Business – not just about the bottom line...

In a world marked by multiple crises, including pandemics, climate change and geopolitical tensions, corporations are tasked with defining a societal purpose that goes beyond their bottom lines. Business schools, too, have made this part of their curricula. Still, businesses continue to struggle to define their purpose, and management research lacks a comprehensive concept. A new article co-authored by Hertie School Professor of Organisation, Strategy and Leadership Johanna Mair, alongside Nathania Chua, Christof Miska and Günter K. Stahl at WU Vienna University of Economics and Business, gives some direction.

The article, titled “Purpose in management research: Navigating a complex and fragmented area of study”, appeared in the Academy of Management Annals last month.

A new agenda in management research

While management research has long explored the role and responsibilities of for-profit companies in society, Mair and her colleagues argue that we still lack a comprehensive understanding of corporate purpose. Their review of 415 articles in the area of management reveals that scholars in the field tend to apply varying perspectives on purpose, each with its own distinct approaches. “Research on corporate purpose has so far been fragmented,” says Mair, “and because of this, we lack a clear research agenda guided by anchoring themes and conceptual dimensions.”

In their paper, Mair and her co-authors untangle this knotted ball of research to create an agenda that can guide future scholarship. They find that four key themes from the management literature, identity, performance, objectives, and change, serve to highlight existing focus areas and knowledge gaps. In addition, the authors reveal that researching along six dimensions of purpose, property, scope, stability, materiality, motive, and rationality, helps to assess whether new research genuinely advances the field or merely rehashes existing ideas. 

“The key themes and conceptual dimensions we uncovered in the literature can lay the groundwork for purpose research as a programmatic and future-oriented agenda,” says Mair. “This agenda would serve to ground discussions on what role the concept of purpose can and should play in the future of corporations and capitalism in addressing public policy challenges.”

Businesses seek a sense of purpose – for the good of society

This study’s interrogation into purpose in the corporate world is timely: Mair and her co-authors argue that purpose statements of most contemporary businesses do not explain why the company is in business in the first place. “Lacking a clear purpose creates a disconnect not only between a business and the audience it hopes to reach, but also within the business itself,” Mair warns. Given the significant public policy challenges that societies worldwide are facing, businesses would do well to adapt how they understand and approach their purpose, she adds. 

A good reason for public policy schools to take note, as governments are going to need the help of the private sector to take on the grand challenges of our time. “A discussion about purpose with clear guardrails will help companies and their leaders to strive for coherence in their purpose, and this is beneficial for society as a whole,” Mair stresses. “By guiding discussions of purpose, our contribution as researchers is to drive thinking on how corporations can help to make the world a better place.” 

Read the full article in the Academy of Management Annals.

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