overcome the barrier(s)? What kind of organizational processes, structures, or<br />
rewards are in place to help <strong>your</strong> employees overcome these barriers and to be authentic<br />
with regards to the corporate purpose?<br />
11. Do you encounter barriers to communicating corporate purpose externally?<br />
12. What would you say <strong>is</strong> the role of leadership in establ<strong>is</strong>hing and maintaining the authenticity<br />
of corporate purpose?<br />
13. What recommendations do you have for other companies that are trying to establ<strong>is</strong>h an<br />
authentic corporate purpose?<br />
14. Thank you so much for <strong>your</strong> time, <strong>is</strong> there anything else you’d like to add before we end that<br />
we haven’t covered around the topic of authenticity of corporate purpose?<br />
Thank you!<br />
46
Appendix III: Qualitative Interview Respondents Rating of Dimensions<br />
In the table below, could you please rate each dimension on a scale of 1 to 7. Attached <strong>is</strong> a brief<br />
description of the dimensions for further information.<br />
Dimensions<br />
Transparency<br />
<strong>How</strong> important<br />
overall <strong>is</strong><br />
authenticity of<br />
corporate<br />
purpose?<br />
(1=Not important<br />
at all, 7=<br />
Extremely<br />
important)<br />
<strong>How</strong> important <strong>is</strong><br />
it to <strong>your</strong><br />
company?<br />
(1=Not important<br />
at all, 7=<br />
Extremely<br />
important)<br />
<strong>How</strong> would you<br />
rate <strong>your</strong><br />
company’s<br />
performance?<br />
(1=Poor, 7=<br />
Excellent)<br />
<strong>How</strong> challenging<br />
<strong>is</strong> it for <strong>your</strong><br />
company?<br />
(1=Not at all<br />
Challenging<br />
7=Extremely<br />
Challenging)<br />
<strong>How</strong> important <strong>is</strong> it<br />
for <strong>your</strong> dec<strong>is</strong>ionmaking<br />
process?<br />
(1=Not important at<br />
all, 7= Extremely<br />
important)<br />
Awareness<br />
Balance<br />
Reliability<br />
Connectedness<br />
Self-regulation<br />
Reputation<br />
Passion<br />
Embeddedness<br />
Continuity<br />
Originality<br />
Long-term<br />
orientation<br />
47
Appendix IV: L<strong>is</strong>t of Survey Respondents<br />
(by company and area of activity)<br />
Company Area of Activity Interview Date<br />
Packaging Environment Performance 23/09/2014<br />
Technology Food Services 24/09/2014<br />
Cement Innovation Management & Collaboration 26/09/2014<br />
Pharmaceutical Compliance 30/09/2014<br />
Automotive Sustainability 10/10/2014<br />
Automotive Energy & Environmental Affairs 13/10/2014<br />
Food & beverage FMCG Communications 14/10/2014<br />
Food & beverage FMCG Procurement & Sustainability 28/10/2014<br />
Food & beverage FMCG Communications 29/10/2014<br />
FMCG Foundation 30/10/2014<br />
Chemicals and health Communications 03/11/2014<br />
A FMCG company Environmental Sustainability 17/11/2014<br />
48
Appendix V: Character<strong>is</strong>tics of Survey Executives<br />
Gender<br />
Answer %<br />
Male 71%<br />
Female 29%<br />
Total 100%<br />
Demographics<br />
Demographics<br />
Number<br />
Average Age 51<br />
Average Years of Work Experience 27<br />
Number of Nationalities 46<br />
Education<br />
Answer %<br />
Some High School 1%<br />
High School 2%<br />
Attended University 1%<br />
B.A. (Bachelor of Arts) 4%<br />
B.S. (Bachelor of Science) 10%<br />
B.B.A. (Bachelor of Business Admin<strong>is</strong>tration) 9%<br />
M.A. (Master of Arts) 7%<br />
M.S. (Master of Science) 23%<br />
M.B.A. (Master of Business Admin<strong>is</strong>tration) 31%<br />
Attended Doctoral Program 2%<br />
PhD (Doctor of Philosophy) 9%<br />
M.D. (Doctor of Medicine) 0%<br />
J.D. (Jur<strong>is</strong> Doctor) 2%<br />
Total 100%<br />
49
Appendix VI: Executives and Firm Character<strong>is</strong>tics<br />
Public versus Private<br />
Answer %<br />
Public 38%<br />
Private 55%<br />
Other 7%<br />
Total 100%<br />
Size of firm in Millions (Euro)<br />
Answer %<br />
0-100 24%<br />
100-500 10%<br />
500-1000 4%<br />
1000-2500 11%<br />
2500-5000 9%<br />
5000-10000 7%<br />
10000 + 35%<br />
Total 100%<br />
50
Appendix VII: Industry Demographics<br />
Answer % Answer %<br />
Academic 1% Machinery 3%<br />
Aerospace 0% Media 1%<br />
Agriculture and F<strong>is</strong>hing 4% Metal 1%<br />
Airline 0% Mining 0%<br />
Automotive 2% Non-Profit 1%<br />
Building Materials 6% Oil and Gas 2%<br />
Business and Professional Services 7% Paper and Packaging 5%<br />
Chemicals 4% Pharmaceuticals and 4%<br />
Health-care<br />
Computer 1% Power and Utilities 1%<br />
Construction 3% Publ<strong>is</strong>hing 1%<br />
Defense 0% Retailing 2%<br />
Energy 6% Rubber 0%<br />
Engineering 1% Software 1%<br />
Fast-moving Consumer Goods 10% Technology and 2%<br />
Communications<br />
Financial Services 8% Textiles 1%<br />
Food and Beverages 7% Transport and 2%<br />
Log<strong>is</strong>tics<br />
Glass and Glassware 1% Travel and Tour<strong>is</strong>m 0%<br />
Government 1% Toys 0%<br />
Health-care 4% Other 6%<br />
High tech / Electronics / Telecoms 2% Total 100%<br />
Industrial Goods 1%<br />
Le<strong>is</strong>ure and Entertainment 0%<br />
Machinery 3%<br />
Media 1%<br />
Metal 1%<br />
Mining 0%<br />
Non-Profit 1%<br />
Oil and Gas 2%<br />
Paper and Packaging 5%<br />
Pharmaceuticals and Healthcare 4%<br />
Power and Utilities 1%<br />
Publ<strong>is</strong>hing 1%<br />
51
Appendix VIII: Ranking of Companies Identified as Having a <strong>Corporate</strong> <strong>Purpose</strong><br />
Question: Identify a company with corporate purpose<br />
Rank Company Name Count Percent<br />
1 Google 9 4.97<br />
2 Nestlé 9 4.97<br />
3 Apple 7 3.87<br />
4 IKEA 6 3.31<br />
5 Patagonia 6 3.31<br />
6 Novart<strong>is</strong> 4 2.21<br />
7 Roche 4 2.21<br />
8 Caterpillar 3 1.66<br />
9 Danone 3 1.66<br />
10 Holcim 3 1.66<br />
11 Innocent 3 1.66<br />
12 Japan Tobacco International 3 1.66<br />
13 Johnson & Johnson 3 1.66<br />
14 Nike 3 1.66<br />
15 Tesla 3 1.66<br />
16 Shell 3 1.66<br />
17 Coca-Cola 2 1.10<br />
18 D<strong>is</strong>ney 2 1.10<br />
19 Hilton Worldwide 2 1.10<br />
20 Kingf<strong>is</strong>her 2 1.10<br />
21 Lego 2 1.10<br />
22 Microsoft 2 1.10<br />
23 Migros 2 1.10<br />
24 Novo Nord<strong>is</strong>k A/S 2 1.10<br />
25 Philipps 2 1.10<br />
26 Syngenta 2 1.10<br />
27 The Red Cross 2 1.10<br />
28 Toyota 2 1.10<br />
29 Unilever 2 1.10<br />
30 Volvo 2 1.10<br />
31 Waitrose 2 1.10<br />
M<strong>is</strong>sing 28%<br />
52
Appendix IX: Companies Identified as Having an <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> and<br />
Receiving at Least One Mention - unsolicited<br />
Companies receiving one mention<br />
Adelholzener General Electric Save the Children<br />
Africa Finance Corporation Givaudan Schlumberger<br />
Aker Solutions Globe Telecom Sime Darby<br />
Amazon Harley Davidson Statoil<br />
Aston -Martin UK Hellenic Straumann AG<br />
Audi Helsana SWATCH<br />
Avin Oil SA Husqvarna Sw<strong>is</strong>s Federal Institute<br />
of Technology<br />
AXA <strong>IMD</strong> Sw<strong>is</strong>s Re<br />
BASF Interface Switcher<br />
Bata Shoe Organization JP Morgan Tata Group, India<br />
BHP Billiton Kambly S.A. Tetra Pak<br />
<strong>BM</strong>W Kone Tha High Performance<br />
Academy<br />
Bobst Koninklijke Vopak NV The Body Shop<br />
Boehringer Ingelheim Lafarge The LEGO Group<br />
Boreal<strong>is</strong> Linney group TOD'S<br />
Cargill Lufthansa Tomra ASA<br />
Carlsberg Malayan Banking Berhad Triodos Bank<br />
Chiquita Marriott Hotels Virgin Atlantic<br />
Deloitte<br />
Mountain Equipment Co-op Xylem<br />
(Canada)<br />
dm-drogeriemarkt Germany Nigerian National<br />
Petroleum Corporation (NNPC)<br />
Doctors Sans Frontiers Norsk Hydro<br />
Dr<strong>is</strong>coll's<br />
Odlo<br />
Eaton<br />
PGB Ltd<br />
ebbf<br />
PH Group<br />
Ecover<br />
PricewaterhouseCoopers<br />
EI DuPont de Nemours Qatar Fuel<br />
Evonik Industries<br />
RioTinto<br />
Ernst & Young<br />
Robert Bosch GmbH<br />
F.Hoffmann-La Roche AG Rockwool<br />
Fonterra<br />
San Miguel Corporation<br />
53
Appendix X: Level of <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> - Top 10 solicited<br />
Q: In <strong>your</strong> opinion, to what extent do you believe that<br />
the following<br />
companies have an authentic corporate purpose?<br />
Top 10 Companies:Average Score<br />
(1-Strongly D<strong>is</strong>agree; 7-Strongly Agree)<br />
<strong>BM</strong>W<br />
Patagonia<br />
Nestlé<br />
Volkswagen<br />
Unilever<br />
Michelin<br />
Adidas<br />
Danone<br />
Lou<strong>is</strong> Vuitton Moët Hennessy<br />
L'Oreal<br />
5.00 5.10 5.20 5.30 5.40 5.50 5.60 5.70 5.80 5.90 6.00<br />
54
Appendix XI: Ranking of Full L<strong>is</strong>t of 30 Companies - Solicited<br />
Ranking Top 30 Companies<br />
Company<br />
Average Standard Count<br />
r<br />
Deviation<br />
<strong>BM</strong>W 5.87 1.16 148<br />
Patagonia 5.82 1.42 74<br />
Nestlé 5.79 1.48 150<br />
Volkswagen 5.74 1.15 141<br />
Unilever 5.64 1.21 135<br />
Michelin 5.59 1.30 125<br />
Adidas 5.46 1.15 132<br />
Danone 5.44 1.22 122<br />
Lou<strong>is</strong> Vuitton Moët Hennessy 5.39 1.58 123<br />
L'Oreal 5.35 1.45 124<br />
Novart<strong>is</strong> 5.34 1.39 119<br />
Chr<strong>is</strong>tian Dior 5.26 1.46 112<br />
Daimler 5.25 1.43 117<br />
Schneider Electric 5.17 1.19 70<br />
Siemens 5.16 1.39 136<br />
Koninklijke Philips Electronics 5.15 1.25 102<br />
ABB 5.13 1.29 96<br />
Zurich Insurance Group 5.08 1.38 90<br />
Vodafone 5.06 1.39 107<br />
Henkel & Company KgaA 4.95 1.27 84<br />
Bayer 4.95 1.24 125<br />
BASF 4.90 1.28 114<br />
Sanofi Avent<strong>is</strong> 4.86 1.44 74<br />
Shell 4.80 1.62 137<br />
Nokia Corporation 4.77 1.56 121<br />
SCA 4.58 1.18 48<br />
Interface 4.53 1.34 36<br />
Gas Natural 4.52 1.31 58<br />
Kering Group 4.50 1.33 42<br />
E.ON 4.49 1.33 84<br />
Total 4.46 1.60 109<br />
Telefonica 4.42 1.37 81<br />
In yoINEOS 4.38 1.53 42<br />
GDF Su<strong>is</strong>se 4.32 1.33 50<br />
BHP Billiton 4.32 1.36 69<br />
RWE (Rhein<strong>is</strong>ch-Westfäl<strong>is</strong>ches Elektrizitätswerk) 4.25 1.21 56<br />
Average 5.02<br />
55
Appendix XII: Presence of <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> in Respondents<br />
companies<br />
(The table represents the percentage of executives that voted in each category.)<br />
Now thinking about <strong>your</strong> organization, to what extent do you believe<br />
<strong>your</strong> organization has an authentic corporate purpose?<br />
Strongly 2 3 Neutral 5 6 Strongly Total<br />
D<strong>is</strong>agree<br />
Agree<br />
Public 0.00 3.23 4.84 8.06 25.81 29.03 29.03 100.00<br />
Private 2.25 1.12 4.49 11.24 19.10 33.71 28.09 100.00<br />
Other 0.00 0.00 9.09 0.00 18.18 54.55 18.18 100.00<br />
Total 1.23 1.85 4.94 9.26 21.60 33.33 27.78 100.00<br />
(The table represents the percentage of executives that voted in each category.)<br />
Firm Size<br />
Millions of<br />
Euro<br />
Now thinking about <strong>your</strong> organization, to what extent do you<br />
believe <strong>your</strong> organization has an authentic corporate purpose?<br />
Strongly 2 3 Neutral 5 6 Strongly Total<br />
D<strong>is</strong>agree<br />
Agree<br />
0-100 0.00 0.00 0.00 5.26 18.42 52.63 23.68 100.00<br />
100-500 0.00 12.50 6.25 6.25 37.50 12.50 25.00 100.00<br />
500- 0.00 0.00 0.00 0.00 33.33 16.67 50.00 100.00<br />
1000<br />
1000- 0.00 5.56 5.56 0.00 22.22 38.89 27.78 100.00<br />
2500<br />
2500- 0.00 0.00 28.57 21.43 14.29 28.57 7.14 100.00<br />
5000<br />
5000- 8.33 0.00 8.33 8.33 16.67 25.00 33.33 100.00<br />
10000<br />
10000 + 0.00 0.00 1.82 14.55 21.82 29.09 32.73 100.00<br />
Total 0.63 1.89 5.03 9.43 22.01 33.33 27.67 100.00<br />
56
Appendix XIII: Status of <strong>Authentic</strong> <strong>Corporate</strong> <strong>Purpose</strong> in Companies<br />
Questions on Leadership & Strategy<br />
Questions Average Standard Count<br />
Deviation<br />
In <strong>your</strong> opinion, how important <strong>is</strong> the<br />
role of leadership in establ<strong>is</strong>hing the<br />
6.62 0.74 165<br />
authenticity of a firm’s corporate<br />
purpose?<br />
Now thinking about <strong>your</strong> organization, to<br />
what extent do you believe <strong>your</strong><br />
organization has an authentic corporate<br />
purpose?<br />
In <strong>your</strong> organization, how often would<br />
you say that corporate purpose guides<br />
<strong>your</strong> dec<strong>is</strong>ion-making?<br />
The Company uses its corporate<br />
purpose to guide strategic dec<strong>is</strong>ionmaking.<br />
In <strong>your</strong> opinion, to what extent <strong>is</strong> the<br />
overall functioning of th<strong>is</strong> company's<br />
leader sat<strong>is</strong>factory?<br />
In <strong>your</strong> opinion, how effective <strong>is</strong> th<strong>is</strong><br />
company's leader?<br />
In <strong>your</strong> opinion, how capable <strong>is</strong> th<strong>is</strong><br />
company's leader?<br />
5.60 1.32 164<br />
5.30 1.29 164<br />
5.91 1.08 196<br />
6.14 1.25 163<br />
6.05 1.20 164<br />
6.20 1.20 164<br />
57
Appendix XIV: Influence of <strong>Corporate</strong> <strong>Purpose</strong> on Dec<strong>is</strong>ion-making<br />
(The table represents the percentage of executives that voted in each category.)<br />
In <strong>your</strong> organization, how often would you say that<br />
corporate purpose guides <strong>your</strong> dec<strong>is</strong>ion-making?<br />
Never 2 3 Neutral 5 6 Always Total<br />
Public 0.00 1.61 8.06 11.29 33.87 37.10 8.06 100.00<br />
Private 1.12 4.49 7.87 10.11 17.98 39.33 19.10 100.00<br />
Other 0.00 0.00 0.00 18.18 27.27 45.45 9.09 100.00<br />
Total 0.62 3.09 7.41 11.11 24.69 38.89 14.20 100.00<br />
(The table represents the percentage of executives that voted in each category.)<br />
In <strong>your</strong> organization, how often would you say that corporate<br />
purpose guides <strong>your</strong> dec<strong>is</strong>ion-making?<br />
Firm Size<br />
Millons of<br />
Never 2 3 Neutral 5 6 Always Total<br />
Euro<br />
0-100 0.00 0.00 0.00 13.16 23.68 39.47 23.68 100.00<br />
100-500 0.00 6.25 6.25 18.75 31.25 25.00 12.50 100.00<br />
500-1000 0.00 0.00 0.00 16.67 33.33 50.00 0.00 100.00<br />
1000-2500 0.00 0.00 11.11 0.00 33.33 44.44 11.11 100.00<br />
2500-5000 0.00 0.00 28.57 28.57 7.14 28.57 7.14 100.00<br />
5000-10000 0.00 8.33 25.00 8.33 16.67 33.33 8.33 100.00<br />
10000 + 0.00 5.45 3.64 7.27 27.27 43.64 12.73 100.00<br />
Total 0.00 3.14 7.55 11.32 25.16 38.99 13.84 100.00<br />
58
Appendix XV: Standardized item factor loadings for each dimension<br />
Factor Item λ Factor Item λ<br />
Balance Q34 0.59 Originality Q6 0.67<br />
Q35 0.54 Q7 0.89<br />
Q36 0.77 Q8 0.50<br />
Q37 0.64 Q9 0.91<br />
Awareness Q14 0.65 Passion Q38 0.70<br />
Q15 0.66 Q39 0.73<br />
Q16 0.75 Q40 0.84<br />
Q17 0.66 Q41 0.59<br />
Q18 0.65 Reputation Q42 0.77<br />
Q19 0.76 Q43 0.77<br />
Transparency Q20 0.85 Q44 0.61<br />
Q21 0.67 Q45 0.53<br />
Q22 0.57 Q46 0.73<br />
Q23 0.49 Embeddedness Q53 0.66<br />
Self-Regulation Q29 0.55 Q54 0.62<br />
Q30 0.51 Q55 0.62<br />
Q32 0.61 Q56 0.62<br />
Q33 0.63 Long Term Orientation Q49 0.63<br />
Reliability Q10 0.82 Q47 0.76<br />
Q11 0.85 Q50 0.77<br />
Q12 0.83 Q51 0.70<br />
Q13 0.83 Connectedness Q24 0.73<br />
Cons<strong>is</strong>tency Q2 0.71 Q25 0.73<br />
Q3 0.74 Q26 0.70<br />
Q4 0.74 Q27 0.76<br />
Q5 0.87 Q28 0.69<br />
Leadership Q9L 0.98<br />
Q10L 0.90<br />
Q11L 0.88<br />
59
Appendix XVI: Internal cons<strong>is</strong>tency coefficients using the McDonald’s ω and<br />
Cronbach’s α methods for the first-order factors and Fornell & Larker’s (1981) <br />
for composite reliability<br />
Scale ω α <br />
Balanced 0.79 0.69 0.73<br />
Awareness 0.71 0.77 0.84<br />
Transparency 0.66 0.64 0.75<br />
Self-Regulation 0.59 0.50 0.67<br />
Reliability 0.87 0.86 0.90<br />
Cons<strong>is</strong>tency 0.81 0.79 0.85<br />
Originality 0.79 0.79 0.84<br />
Passion 0.74 0.74 0.81<br />
Reputation 0.75 0.72 0.81<br />
Embeddedness 0.59 0.59 0.72<br />
Long Term Orientation 0.53 0.66 0.81<br />
Connectedness 0.82 0.78 0.85<br />
Leadership 0.92 0.92 0.76<br />
Note. The full sample was utilized when estimating ω, whereas l<strong>is</strong>tw<strong>is</strong>e deletion was<br />
used when estimating α and .<br />
60
Appendix XVII: Confirmatory Factor Analys<strong>is</strong><br />
61