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How Authentic is your Corporate Purpose? - Power Of Purpose
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How Authentic is your Corporate Purpose? February, 2015
Transcript of How Authentic is your Corporate Purpose? - Power Of Purpose
How Authentic is your
Corporate Purpose?
February, 2015
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Authors:
Daina Mazutis, Ph.D, IMD Professor of Strategy and Ethics
and
Aileen Ionescu-Somers, Ph.D, Director, CSL Learning Platform, IMD Global Center for Sustainability
Leadership
with support from Michael R. Sorell (quantitative research) and Sophie Coughlan (interviews and
case research), IMD Research Associates
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Contents Executive summary ................................................................................................................................. 5
1. Defining The Business Challenge: Why Does An Authentic Corporate Purpose Matter? .............. 8
2. Methodology ................................................................................................................................... 9
3. Introducing the Authenticity of Corporate Purpose Model.......................................................... 11
4. Survey Results and Key Findings ................................................................................................... 15
4.1 Response sample .................................................................................................................... 15
4.2 The challenge of establishing an authentic corporate purpose ............................................. 15
4.3 The current state of authentic corporate purpose among organizations .............................. 18
4.4 The role of leadership in driving an authentic corporate purpose ......................................... 18
5. Testing the Authenticity of Corporate Purpose Model................................................................. 19
6. Leadership and Authentic Corporate Purpose.............................................................................. 21
7. Qualitative Research Findings ....................................................................................................... 23
7.1 Defining authentic corporate purpose ................................................................................... 23
7.2 Impact ..................................................................................................................................... 24
7.3 Integrating corporate purpose into decision-making ............................................................. 25
7.4 The role of leadership ............................................................................................................. 27
7.5 Recommendations .................................................................................................................. 27
8. Understanding the Dimensions of Authenticity ........................................................................... 28
8.1 Awareness ............................................................................................................................... 28
8.2 Embeddedness ........................................................................................................................ 31
8.3 Transparency ........................................................................................................................... 34
8.4 Checking the authenticity of corporate purpose against 12 dimensions ............................... 36
9. Executive Benchmarking Session .................................................................................................. 36
10. Implications for Leaders .............................................................................................................. 37
11. Conclusion ................................................................................................................................... 38
12. Bibliography ................................................................................................................................ 40
13. Appendices .................................................................................................................................. 43
Appendix I: Survey Questionnaire ................................................................................................ 43
Appendix II: Qualitative Interview Protocol .................................................................................. 45
Appendix III: Qualitative Interview Respondents Rating of Dimensions ..................................... 47
Appendix IV: List of Survey Respondents...................................................................................... 48
Appendix V: Characteristics of Survey Executives ........................................................................ 49
Appendix VI: Executives and Firm Characteristics ........................................................................ 50
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Appendix VII: Industry Demographics .......................................................................................... 51
Appendix VIII: Ranking of Companies Identified as Having a Corporate Purpose ........................ 52
Appendix IX: Companies Identified as Having an Authentic Corporate Purpose and Receiving at Least One Mention - unsolicited ................................................................................................... 53
Appendix X: Level of Authentic Corporate Purpose - Top 10 solicited ......................................... 54
Appendix XI: Ranking of Full List of 30 Companies - Solicited ...................................................... 55
Appendix XII: Presence of Authentic Corporate Purpose in Respondents companies ................. 56
Appendix XIII: Status of Authentic Corporate Purpose in Companies .......................................... 57
Appendix XIV: Influence of Corporate Purpose on Decision-making ........................................... 58
Appendix XV: Standardized item factor loadings for each dimension ......................................... 59
Appendix XVI: Internal consistency coefficients using the McDonald’s ω and Cronbach’s α
methods for the first-order factors and Fornell & Larker’s (1981) for composite reliability ..... 60
Appendix XVII: Confirmatory Factor Analysis ............................................................................... 61
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Executive summary
Introduction
Over the last century, much has been written about the corporate organization’s “reason for being”
(or “raison d’être”). From early debates about the fiduciary duties of the corporation to more recent
discussions regarding stakeholder responsibilities, how an organization’s leaders choose to position
their company within a broader societal context can be interpreted as a clear reflection of their own
ideas and beliefs. Over time, the term “corporate purpose” has come to be more widely used – by
leading companies – to express how an organization sees its role in society. As “corporate purpose”
is not yet a term utilized by all companies, a clear definition is necessary. We define “corporate
purpose” as follows:
Corporate purpose is a company’s core "reason for being.” The organization’s single underlying
objective unifies all stakeholders and embodies its ultimate role in the broader economic, societal
and environmental context. Corporate purpose is often communicated through a company's
mission or vision statements, but it may also remain informal and unarticulated.
However, if it does not match the firm's actions, internal and external stakeholders will view
corporate purpose with mistrust and skepticism and perceive it as mere “window dressing”. In the
shadow of the recent financial crisis, public confidence in the authenticity of any stated corporate
purpose that differs from the predominant profit-maximizing norm is increasingly met with distrust.
Therefore, it behooves us to understand the drivers of authentic corporate purpose better so that
we can begin to heal the rift between business and society.
The explicit objective of this study is to uncover the drivers or “dimensions” of an authentic
corporate purposed. Based on a quantitative survey of over 200+ executives and in-depth qualitative
interviews with 12 executives from organizations perceived as having an authentic corporate
purpose, we present our findings. On the one hand, they illustrate the challenges of establishing an
authentic corporate purpose in corporate organizations, and on the other hand, they provide
executives with a roadmap to achieving an authentic corporate purpose for their firms.
Findings
The challenges of establishing an authentic corporate purpose
About a third of the executives we surveyed had considerable difficulty identifying a single company
that they perceived as having an authentic corporate purpose. This finding points to the fact that,
while many companies may “talk the talk”, they do not necessarily “walk the walk” when it comes to
their stated corporate purpose. In addition, if they do “walk the walk,” they may not be perceived as
doing so, so their internal and/or external communications strategies need revision.
It is also significant that not one company stood out from the pack as having the most credible or
convincing authentic corporate purpose. Of the companies our respondents identified as having an
authentic purpose, most received only a single mention. Even the top three companies that
respondents identified – Google, Nestle and Apple – received relatively low levels of multiple
mentions, signifying that executives felt there was not one company that most exemplified an ideal
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authentic corporate purpose. This may point to a dearth of leadership; therefore, this study
specifically focuses on the implications of our findings for the leadership in corporate organizations.
We also identified gaps between a company’s stated corporate purpose and managerial attitudes
and behaviors. While executives generally agreed that their own company had an authentic
corporate purpose (we may expect considerable bias in this finding), they also admitted that they do
not always rely on their company’s corporate purpose to guide their decision-making processes. We
suggest that if managers are not using the organization’s corporate purpose to guide their decision-
making, then the organization’s corporate purpose will never be truly “authentic” or perceived as
such either internally or externally. This state of affairs may be leading to increased cynicism
amongst employees and the general public, which then endorses the lack of trust that is often
reported in corporate reputation surveys. The lack of an authentic corporate purpose has knock-on
effects on reputation and brand and therefore on the performance of corporate organizations.
Strong and committed leadership is crucial to authenticity
Our research provides strong evidence that leadership is a strong and consistent predictor of
authentic corporate purpose, explaining almost 50% of the variance in perceptions of authenticity.
This is not surprising since leaders set both the direction and overall objectives of the company.
Leaders also personify the company’s identity and image through communications with both
internal and external stakeholders. This supports the idea that corporate purpose must be consistent
with both corporate leadership and action (i.e. both “walking the talk AND talking the walk”).
Leaders who are perceived to be effective, capable and leading operations satisfactorily are much
more likely to be running organizations that have an authentic corporate purpose. However, in a
complex and uncertain global business context – and as organizations grow in scale and across
geographies – it is increasingly challenging for leaders to ensure that an authentic corporate purpose
is maintained.
A roadmap to authenticity
Using the survey questionnaire, backed by benchmarking interviews with corporate executives, we
provide a conceptual model that addresses the dimensions of an authentic corporate purpose and
consists of factors relating to both an organization’s identity and image. We have categorized our
findings under the following organizational activities: stewarding, leading, differentiating and
delivering – which broadly capture the 12 separate dimensions of awareness, balance,
connectedness, consistency, embeddedness, long-term orientation, originality, passion, reliability,
reputation, self-regulation and transparency. Our results deliver a veritable “diagnostic toolset” that
allows leaders in corporate organizations to check – holistically and at different levels within firms –
whether all dimensions that have the potential to contribute to the authenticity of a firm’s corporate
purpose have been addressed. We provide definitions of these dimensions and concepts in our
report so that executives can find their way easily around the diagnostic toolset.
Our survey results indicate that managers identified awareness as the top dimension that
organizations need to have in place if they are to have a truly credible and authentic corporate
purpose. By awareness, we mean that the company, through its direct interactions with
stakeholders, has acquired an understanding of its own strengths and weaknesses and what drives
or motivates its actions and how these affect key stakeholders as well as the environment. However,
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although awareness is critical to authentic corporate purpose, all 12 dimensions are highly important
when it comes to establishing an authentic corporate purpose. Focusing on one or two dimensions is
unlikely to be sufficient to overcome the skepticism of internal and external stakeholders; therefore,
the diagnostic toolset we present will enable leaders to tackle the full gamut of authenticity
dimensions in a comprehensive and cohesive way.
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1. Defining The Business Challenge: Why Does An Authentic Corporate
Purpose Matter?
Many management scholars have tried to articulate what exactly corporate purpose means. For
example, almost 80 years ago, Chester Barnard (1938: 82) stated that a company comes together
when the following three things occur concurrently: (1) there are people who communicate with
each other; (2) there is an action/task to be completed; and (3) there is a common purpose. He saw
defining this common purpose as a core task of leadership.
Yet, success in both defining and implementing a common purpose is of necessity based on the
willingness of individuals in organizations to cooperate. According to Barnard, individuals will usually
act un-cooperatively unless there is an objective that unites them. However, simply having a defined
purpose does not mean that people relinquish their individual self-interests:
A purpose does not incite co-operative activity unless it’s accepted by those whose efforts will
constitute the organization (Barnard, 1938: 86).
More recently, scholars such as Collins and Porras (1994), Ellsworth (2002) and Binney (2006) have
built on Barnard’s initial ideas about corporate purpose.
Collins and Porras (1996: 68) stated:
Core purpose is the organization’s reason for being. It does not just describe the organization’s
output or target customers; it captures the soul of the organization. A primary role of core
purpose is to guide and inspire.
Ellsworth (2002: 4) defined corporate purpose as follows:
Corporate purpose sits at the confluence of strategy and values. It expresses the company’s
fundamental value — the raison d’être or overriding reason for existing. It is the end to which
the strategy is directed.
Binney (2006) defined corporate purpose as:
A shared sense of “Why do we exist?” and “What is the essence of how we do things around
here?” It was what gave exceptional companies a compass to steer by, and enabled them to
adapt and thrive in periods of great economic and social change.
We integrate the above, and define corporate purpose as follows: Corporate purpose is a company’s core "reason for being.” It is the organization’s single underlying objective that unifies all stakeholders and embodies its ultimate role in the broader economic, societal and environmental context. Corporate purpose is often communicated through a company's mission or vision statements, but it may also remain informal and unarticulated. Through this study, we are interested in understanding what determines the authenticity of a firm’s corporate purpose. Since “authenticity” is generally defined as being “true to oneself,” we further define authenticity of corporate purpose, as the alignment between a firm’s perceived corporate purpose and the actual strategic decisions and actions that a firm takes.
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Research by Burson-Marsteller and IMD’s Center for Corporate Sustainability in 2010 validated the
importance that corporate purpose plays in firm performance.1 In particular, the study found that:
• A well-executed corporate purpose communication strategy enhances the financial performance of leading European companies;
• A well-executed corporate purpose communication strategy is more important than company size in terms of its effect on financial performance;
• Corporate purpose enhances not only economy-wide financial performance of leading European companies but also relative financial performance within industries.2
Unfortunately, corporate purpose can act as a double-edged sword. On the one hand, a corporate
purpose that is consistent with related and relevant strategic corporate actions can build, sustain
and increase trust. On the other hand, a corporate purpose that is inconsistent with corporate
actions, will lead stakeholders to view the corporate purpose and the company with mistrust and
skepticism. The research described in this report revealed once again that companies absolutely
need to “walk the talk” in order to be credible and authentic with regard to their corporate purpose
statements. However, it also revealed that “talking the walk” was an equally important part of the
paradigm. Since perception – built on awareness and knowledge gained through experience,
learning and communication – is often reality, corporate purpose messages must be carefully tuned
to indicators that demonstrate that the organization effectively “walks its talk.”
For organizations to overcome this double-edged sword and build trust with stakeholders, their
corporate purposes must be aligned with their strategic decisions and actions in order to be
perceived as “authentic.”
Understanding how to manage the authenticity of their corporate purpose successfully is a challenge
for many organizations’ leaders and managers. The goal of this report is to put forth a model for
authentic corporate purpose. Our hope is that this model will help business leaders effectively
manage their firm’s authenticity into the future.
2. Methodology
Similar to procedures followed in previous research on authenticity in different domains, we began
with an item development and validation process that followed several steps. First, we compiled a
list of possible authenticity dimensions based on an extensive literature review of empirical research
conducted in other relevant domains, including psychology, philosophy, leadership, strategy and
marketing.
Next, we generated a pool of items from the literature based on these dimensions, identifying items
that have empirically been shown to capture the different dimensions of authenticity in these
various disciplines. Based on this literature review, twelve initial dimensions and forty eight items
were identified that related to the construct of authenticity of corporate purpose with scales
adopted from the following research: continuity/consistency, originality, naturalness and reliability
1 “ Communicating Corporate Purpose,” IMD and Burson-Marsteller, 2010 Link: http://burson-
marsteller.eu/wp-content/uploads/2011/10/IMD-B-M-Corporate-Purpose-Impact-Study-2010.pdf 2 “ Communicating Corporate Purpose”, page 26
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(Bruhn et al., 2012), awareness, transparency, balanced processing and self-regulation/internalized
moral perspective (Bento & Ribeiro, 2013; Leroy, Anseel, Gardner, & Sels, 2012; Neider &
Schriesheim, 2011; Walumbwa et al., 2008), connectedness (Turker, 2008; Lee & Robbins, 1995),
passion (Tate, 2008), improvement (O’Connell, 2014) and image (Riordan, Gatewood, & Bill, 1997).
As a second step, we asked a second group of research assistants to describe a company that they
regarded as having an authentic corporate purpose: “What specifically about these companies
makes you believe in the authenticity of their corporate purpose?” Their responses were then
content analyzed to ensure that the emergent categories were a close fit to our original
multidimensional conceptualization of the authentic corporate purpose construct. At this point, the
dimensions of naturalness and improvement were dropped, while embeddedness (Lee & Robbins,
1995) and long-term orientation (Bearden, Money & Nevins, 2006; Ganesan, 1994) were added
leaving a total of twelve dimensions and fifty-three items that related to the construct of
authenticity of corporate purpose at the organizational level.
As a final step, we conducted an item purification test with the second group of research assistants,
by asking them to name a company that they would classify as having an authentic corporate
purpose. We then asked each rater to point out the degree to which these 53 items described the
authenticity of the company’s corporate purpose (where 1 = “describes very poorly’ to 7 “describes
very well”), with the intent of removing any items with a mean rating below four. No items needed
to be removed at this stage providing support that our minor adaptations from other disciplines
adequately captured the intended dimensions of authentic corporate purpose.
In summary, our final corporate purpose authenticity scale contains twelve dimensions that are fully
defined in Section 3: awareness (6 items), balance (4 items), connectedness (5 items), consistency (4
items), embeddedness (4 items), long-term orientation (4 items), originality (4 items), passion (4
items), reliability (4 items), reputation (5 items), self-regulation (5 items) and transparency (4 items).
This final scale was pre-tested with a sample of employees in an academic research department
(n=18). The full questionnaire generated from this process of verification can be found in Appendix I.
The criteria used for collecting the sample were as follows:
Geographies and sectors: For this research, we invited responses from executives at
companies located all over the world (companies in nearly 50 different countries are thus
represented in our sample). In this study, we also accepted responses from executives in all
business & industry sectors;
Executive level: The executives surveyed were primarily alumni and network contacts of a
top business school – thus high middle- to senior managers. The average age was 51 and
there were 46 different nationalities.
The finalized survey questionnaire was sent in two phases to a total of 10,500 (first to 7,000 and
then – one month later – to a further 3,500) executives. We can report a 2% response rate, since a
total of 200 questionnaires were received in return. Semi complete questionnaires were included in
the analysis where feasible to integrate them. A further 40 responses were received with only the
first question answered, and these were used in the analysis of the first question only.
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To validate the dimensional structure of a higher order authentic corporate purpose construct, we
then conducted a confirmatory factor analysis (CFA) using Mplus 7.11 on the 200 responses
received. As described in Section 5, the analysis supported all 12 identified dimensions. Having
established the dimensionality of the ACP construct, we then ran a full structural model (SEM) to
test the relationship between leadership and ACP. As discussed in Section 6, leadership was found to
be an important predictor of ACP.
To benchmark the survey findings and go deeper with the analysis, we conducted qualitative
interviews with executives from the companies identified by survey respondents as having an
authentic corporate purpose. We identified ten companies as subjects for interviews; contacts
within each of these companies in relevant functions were then e-mailed to inquire about their
willingness to participate in a structured interview. For those who confirmed, interviews were
conducted by phone in a standardized open-ended format for 45 minutes (refer to Appendix II for
the interview protocol). Interviews were recorded with the respondent’s permission, and transcribed
after the conclusion of the interview. During the interview, respondents were asked if they would
agree to rate each of the dimensions with regard to their company. If they agreed, these were then
sent to them by email in the form shown in Appendix III, together with a one-page attachment
briefly describing each of 12 the dimensions. The respondent companies and areas of activity are
indicated in Appendix IV.
3. Introducing the Authenticity of Corporate Purpose Model
In this section, we introduce our theoretically derived model of authentic corporate purpose.
Stemming from the authentic leadership, authentic branding and authentic CSR literatures, as
captured in Figure 1, we grouped the 12 core dimensions of authentic purpose conceptually into
factors that relate either to an organization’s identity or to its image. An organization’s identity
refers broadly to how an organization internally defines its central, distinctive and enduring features,
while the notion of image captures how external constituents, including customers and other
stakeholders, perceive the organization. As such, we see these two broad concepts as a mirror
reflection of each other or as two sides of corporate purpose and it is only when the internal and
external perceptions of corporate purpose align that we see attributions of authenticity occur.
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Figure 1. Authenticity of Corporate Purpose: A Conceptual Model
We chose identity and image to capture the idea that authenticity has both internal and external
components and that an authentic corporate purpose is both about how the organization sees itself
as well as how others see the organization.
Identity: Translating measures from the authentic leadership and corporate social responsibility
(CSR) literature, we found that activities related to leading and stewarding the company within
society reflect more broadly how an organization sees itself and thus pertains to organizational
identity. For example, authentic leaders are described as having highly developed systems of self-
awareness and self-regulation. They have realistic, balanced concepts of themselves that are rooted
in strong values and they tend to base their actions on these core values, acting transparently and
leading from conviction. Similarly, we argue that organizations with an authentic corporate purpose
will also act with awareness, self-regulation, balance and transparency and that these activities are
central to leading with an authentic corporate purpose. Similarly, how an organization chooses to
interact with its stakeholders, the environment and the broader community in which it operates can
also be seen as a reflection of how a company defines its role within society. Therefore, these
stewarding activities are also deemed part of organizational identity.
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Image: In contrast, research into the authenticity of brands and communications focuses more on
how external constituents, notably consumers, view an organization’s activities. Delivering reliable
and consistent brand experiences, for example, has been found to be central to authenticity in the
marketing literature. Part of being authentic is also being distinct and being recognized for your
passion and excellence, which can be attributed to an organization’s differentiation strategy. As
more externally driven factors, delivering and differentiating are thus largely indicative of a
company’s image.
We now elaborate on identity and image by defining the four broad sets of organizational activities
within identity and image that directly contribute to perceptions of authenticity of corporate
purpose. We classify these organizational activities as leading, stewarding, differentiating and
delivering.
Leading refers to the set of organizational activities that relate to how the company chooses to
interact with its stakeholders and make decisions that affect these stakeholders. The dimensions
associated with leading the organization authentically are derived from the authentic leadership
literature and they include balance, awareness, transparency and self-regulation as defined below:
Dimension Description
Lead
ing
Balance The company solicits and objectively takes into account in its decision‐making all relevant information and points of view regardless of source, including views that challenge deeply held positions or evoke its own organizational limitations and shortcomings.
Awareness The company – through direct interactions with its stakeholders – has acquired a deep understanding of its own strengths and weaknesses, what drives or motivates its actions and how it impacts stakeholders and the environment.
Transparency The company promotes trust by openly sharing information with its stakeholders, demonstrating coherence between “talk” and “walk”, is honest and truthful about its activities, admits mistakes when they are made, and does not pretend to be something it is not.
Self‐regulation The company makes decisions that are true to its stated corporate purpose and that exhibit restraint with regard to growth and profit ambitions based on strong internalized moral standards and values that promote legal and ethical norms and positive stakeholder impact.
Stewarding refers to the set of organizational activities that reflect how the organization sees its role
in the broader environmental and social context. We identified three dimensions of stewarding,
which are drawn primarily from the authentic, CSR, corporate citizenship and sustainability
literature. Embeddedness, long-term orientation and connectedness are defined as follows:
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Dimension Description
Ste
ward
ing
Embeddedness The company’s choices and actions are partly generated by the actions and expected behavior of other actors; thus, it remains close to its stakeholders who enable it to remain connected to the world around it.
Long‐term Orientation
The company plans for the long term by focusing on long-run goals, understands the interdependence of current and future benefits, maintains a long‐term relationship.
Connectedness The company is anchored to a business context that transcends personal, organizational and geographic boundaries, and aims to contribute to societal wellbeing by protecting and improving the environment and quality of life of stakeholders while respecting values, norms and traditions.
Delivering refers to how external constituents perceive a firm’s ability to maintain its commitments.
It has two dimensions that come from the authentic marketing and communications literature.
These dimensions are consistency and reliability and are defined as follows:
Dimension Description
Deliv
eri
ng
Consistency The company honors its heritage, actively creating connections with its origins, and also creating an internal consistency and continuity that enables it to stay true to a clearly stated corporate purpose over time.
Reliability The company consistently pursues its purpose over time, making reliable promises and delivering on them, no matter how challenging the business context, while either meeting or exceeding its stated objectives.
Differentiating refers to the firm’s ability to be seen as unique and distinct from other firms in the
marketplace. The three dimensions of differentiating – reputation, passion and originality – come
from the authentic branding literature and are defined as follows:
Dimension Description
Dif
fere
nti
ati
ng
Reputation The company can gauge how outsiders are judging it, has a good reputation in the community, among customers and in the industry as a whole, is actively involved in the community and is known as a good place to work.
Passion The company has a sense of purpose that inspires passion and that people like, find important and in which they invest time and energy. The company appears highly motivated to excel in everything it does.
Originality The company has a unique corporate purpose that stands out because it is fresh, creative, original and different to that of other companies in the same industry, and it cannot be easily replicated.
As discussed in Section 5, our confirmatory factor analysis established that each one of these twelve
dimensions is an important determinant of an authentic corporate purpose. However, before
proceeding with a more detailed discussion of the individual dimensions, we first highlight some
more general themes that emerged from the quantitative study.
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4. Survey Results and Key Findings
4.1 Response sample
Appendices V, VI and VII present the characteristics of our executive respondents and the firms they
represented. The executives were in the high middle to upper levels of management, with an
average age of 51. The firms they represented were from a broad section of business an industry
4.2 The challenge of establishing an authentic corporate purpose
Although we were able to identify the core dimensions of an authentic corporate purpose, on the
whole, our research suggests that an authentic corporate purpose may in fact be a rather elusive
concept. In fact, as illustrated in Figure 2, our study found that almost a third of the executives
surveyed had considerable difficulty in identifying a single company that they perceived as having an
authentic corporate purpose.
Figure 2: Challenge in Identifying a Company with an Authentic Corporate Purpose
To illustrate the difficulty in identifying a firm with an authentic corporate purpose, one respondent
wrote:
Absolutely no name comes to my mind in this context, not even Google, Amazon, BMW,
Deutsche Bank, or any other.
Furthermore, in those instances where a company could be identified as having an authentic
corporate purpose, no one single company emerged as a clear leader. For example, as can be seen in
Figure 3, only five companies received more than five mentions each. These were Google, Nestle,
Apple, IKEA and Patagonia (refer also to Appendix VIII for a ranking of companies perceived as
having an authentic corporate purpose). In addition, there was a very long tail in that a total of over
181 companies received at least one mention suggesting very diverse and unique individual
perceptions of the authenticity of an organization’s corporate purpose (refer to Appendix IX for
companies identified as having an authentic corporate purpose and receiving at least one mention).
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Figure 3: Top Five Companies with an Authentic Corporate Purpose – Unsolicited
To supplement our first open-ended question, we also asked respondents to rate the corporate
purpose authenticity of a predetermined list of 30 companies. For this list, we selected organizations
that have been previously ranked as highly reputable businesses by Corporate Knights, Global ESG
100, Ethisphere, Fortune’s Most Reputable Companies and the Dow Jones Sustainability Index.
Again, we found that no single company emerged as a clear “winner.” On the whole, respondents
did not “strongly agree” (7) that any one company stood out from other companies on the list in
terms of the authenticity of their corporate purpose. As can be seen in Figure 4, the highest-rated
solicited company was BMW with a score of 5.87 (refer to Appendix X for data). However, the
difference in mean values between companies is not great, in that the number 5 company, Michelin,
scored a 5.64. Interestingly, however, both Nestlé and Patagonia appeared in both the unsolicited
and solicited lists suggesting that these two companies, despite only marginally higher ratings, may
nonetheless represent current best in class organizations for authenticity of corporate purpose (refer
to Appendix XI for the ranking of full list of 30 companies solicited).
0
1
2
3
4
5
6
7
8
9
10
Google Nestlé Apple IKEA Patagonia
Top 5 Companies Mentioned by Executives
Count
Percent
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Figure 4: Top Five Companies with an Authentic Corporate Purpose – Solicited
Based on our research, we suggest several reasons why it may be so difficult to identify a company
with an authentic corporate purpose. When we asked respondents whether the company they
selected as having an authentic corporate purpose uses its purpose to guide its strategic decision-
making, the executives as a group generally agreed that this was the case (average score of 5.91). As
such, the alignment between a firm’s stated corporate purpose and the strategic decisions the firm
makes seems to be a very important determinant of authenticity. Given this finding, we might
conclude that either:
1) There may in fact not be that many companies with corporate purposes that are seen to be
completely aligned with their strategic actions. In this situation, even though the company
says one thing, it behaves in a different way (in other words, the “walking the talk” part of
the equation is not operational). This makes external stakeholders view the company’s
corporate purpose as untruthful, and therefore they cannot view the firm as having an
authentic corporate purpose.
Or:
2) In general, a significant number of companies may not be effectively communicating their
corporate purposes to the external world (in other words, the “talking the walk” part of the
equation is not operational). In this case, external constituents do not have enough
information to connect a company’s strategic actions to its corporate purpose. Thus, the
external stakeholders do not see the firm as having an authentic corporate purpose.
5.45 5.50 5.55 5.60 5.65 5.70 5.75 5.80 5.85 5.90
Michelin
Unilever
Volkswagen
Nestlé
Patagonia
BMW
Q: In your opinion, to what extent do you believe that the following companies have an authentic corporate purpose?
Top 5 Ranked Companies: Average Score (1-Strongly Disagree; 7-Strongly Agree)
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4.3 The current state of authentic corporate purpose among organizations
Given that it is so difficult to identify a single organization that most respondents would unprompted
identify as having an authentic corporate purpose, we were keen to understand how respondents
saw the authenticity of their own company’s corporate purpose. As such, we asked executives two
questions about the corporate purpose of their organizations: First, we asked respondents to rate
the authenticity of their organizations’ corporate purpose, and second, we asked them how often
their organizations’ corporate purpose guided their decision-making.
With respect to their own organizations, the executives generally “agreed” that their own
organizations had an authentic corporate purpose. On a scale from 1 (Strongly Disagree) to 7
(Strongly Agree), the average score was 5.60 (refer to Appendix XII for survey data related to the
presence of authentic purpose in respondents companies). However, slightly fewer respondents
agreed that their corporate purpose guides the decision-making in their organizations (5.3). In fact,
only 14% of executives stated that corporate purpose “always” guides the decision-making in their
firms (refer to Appendix XIII for a breakdown of responses to these questions and to Appendix XIV
for data on the influence of corporate purpose on decision-making).
As per our definition, for a corporate purpose to be seen as authentic, the company’s perceived
corporate purpose and the actual strategic decisions and actions that the firm takes must be aligned.
Therefore, the gap between purpose and corporate decision-making is an important finding
supporting the general difficulty in identifying organizations that have an authentic corporate
purpose.
4.4 The role of leadership in driving an authentic corporate purpose
We also deliberately set out to understand the role of leadership in establishing and maintaining an
authentic corporate purpose. Leadership is central to organizations overcoming barriers such as
short-term financial and competitive market pressures that can derail decision-makings alignment
with corporate purpose. Our study suggests that as organizations grow in scale and across
geographies, it becomes increasingly challenging for leaders to ensure that authenticity of corporate
purpose is maintained by aligning purpose with decision-making.
We asked several questions with respect to the leader’s role in ensuring their company’s
authenticity of corporate purpose. First, we asked respondent’s directly about the effectiveness of
the leadership of those organizations they identified as having an authentic corporate purpose. As
Table 1 shows, in general, executives feel that the leaders of organizations with an authentic
corporate purpose are effective, capable and leading operations satisfactorily.
Table 1: Leaders of Companies with an Authentic Corporate Purpose
Question Average
In your opinion, to what extent is the overall functioning of this company's leader satisfactory?
6.14
In your opinion, how effective is this company's leader? 6.05
In your opinion, how capable is this company's leader? 6.20
(1-Not at all to 7- Very Much So)
19
We then asked more specifically for respondents’ opinions about the relationship between
leadership and the authenticity of a firm’s corporate purpose. As indicated in Table 2, the executives
in our study strongly agreed that leadership is an important factor in establishing the authenticity of
a firm’s corporate purpose. This is not surprising because the leader sets both the direction and the
overall objectives of the company. In addition, the leader personifies the company’s identity and
image through his/her communications with stakeholders. This supports the idea that corporate
purpose must be consistent with both corporate leadership and action (i.e. both “walking the talk
AND talking the walk”).
Table 2: Leadership and Authentic Corporate Purpose
Questions Average
In your opinion, how important is the role of leadership in establishing the authenticity of a firm’s corporate purpose?
6.62
(1-Very Unimportant to 7- Very Important)
We explore the relationship between leadership and authentic corporate purpose in more detail in
Section 6.
5. Testing the Authenticity of Corporate Purpose Model
Having identified the challenges with establishing an authentic corporate purpose and the role of
leadership in driving this process, we now turn to empirically specifying the dimensions of authentic
corporate purpose.
In section 3, we outlined our general conceptual model of authentic corporate purpose, which
consisted of both an internal and external component and four organizational activities: leading
(balance, awareness, transparency and self-regulation), stewarding (embeddedness, long-term
orientation and connectedness), delivering (reliability and consistency) and differentiating
(reputation, passion and originality).
Using the survey responses, we then conducted a confirmatory factor analysis (CFA) to test the
relationship between these 12 dimensions and the construct of “authentic corporate purpose”
(N=199).
20
Figure 5: The 12 Dimensions of “Authenticity of Corporate Purpose”
Figure 5 reports the test results of the 12 dimensions and shows how each dimension relates to the
construct of authentic corporate purpose. The relationship between the dimensions is expressed in
terms of standardized factor loadings, which reflect the strength of the relationship between the
dimension and the construct of authentic corporate purpose3.
Since all of the 12 dimensions are significant at the 1% level, it is clear that each of the dimensions
presented has a role to play in establishing and maintaining an organization’s authentic corporate
purpose. However, as the numbers reported in Figure 5 show, not all the dimensions have the same
impact. For example, the originality dimension scored lower than the other 11 dimensions with a
standardized factor loading of 0.59, while awareness is highly correlated to authenticity of corporate
purpose with a standardized factor loading of 0.98. In addition, not all dimensions were equally
strong in terms of the internal consistency and composite reliabilities of their measures4. As such, it
is possible that a more parsimonious empirical model exists. For the purposes of this report,
however, the full theoretical model is retained in discussing the different dimensions of authentic
corporate purpose.
3 We tested several different models to ascertain the dimensionality of the ACP construct determining that the
second order factor model represented the best model fit. 4 See Appendix XVI for the standardized factor loadings for each item and Appendix XVII for the internal
consistency and composite reliability of each dimension.
.83*** .98***
.93***
.86***
.90***
.90***
.59*** .94***
.86***
.96***
.84***
.90***
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6. Leadership and Authentic Corporate Purpose
Having established the twelve dimensions of the Authentic Corporate Purpose (ACP) construct, we
next examined the relationship between leadership and ACP in more detail. A review of the
literature reveals that the role of leadership is considered crucial to setting the direction, vision and
mission of the organization in a manner that defines the organizations corporate purpose. While
much has been written about how different types of leadership (e.g. transformational, transactional,
transcendent, servant, spiritual, primal etc.) affect dimensions of organizational performance, here,
we were interested in the degree to which effective leadership matters to perceptions of
authenticity of corporate purpose specifically.
As such, we estimated several structural equation models linking our effective leadership variables
to ACP. Overall, we found very strong support for leadership as predictor of ACP as can be seen in
Figure 6. With a β = .70, almost 50% of the variance in ACP can be explained by the leadership factor.
This suggests that effective leadership is in fact essential to establishing an authentic corporate
purpose. This finding was also reiterated in our qualitative interviews discussed in the next section.
22
Figure 6: Leadership and Authentic Corporate Purpose
Balance
Aware-
ness
Trans-
parency
Self-
Regulation
Reliability
Consistency
Originality
Passion
Reputation
Embedded-
ness
Connected-
ness
Long Term
Orientation
ACP Leadership β = .70
λ = .83
λ = .97
λ = .85
λ = .95
λ = .86
λ = .95
λ = .89
λ = .91
λ = .90
λ = .85
λ = .93
λ = .90
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7. Qualitative Research Findings
In order to lend some richness and depth to the quantitative survey, we conducted interviews with
several of the companies identified in the survey as having an authentic corporate purpose. We
were interested to know how these companies define corporate purpose, what they see as the
internal and external impacts of having an authentic corporate purpose, how they use corporate
purpose in decision-making processes in their companies, as well as what are the barriers and
enablers to living an authentic corporate purpose. Rather than probe each organization specifically
regarding the twelve dimensions of ACP that we identified from the literature, instead, we listened
for the emergence of these dimensions in their responses to our semi-structured interview
questions.
These interviews were conducted with senior executives from functions such as communications,
procurement, sustainability and compliance and provided further insight into how companies view
the importance of authenticity of corporate purpose and its influence at both the strategic and
operational levels.
7.1 Defining authentic corporate purpose
All interviewees identified authentic corporate purpose as being extremely important to their
company. What is an authentic corporate purpose and how is it expressed by companies? While
some companies did not distinguish between corporate purpose and mission statement, others
suggested that while corporate purpose was something internal – driving the company’s
understanding of itself and how it operates – a mission statement was a way to communicate the
company’s purpose externally. Sustainability (generally defined as the ability to create economic
value over the long term while protecting the natural environment and positively impacting
societies) is central to the corporate purpose of five of the nine companies interviewed; three
companies expressed their purpose as effecting positive change at the societal level. Several
companies view purpose as being the central idea linking the company’s activities, and creating
consistency between a company’s strategy, positioning and operations. One company defined
purpose as being the internal driver of passion by building employee engagement and commitment
to the company’s key activities.
When discussing their individual companies, interviewees expressed corporate purpose in two main
ways: (1) as a function of the company’s impact on customers or (2) how the company has a positive
impact on broader society. We discovered that many companies have an explicitly stated purpose,
whereas a more expanded implicit purpose emerges from discussions with their executives. For
example, Google’s stated purpose is to affect positive change in various aspects of the world, whilst
employees may express purpose as, for example “bringing people together, enabling them to work
on issues that they believe will effect positive change, contribute to building knowledge and making
good things happen at scale”. BMW’s explicit purpose is expressed as being “the most successful
provider of premium mobility products and services” while more implicit expanded purpose
emerges in discussions with employees such as “being a leader in the iconic change occurring in
society around mobility, understanding the company’s social and environmental context, and
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engaging with all stakeholders in a transparent manner”. Most of the interviewees mentioned that
corporate purpose had been present since the founding of their company, and that purpose was
core to the long-term vision of the company. In the few instances where purpose had been
articulated more recently, this had been done as the result of a strategic decision.
Why do some companies lead the way in paying attention to authenticity, while others do not?
Several cited the importance of a clearly thought out long-term vision, the embedding of values in
the company culture, and established attitudes and beliefs in what the future looks like, as well as
what the company’s role in society should be. Interviewees concurred that family owned companies
found this easier to instill; a founder with a vision and continued involvement of the family owners in
the business contributes to keeping these values present and alive in the business activities.
However, other companies have chosen to focus on relating corporate purpose to their business
because they believe it is good for business – both in terms of brand building and mitigating
reputational risk, as well as representing a real long-term business decision. For example, IKEA – a
family owned company, thus without short-term shareholder constraints – is able to invest heavily in
renewable energies such as wind farms and is committed to becoming totally carbon-neutral by
2020 because it believes this is the soundest long-term business decision in alignment with its
corporate purpose.
7.2 Impact
Internal
Corporate purpose seems to have two main types of impact on internal stakeholders. On the one
hand, it provides consistency, unifies employees and serves to anchor them in firm values when
making operational decisions. Equally important is the impact purpose has on creating passion and
engagement among employees, resonating at a deeper and more individual emotional level, which
builds and strengthens a personal commitment to the company’s work. Contributing to something
larger is something employees feel proud of and it creates energy. Several companies also
mentioned how purpose helps to attract and retain talent, as people who are aligned with the
purpose are drawn to the company.
External
Corporate purpose has a diversity of impacts on external stakeholders. First, when companies
participate proactively in conversations about their broader impact, they ensure that they can
actively influence higher-level agendas (such as sustainability) and address concerns proactively,
heading off potentially controversial and damaging issues before they arise. Second, the consistency
afforded by having an authentic purpose contributes to building the company brand among
consumers; in an increasingly transparent world with consumers who are both aware and concerned
about the impact companies have on society, this is critical. In a world in which social media ensures
that conversations are happening all the time, across a broad variety of platforms, hardwiring the
company brand through a strongly articulated corporate purpose is becoming increasingly critical.
“While we are sleeping, someone else is awake,” commented a director at BMW.
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One executive described the “double-edged sword” dimension in this way:
Authentic corporate purpose is one of the most important ways a corporation in today’s world
can communicate in a world characterized by a barrage of ideas. It helps people to understand
why a corporation exists and why people should care if it went away tomorrow. With the degree
of information chaos, citizen journalists and content circulating on digital media – if your
purpose is not authentic, you will be found out quickly.
Finally, by having a purpose and reliably delivering upon it, companies establish credibility and build
trust as a partner in strategic partnerships.
7.3 Integrating corporate purpose into decision-making
Corporate purpose is strongly integrated into the decision-making processes of the companies
interviewed at many levels – from the strategic to the operational. There are many examples of this.
At Tetra Pak, purpose translates into a strategic priority, with environmental excellence being one of
the company’s four strategic pillars. At Google, having a positive impact on society drove the
company to invest in the Google Food Innovation Lab, which looks at how Google can make a
positive contribution to the whole food system. At several companies, corporate purpose guides
investment decisions; proposals for new projects need to report on how they fulfil corporate
purpose. At BMW, documentation submitted to the board needs to include sustainability measures.
All of the projects selected for Holcim’s innovation fund are chosen based on how they can help
achieve the long-term sustainability agenda (core to the firm’s purpose). At Toyota, the mobility
project, which includes investment in fuel cell technology, is central to its long-term purpose of
leading the way to future holistic mobility solutions on a systemic level. At Unilever, carbon and
water footprint targets as well as sustainable sourcing targets are the direct result of objectives
established based on the organization’s corporate purpose. Roche has invested heavily in issues
related to diseases neglected in developing countries, an example being its Global Access Program to
dramatically lower the price of HIV viral load tests in low- and middle-income countries. IKEA helps
to set the global standard for forestry through the Forest Stewardship Council to ensure that forests
will be present in the longer term.
Most interviewees mentioned how corporate purpose is core to operational decision-making or
corporate culture. For example, at IKEA, corporate purpose drives employee behavior:
Purpose is at the core of how employees think about what’s right and what’s wrong, how they
should behave inside this company in their day-to-day job. So it’s absolutely fundamental for
people to navigate in their daily lives and what it takes to be a good employee in the context of
an IKEA purpose and an IKEA core strategy.
Enablers
Companies cited a variety of enabling factors to explain the degree to which corporate purpose is
embedded at the organizational level. Top-level indicators included long-term vision, private
ownership, focus and leadership. At Tetra Pak, private ownership provides the continuity required to
embed purpose. At BMW, the board, for example, has ensured that purpose has been translated
into supportive human resource policies. At Roche, family owners (including two board members)
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live the values, determine the strategy and take on the role of ensuring that long-term investment
decisions reflect the core purpose.
The degree of operational alignment is also important in purpose-driven organizations, including
consistency between brands, purpose, supply chain and marketing. At Unilever, sustainable sourcing
policies guide all decisions so that they are aligned with purpose. For example, wherever possible,
ingredients are sourced from the country where the food is being produced, so that value is retained
in the producing country and eco-efficiencies are exploited.
HR practices including recruitment and training are central to attracting and retaining talent that
shares the organizational values and lives the corporate purpose. Toyota ensures that corporate
purpose is a key consideration in decisions at all levels by differentiating between organizational
roles; those in charge of operations have a day-to-day focus while experts are explicitly tasked with
taking a long-term view. In this way, it creates accountability for purpose at the individual level. At
the board level, Toyota’s chairman has also explicitly taken on the role of taking a long-term view.
Google gives employees 20% of their time to work on their own projects, and provides the
opportunity to communicate and articulate how their innovation projects are aligned with corporate
purpose.
Barriers
Half of the companies interviewed cited financial short-term pressures as a barrier to implementing
purpose authentically. Executives referred to pressure to “make the numbers,” as well as consumer
pressure on cost and/or failure to recognize externalities. A few executives mentioned
internationalization as a barrier; as the company globalizes, making sure that local operations and
partners remain aligned with corporate purpose can be a challenge.
In order to overcome these barriers, companies are taking a combination of internal and external
measures.
Internal measures
There are a number of efforts to ensure that human resource (HR) practices, including recruitment,
training, performance evaluation and incentives, are aligned with corporate purpose. This helps to
mainstream corporate purpose into the organization. When selecting talent, one executive at
Google said, “You need individuals who see the opportunity, are able and willing to connect the
dots, be challenged frequently and be made very uncomfortable.” Some companies (including Tetra
Pak and Unilever) include clear targets to reward contributions to corporate purpose.
A clearly communicated purpose, including how to translate it operationally, helps employees have a
clear mandate for action. A focused message is key. While purpose is by nature aspirational, it needs
to be realistic and credible.
External measures
Three of the companies interviewed mentioned the importance of engaging with external
stakeholders. For example, Unilever has developed several platforms with external stakeholders.
One such platform is the Sustainable Agriculture Initiative Platform, which has 60 food and drink
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companies as members. Other such forums include the Roundtable for Sustainable Palm Oil and the
Roundtable for Sustainable Soy. A Unilever executive mentioned its clear focus in this regard, with a
view to fulfilling purpose and having impact: “You always try to get more industries around the table
to work on sustainable solutions in value chains. And then your impacts can be much, much bigger.”
In this way, Unilever has developed the partnerships it needs to make the positive impact it seeks.
When engaging with partners, having deep and extensive knowledge related to the areas touching
corporate purpose is important. Tetra Pak, for example, researches how its partners can improve on
sustainability indicators and works with them to do so. For instance, it seeks to understand the
drivers of the carbon footprints of its preferred suppliers so that it can work with them to
understand and reduce their carbon footprints.
Also, authenticity is important for building trust, as is addressing the very specific concerns of
different stakeholder groups. Lack of authenticity can very quickly erode trust. As stated by one
executive at DuPont:
Authenticity is in the eye of the beholder. NGOs don’t care if – from the company point of view –
they are trusted suppliers who deliver on-time and on-budget. It depends on the audience. You
have to build credibility. It takes a long time to build credibility, but just one error to wipe it out.
7.4 The role of leadership
All the companies interviewed agreed that the role of leadership was critical to ensuring that
organizations lived their corporate purpose. By providing the long-term vision, articulating and
communicating the purpose internally and externally, leaders provide the direction and clarity and
set the course. By ensuring their behavior is consistent with the values espoused, leaders inspire
those inside organizations to live the purpose and thus provide credibility externally. The leader is
the initiator and challenger, providing the organization with the continuity required to stay the
course.
7.5 Recommendations
Nearly all of the companies we interviewed mentioned the importance of the founder in clearly
articulating the purpose when setting up the company. Can companies who have not benefited from
such clarity of intent from the outset set a corporate purpose? If so, what are key ingredients to
ensuring that they are successful in doing so? Executives repeatedly mentioned the following
elements.
Know thyself: Companies need to have a clear knowledge of what they are and where they
want to go, and they need to conduct a careful analysis of where they can make an impact.
Focus: Companies that have an authentic corporate purpose are aspirational in the impact
they want to make while retaining enough focus to ensure they can retain credibility.
Resonance: To ring true, a corporate purpose needs to resonate with its audience, whether
it is external (e.g. customers), internal (e.g. employees) or other stakeholders.
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Strategic embedding: When purpose is deeply engrained in organizational decision-making,
both at the operational and strategic levels, it becomes an integral part of the organizational
make-up, leaving no doubt about how it translates into action in every situation.
Clear and continuing vision: Strong leaders who are both convinced and convincing continue
to guide and inspire, helping to ensure the organization continues to stay the course and live
its purpose over the long term rather than becoming complacent.
The interviewees raised some interesting questions: Will authenticity become more of a strategic
challenge in the future as companies make a broader corporate purpose central to their strategy?
How can they ensure they communicate this effectively? With the proliferation of conversations
happening at increasing speed and across time zones on social media platforms, how can companies
be sure that what they project externally reflects their authentic corporate purpose?
8. Understanding the Dimensions of Authenticity
In this section, we explore some of the most important dimensions when it comes to establishing an
authentic corporate purpose – bearing in mind that all twelve dimensions are important for
authenticity. We then look at how leaders and other stakeholders can use these dimensions to
establish and maintain an authentic corporate purpose.
Dimension Description
Awareness The company – through direct interactions with its stakeholders – has acquired a deep understanding of its strengths and weaknesses, what drives or motivates its actions and how it impacts stakeholders and the environment.
Embeddedness The company’s choices and actions are partly generated by the actions and expected behaviour of other actors, and thus it remains close to its stakeholders who enable it to remain connected to the world around it.
Transparency The company promotes trust by openly sharing information with its stakeholders, demonstrating coherence between “talk” and “walk,” is honest and truthful about its activities, admits mistakes when they are made and does not pretend to be something it is not.
8.1 Awareness
Organizations that are aware have a deep understanding of their own strengths and weaknesses.
The questions included in our questionnaire and designed to throw light on our understanding of the
relationship between an organization’s awareness and its authenticity in corporate purpose were as
follow:
- Does the organization seek feedback to improve its interactions with stakeholders?
- Does the organization accurately describe how stakeholders view its actions?
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- Is the organization aware of the impact it has on its stakeholders?
- Is the organization aware of why it does the things it does?
- Is the organization aware of what drives or motivates its actions?
- Is the organization aware of what it finds truly important?
Case story: Tetra Pak
Established in 1952 in Lund Sweden by Ruben Rausing, Tetra Pak, the world leader in liquid food
processing and packaging, is part of the privately held Tetra Laval group. In December 2013, Tetra
Pak operated in more than 170 countries around the globe, employing almost 23,500 people. Its
customers come from different parts of the food industry, such as the dairy, cheese, ice cream,
beverage and prepared food sectors. Tetra Pak’s stated mission is to “make food safe and available,
everywhere.” The company translates its purpose at the organizational level through its core values,
to reinforce its culture. Its core values consist of four pairs:
Customer focus & long-term view
Quality & innovation
Freedom & responsibility
Partnership & fun
Tetra Pak sees its purpose as making food available, affordable and attainable across different
geographies and aspects of society. This is the underlying reason for its involvement for 50 years in
school milk and feeding programs around the world through its Food for Development Office (FfDO).
The company has partnered with governments, development agencies, NGOs, local dairies and
farmers. For example, FfDO delivered milk and other nutritious drinks to 64 million schoolchildren in
2013.
Tetra Pak also has an underlying unstated purpose, which results from a statement by its founder
that the package should save more than it costs, i.e. the resources Tetra Pak uses to manufacture its
products should be less than what is saved from the products’ use. This has resulted in a strong
focus on environmental impact. This is deeply internalized in the organization, driving decision-
making processes, strategy and innovation. The company uses a balanced scorecard approach – for
example – to ensure that its HR practices reflect environmental performance targets, with specific
goals integral to the reward system.
In 2010, a 10-year business strategy was launched: Strategy 2020. One of the four strategic priorities
articulated was the driving of environmental excellence. Tetra Pak made a number of commitments
to deliver on goals even where there was a great deal of uncertainty, for example, greenhouse
commitments that had not yet been finalized at the international level. The leadership team
endorsed a strong company-wide conviction that even if the path was not very well defined, the
ultimate defined goals and underlying ambition behind them were correct. This top-level support
and the resulting articulation of environment as a strategic priority was a key enabler.
The role of the Tetra Pak founder continues to have a strong influence on the authenticity of the
company’s purpose and drives its long-term perspective. This longer-term perspective has lent Tetra
Pak a great deal of stability and guided its relationships with its external stakeholders, such as its
suppliers. As a director at Tetra Pak commented:
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We buy from suppliers with whom we’ve had a relationship for years and with whom we want to
continue having a relationship for many years to come. Many years might mean 20–30 years.
The continuity of the company and this long-term perspective requires a rooted sense of
underlying corporate purpose, because we have been there and we will be there. We are in this
market niche for the long-run, so we have to be really true about it, to be perceived as we want
to be perceived … as a long-term player.
Inter-dependence of purpose and external stakeholder relationships
Tetra Pak’s primary external stakeholders are its customers. Much of its sustainability work is
done with the perspective of helping the future of its customer’s businesses. The company has
realized that in order to be a supplier of choice for its customers, it also needed to contribute
to their environmental performance. The above-mentioned director describes the centrality of
purpose to its customer relationships as follows:
In our relationship with our customers, the purpose and the continuity are very important and
this has become part of our values. In every business relationship, you are also using your values
as part of your selling proposition. The sustainability values come from the real intent of the
company, of its purpose. They can be validated by being part of what you represent to your
customers.
Achieving recognition from customers is a challenge. While some customers value a lower carbon or
water footprint, most are not willing to pay a higher price tag associated with them. To be as
creative as possible with solutions and increase the chances of success, there are a number of
challenges. Organizations must acquire new levels of creativity, deeper knowledge and internal
competences that will enable them to collaborate with a variety of external stakeholders. In this
way, the company understands better what the possible solutions can be. This has lent itself to a
collaborative approach, and Tetra Pak remains close to its stakeholders to find solutions:
We need to understand what the possibilities are, not just by asking the supplier a question or a
number of questions about carbon footprints, but by understanding what makes up the carbon
footprint of their product and then working with them to reduce that carbon footprint. And if
they are the supplier we want to work with from a business, commercial and risk perspective, it’s
not only price that counts – it’s about risk, it’s about engagement, it’s about sharing goals for the
future. Then by working with them we can find an optimized value chain for this supplier that
reduces their carbon footprint rather than just buying from someone else.
Tetra Pak views developing and sharing knowledge with its peers, to better understand how to move
forward in a way that is consistent with its purpose, as a fundamental differentiation factor. As a
result of its continuing engagement with its stakeholders, Tetra Pak has acquired a deep – difficult to
replicate – awareness of its purpose, as well as a commitment to pursuing it.
We often make presentations to customers, to internal stakeholders, to government teams of
other organizations or within Tetra Pak where we try to present why we are doing this and why
we think this is the right way forward. We try to present on a peer-to-peer basis, in order to offer
support. Tetra Pak is very open and people are free to speak. It’s a very Scandinavian culture. If
people have an opinion, we are going to hear that and engage in a conversation.
Recommendations for Increasing Organizational Awareness
To build this capability, leaders and stakeholders should pay special attention to the following:
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1) Seeking feedback from stakeholders.
2) Being aware of the impact the organization has on its stakeholders.
3) Understanding the reason behind the organization’s actions.
4) Understanding what drives and motivates the organization.
5) Understanding what the organization finds truly important.
8.2 Embeddedness
An organization that is “embedded” has a close relationship with its stakeholders and the world
around it. Leaders and stakeholders concerned about embeddedness should first ask themselves
these questions:
- Is the organization disconnected from the world around it?
- Is the organization distant from its stakeholders?
- Does the organization have a sense of connectedness with society?
- Does the organization have a relationship with its environment?
Case story: Google Innovation Lab for Food Experiences
Google is a global technology leader focused on improving the ways people connect with
information. In 2013, Google has 70 offices in more than 40 countries around the globe, its products
and services were available in over 100 languages and 50 countries. It had $60 billion of revenues
(90% of which were generated from advertisers), with the US accounting for 45% of its revenues.
Google’s business is primarily focused around the following key areas: search and display
advertising, the Android operating system platform, consumer content through Google Play,
enterprise, commerce and hardware products. Google had 47,756 full-time employees in 2013.
Larry Page and Sergey Brin started the company as a result of Page’s doctoral research project in
1998. Google’s initial public offering took place in 2004, raising US$1.67 billion and providing Google
with a market capitalization of more than $23 billion. Its founders retained a strong involvement in
the business and had intentionally done so in order to retain control and lend continuity to Google’s
activities and contribute to its corporate purpose.
Google’s mission is “organizing the world's information and making it universally accessible and
useful.” While it is well known for having revolutionized online searches, Google sees its purpose as
being broader: using information technology and data to address broader global issues and, as one
executive put it, “make the world a better place.” Thus, purpose is at the core of Google’s
recruitment and HR practices; it attributes its ability to attract talent to the belief that the
organization is working on effecting positive change in the world. Google also allows its employees
the freedom to work on projects they believe will have a positive impact on the world. Its 47,756
full-time employees (Googlers) may use 20% of their time to work on innovation projects that they
have selected themselves and that they are passionate about. Such projects have resulted in
successful Google innovations including Gmail, Adsense, Google Transit and Google Talk.
This open innovation approach also encourages the development of leaders within Google, by
helping them to work in a non-hierarchical way. In addition, Google leaders are empowered to make
32
changes at a level they have never experienced before, and they are given the trust and resources to
figure out what the changes should be. To be successful with their initiatives, Googlers need to
develop an ability to articulate how the opportunity resonates with the corporate purpose, thereby
attracting the talent to work on these projects. This in turn has an impact on commitment within the
firm; when employees work on projects they are passionate about, they are energized by them.
Leaders are given significant latitude to maximize opportunities within the overall scope of their
program or budget; in this way, they can allocate resources to partners or projects where they can
have a broader long-term impact. Externally, the fact that Google has built a reputation for using the
opportunities that it has to make a broader contribution, by being knowledgeable and thoughtful, as
well as inclusive in its approach, means that it is perceived as a valuable contributor to discussions
by its external stakeholders. One such example is Google’s ambitions when it comes to the
sustainability and quality of food that it feeds its employees – free of charge - for breakfast, lunch
and dinner, as well as snacks throughout the day.
Google’s Food Program
Google’s 500,000-square-foot headquarters in Mountain View, California (known as the North
Bayshore campus) has gardens, free restaurants, a basketball court, yoga classes, massage services,
napping pods and dry-cleaning services. It also has 25 cafés as well as “micro-kitchens” throughout
the workspace. Google has one global program chef as well as restaurant chefs for each of its cafés.
They focus on providing “delicious, nutritious and healthy” food. The company maintains that it is
essential to nourish the body (and mind) with healthy food. Google also tries to encourage portion
control. The many micro-kitchens are stocked with healthy snacks. Each café has its own distinctive
menu, with items in line with its concept. Most serve breakfast, lunch and dinner, and some are
open on weekends. The supply chain includes community-sponsored agriculture organizations
(CSAs) and community-supported fisheries (CSFs). In addition to being healthy, the food offering
aspires to be appealing, with flavor and variety as key considerations.
The food team at Google is responsible for providing nutritious, food-filled experiences to those who
are at Google, including Googlers, temporary staff, vendor partners and contractors. On a daily basis,
Google serves over 60,000 people around the world. Traditionally corporate (and other)
organizations have tried to serve food in the most economically efficient way, focusing on reducing
the overall spend. Google, however, is concerned with the impact of food on the health and well-
being of its employees. It examines the holistic intersection of food, health, fitness and well-being.
The result is a food program that looks at the impact on Googlers, as well as the extended impact on
the families of Googlers.
Google sees the impact that it could have with its food program is beyond just its employees, their
families and even its partners present on its campus. A senior Googler explains:
We believe that we have the power as of today to bring a wide variety of partners both
internally and externally together to think through how food can help people to be at their best
in the short as well as long-term. Because it fits in the broader Google goal, we have the freedom
to spend a significant amount of our time and our capacity on building our relationships and
partnerships with organizations outside Google, and to develop knowledge and insight, and
ultimately make this available to the broader world as well. So whatever we have learnt and
continued to learn about how people can make better food choices … that ultimately becomes
33
knowledge for the broader good. That is what makes us different. It is about using the
opportunity that you have to contribute to a broader good.
The result is a platform called the Google Innovation Lab for Food Experiences, which meets twice a
year. It brings people together from a diverse group of global companies and NGOs, who share the
core belief that together they can do more to make a contribution to affect positive change in the
overall food system, to feed the 8 or 9 billion people in the years to come in a way that considers the
intersection of health and environment. “The fact that we have the ability and the freedom to do
this within our organization is a part of our authentic corporate purpose,” explains a senior Googler.
Case Story: Toyota
Toyota Motor Corp. is a Japanese automotive manufacturer headquartered in Toyota, Japan.
Kiichiro Toyoda founded the company in 1937, starting the automotive business from scratch.
Since at that time, there was no automotive expertise in Japan, the company executives of the time
were sent to the US to actually learn how cars were produced.
The company nearly collapsed during the 1950 recession and became heavily dependent on banks.
The result was a focus on reducing risk as well as a commitment to organic growth, in order to
reduce reliance on external finance. In 2013 Toyota’s net revenues were $222 billion; it had 333,498
employees worldwide and was the largest automobile manufacturer by production.
Toyota’s stated purpose is; “Toyota will lead the way to the future of mobility, enriching lives around
the world with the safest and most responsible ways of moving people.” It sees its purpose as being
to serve society: to understand fully the impact that the company has on the environment, but also
how it helps people gain access to where they need to go and improve their mobility. Internally, it
seeks to make this as consistent as possible throughout the organization, making sure that all
entities globally are aligned. Toyota’s ability to be consistent in reliably delivering on its purpose
means that its external stakeholders respect it as a credible partner. On a number of occasions,
policymakers or stakeholders have sought the company’s advice on different issues. Therefore, it
places great importance on consistency, making sure employees fully understand what the company
purpose and mission is, through training and communication.
The founder’s vision continues to exert a strong influence on the company. Climate change was
always high on the agenda and therefore it has attended all the Climate Change conferences to date.
The corporate purpose is institutionalized and deeply embedded in the culture. Taking a long-term
view – an inherently Japanese cultural approach - is institutionalized at Toyota through an
interestingly differentiated approach. Some roles are clearly operational (encompassing a short-term
view) while others are deemed experts with also a thought leadership mandate (and are tasked with
taking a long-term perspective). The fact that the chairman of the board, for example, is tasked with
actively taking a long-term perspective on any strategic decision helps to ensure the company
retains its focus on long-run goals, understands the interdependence of current and future benefits
and preserves a long-term relationship with its stakeholders for future success.
Toyota, like many other companies, has experienced difficulty during the ongoing economic crisis
which started in 2008, and has faced strong pressure to shift its focus to shorter-term results. During
such periods of uncertainty, while parts of the organization needed to have a short-term view to
34
adequately assess the risk, Toyota continued to maintain its long-term focus and kept working on
long-term projects, such as the mobility project, described below.
Mobility project
Toyota’s mobility project provides a clear example of how purpose affects decision-making. As part
of its contribution to society, Toyota views its role as leading the way to the mobility solutions of the
future. Out of conviction that truly sustainable future mobility can only be achieved if it works
together cross-sectorally with other industries to improve the mobility system overall, Toyota
initiated a sustainable mobility project within the working frameworks provided by the World
Business Council for Sustainable Development. The project seeks to align different sectors involved
in mobility such as, infrastructure providers, public transport operators, automotive industry and so
on, and to facilitate all parties to work in one direction, in order to take an integrated approach to
issues such as mobility, energy, information, and citizens’ behavior and choices. Another example is
Toyota’s commitment to the fuel cell. There is a great deal of resistance to changing business models
in the market currently, and there might be other solutions that help to reduce CO2 in the shorter-
term. However, when evaluating resource availability in the long-term, Toyota considers the fuel cell
to be the better option. The fact that Toyota takes a long-term view (looking ahead 20-30 years) is
the driver behind its decision to introduce and invest in the fuel cell today.
The company feels it is important to understand the practical elements of the barriers to its long-
term projects – and how to overcome these. It used the word Genba to describe this; a Japanese
term meaning “the real place.” For example, it volunteered to run the mobility project “hands-on” in
Bangkok, in order to deepen its understanding of how to change the behavior of people using roads
and mobility solutions in that area. This focus and experience will allow it to find the right tools and
methodologies to achieve its vision. “It’s not just an abstract vision, but it’s combined with very
practical hands-on experience”; in the words of a General Manager interviewed at Toyota Motor
Europe.
Recommendations to increase organization’s “embeddedness”
In order to build the ability to remain connected to other actors, an organization’s leaders and
stakeholders should focus on:
1) Making sure the organization is connected with the external world.
2) Taking care not to distance the organization from its stakeholders.
3) Making sure the organization is connected with society at large.
4) Relating the organization to the environment it serves.
8.3 Transparency
An organization that is transparent openly shares information with its stakeholders. Leaders and
stakeholders concerned about transparency should ask themselves these questions:
- Does the organization tell the truth?
- Does the organization admit mistakes when they are made?
35
- Does the organization openly share information with stakeholders?
- Does the organization pretend to be something that it is not?
Case story: BMW
In the premium segment of the automobile market, the BMW Group manufactures automobiles and
motorcycles and is based in Munich, Germany. The company sells BMW, Rolls-Royce and Mini cars,
as well as BMW Motorrad motorcycles. In 2012, Forbes announced the BMW Group as the most
reputable business in the world. Its 2013 revenues were € 76.058 billion and 110,351 employees.
The BMW Group is a global company that sells its products in more than 140 countries and
production facilities in 13 countries. Its mission statement is to be “the world’s leading provider of
premium products and premium services for individual mobility”. The BMW Group’s strong sense of
purpose has positive impacts both internally and externally. The impact of purpose on internal
stakeholders is that it fosters employee commitment and pride. The BMW Group’s sense of purpose
also allows it to have a more open dialogue with external stakeholders. It holds stakeholder
dialogues with different stakeholder groups, to discuss different topics in a world café-style format
to ensure that it hears very diverse views. The openness of the format ensures that stakeholders are
listened to and heard, which they appreciate. As described by a senior executive at the BMW Group:
We receive feedback which is very consistent across regions and is positive about our openness
and we are putting so much emphasis on listening. The authenticity allows this openness and
trust to develop step by step with our brand stakeholder base.
Integrating purpose into decision-making at the BMW Group
The BMW Group implemented Strategy Number ONE in 2007, to align the group with two targets: 1.
to be profitable and 2. to enhance long-term value in times of change. This strategy applied to the
technological, structural as well as cultural aspects of the BMW Group and helped all managers to
adopt a more holistic view when making decisions. In other words, the company’s decision-making
process integrated its purpose in a cascaded manner from the board level downwards. For example
– today - when presenting a new project to the board for approval, part of the documentation
required is an assessment of the sustainability impact as well as financial and human resource
implications. In this way, all projects are considered in the context of their broader context and
impact. “The company is placing the focus on whether employees are not only looking at their direct
task and responsibility, but also whether they take decisions based on the company context as a
whole.”
A key enabler of the BMW Group’s purpose is its people. Within the recruitment process, there is a
clear criterion that a future employee has to fit into - the BMW Group culture as already described.
The leadership component is also critical. Stability at the top-management level has allowed for
establishing continuity in the company’s ability to live its purpose over time. Six of the eight board
members have grown up and evolved their professional activities within the BMW company, and
around 46% of the shares are held by one family. In addition to providing continuity, stable
leadership allows the BMW Group to take a very long-term view, consciously making decisions that
underscore the company’s desire to lead iconic change. The tone is set at the top, with the board a
key champion of corporate purpose: “The board contributes a lot to setting the tone, leading by
example in terms of the kinds of behaviors they promote and the leaders they hire.”
36
As the BMW Group has grown and internationalized, it needed to ensure its purpose was being lived
in all parts of the company, and in a truly authentic way. To ensure that purpose is consistently lived
across geographies, for any new production site or joint ventures in other countries, the BMW
Group makes sure that managers are experienced in working at the Group’s headquarters as well as
in markets abroad. When the center or “hub” is so connected to the sum of its parts, this helps all
parts of the BMW Group globally to remain consistent and cohesive. At the same time, the BMW
Group values diversity and respect for individual differences. If purpose and trust are present, teams
can leverage their diversity to come up with the solutions that work best for the company in line
with the company’s purpose and objectives.
The BMW Group recognizes the importance of communicating effectively and authentically in
particular in the digital age. The speed of digital channels and the global nature of connectedness
mean that news travels fast – and ceaselessly. “If all parts of the organization understand the
purpose, employees are empowered to make decisions autonomously while being aligned with the
BMW Group’s corporate purpose.
Recommendations to increase organization’s “transparency”
Leaders and stakeholders should work towards the following:
1) Telling the truth.
2) Allowing the organization to admit mistakes when they are made.
3) Openly sharing information with shareholders.
4) Making sure the organization is being true to itself and is not pretending to be what the
organization is not.
8.4 Checking the authenticity of corporate purpose against 12 dimensions
In Sections 8.1, 8.2 and .3, we suggest how it is possible for our “top three” dimensions – awareness,
embeddedness and transparency – to generate a diagnostic toolset from our research with key
questions that firms can ask themselves about each dimension in order to assess authenticity. A set
of relevant questions can be asked against each one of the twelve dimensions of authenticity in
corporate purpose that our research identified. It behooves companies to do so, given that all
twelve of these dimensions count when it comes to having a truly authentic corporate purpose.
9. Executive Benchmarking Session
In addition to the survey and interviews described above, we tested our work with a group of 20+
executives from various functional disciplines in several corporate organizations over the course of
an executive session. The executives were unaware of the topic before coming to the session and
did not receive any pre-reading material. Some preliminary results of the project were shared as
input to a group workshop around the question: What needs to happen for companies to become
better at being authentic with their corporate purpose? During the session, the participants were
divided into five groups to discuss the topic of authentic corporate purpose. The discussions brought
forth some interesting ideas and reflections on the concept of authenticity and corporate purpose. A
number of themes emerged across the five groups, as follows:
37
• Strategy has to illustrate purpose both in the long and short term.
• Companies need to have a clearly articulated business case for purpose.
• Executives need to communicate internally but with radical transparency,
i.e. being radically open.
• Leadership at all levels needs to live the purpose.
• Businesses need to connect purpose with people (their stakeholders),
whether internal or external.
• Leaders need to work with HR to integrate purpose with the employees.
• Companies need to create incentives to integrate purpose into the corporate culture.
• Companies need to work to co-create purpose with employees and customers.
10. Implications for Leaders
What do all of these findings mean for leaders? Given that almost fifty percent of the variance in
authentic corporate purpose is driven by effective leadership, by considering the different
dimensions of authentic corporate purpose, leaders can better assess the following:
1) Which of the dimensions of corporate purpose does your organization excel? In which areas
might you not be as strong? What could you do to help reinforce the authenticity of your
corporate purpose among stakeholders both inside and outside the company?
2) Does your corporate purpose cover the various different components of authenticity:
leading, stewarding, delivering and differentiating?
3) Does the corporate purpose reflect the company’s identity authentically? Is this consistent
with the image the organization has externally? Are all aspects of the organization’s
operations aligned with purpose?
Next, the leader needs to ensure that their corporate purpose is communicated appropriately. Are
external stakeholders getting the information they need in a transparent and timely manner to build
their perception of the company as a credible partner? Is the company paying enough attention to
social media – which needs to be given particular attention in a world where there is increasing
noise, and decreasing attention levels. Internally, is behavior that is aligned with purpose being
rewarded and is that which diverges being held accountable? Does every employee have a clear
understanding of what decisions and actions are right and wrong, i.e. aligned with purpose?
Finally, the leader needs to set a clear example by ensuring all strategic decisions are guided by the
corporate purpose. The survey findings seem to suggest that many executives fail to use the
corporate purpose to “always guide” their decision-making. This gap leads to misalignment between
corporate actions and corporate purpose.
By providing the long-term vision and articulating and communicating the purpose internally and
externally, leaders provide the direction and clarity and set the course. By ensuring their behavior is
consistent with the values espoused, leaders inspire those inside organizations to live the purpose
and provide external credibility. The leader is the initiator and challenger, providing the organization
with the continuity required to stay the course.
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11. Conclusion
This study researched the relationship between “authenticity” and “corporate purpose.” The
contention was that if a corporate purpose is not considered “authentic” then stakeholders will view
the company and the company’s corporate purpose with mistrust, skepticism and cynicism. This
then has clear reputational and brand value implications that, according to our previous research on
corporate purpose, will certainly be played out through effects on financial performance. Although
difficult – even impossible – to quantify exactly (since there are many factors influencing these
aspects at any one time), such impacts on brand value and reputation are increasingly important
considerations in high-level decision-making in companies.
Based on the authenticity research in a diverse field of business literature, 12 dimensions were
theorized to constitute an organization’s “authenticity of corporate purpose.” The survey results of
over 200+ executives from 46 different nations and 43 different industries supported this theory.
The support of the 12 dimensions gives validity to the overall conceptual model.
The survey uncovered a number of findings that are worth repeating here:
Many executives had considerable difficulty in identifying a company with an authentic
corporate purpose. This may be because corporate purpose is often received with mistrust,
skepticism and cynicism. Many companies may “talk the talk” but they do not “walk the
walk.”
Not one company stood out from the pack on authenticity of corporate purpose. Most of
the companies in our study only received only one mention. The top three companies
identified by the respondents – Google, Nestle and Apple – received a small number of
multiple mentions, nine at the most. There were no companies that the executives
resoundingly believed exhibited an ideal authentic corporate purpose.
There exists a gap between a company’s corporate purpose and managerial attitudes. While
executives generally “agreed” that their own company has an authentic corporate purpose,
they do not “always” rely on their company’s corporate purpose to guide their decision-
39
making process. If managers are not using the organization’s corporate purpose to guide
their decision-making, then the organization’s corporate purpose will never be perceived as
truly “authentic.”
Leadership is an important part of maintaining and establishing an authentic corporate
purpose. Results of our structural equation modeling demonstrate that effective leadership
is an important predictor of authentic corporate purpose.. Strong leaders who are convinced
and convincing continue to guide and inspire, helping to ensure the organization does not
get complacent but rather continues to stay the course and live its purpose over the long-
term.
Companies can diagnose and manage their “authenticity of corporate purpose” with the
help of our model and the diagnostic toolset it has helped to generate. The model details the
different types of activities that contribute to perceptions of authenticity: stewarding,
leading, differentiating and delivering. Each of these sets of activities consists of several
dimensions including: awareness, balance, connectedness, consistency, embeddedness,
long-term orientation, originality, passion, reliability, reputation, self-regulation and
transparency
This study is the first empirical study conducted on the “authenticity of corporate purpose.” It
became clear from this piece of research that much work still needs to be done in this area. For
example, further work can be performed on the role that brands play on establishing and
maintaining an authentic corporate purpose. Despite no one clear brand winner, it may be worth
examining if brand strength can help establish and maintain an organization’s “authenticity of
corporate purpose”? Or can it be a hindrance?
It is important to understand when and on what occasions managers choose not to use corporate
purpose to guide their strategic decision-making. For example, is corporate purpose ignored when
managers are making important decisions or in crises? And if so, how often does this occur? What is
then, the subsequent impact on authenticity?
Also, it is important to understand how these dimensions interact with each other. Is it possible for
firms to work on parts of the model and still be perceived as (mostly) authentic? And if so which
parts of the model best interact? Are some dimensions significantly more important than others in
establishing an authentic corporate purpose?
Lastly, this project mostly examined external views of authentic corporate purpose. However,
Barnard wrote, “A purpose does not incite co-operative activity unless it is accepted by those whose
efforts will constitute the organization.” (1938: 86). Future research could study how employees
view authentic corporate purpose to uncover similarities and differences between external and
internal views.
These areas/questions are beyond the scope of this research project. We hope that both
practitioners and scholars will be interested in continuing to work in this area in the future.
40
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13. Appendices
Appendix I: Survey Questionnaire
Below are the questions that were included in the final quantitative survey questionnaire.5
Corporate purpose is a company's core "reason for being." It is the organization’s single underlying
objective that unifies all stakeholders and embodies its ultimate role in the broader economic,
societal and environmental context. Corporate purpose is often communicated through a company's
mission or vision statements, but may also remain informal and unarticulated.
However, corporate purpose can sometimes be viewed with mistrust and skepticism and perceived as
mere “window dressing” if it does not match the firm's actual actions.
Through this study, we are interested in understanding what determines the authenticity of a firm’s
corporate purpose. Since “authenticity” is generally defined as being “true to oneself,” we define
authenticity of corporate purpose as the alignment between a firm’s perceived corporate purpose
and the actual strategic decisions and actions that a firm takes.
Given the definition in the introduction, please think of a company that you believe has an Authentic
Corporate Purpose.
______________________________
On a scale from 1 to 7, where 1 is "Strongly Disagree" and 7 is "Strongly Agree," to what extent do
the following statements describe the company you chose for Question # 1.
Dimension Questionnaire Items: The Company…
Lead
ing
Balance ...solicits views that challenge its deeply held positions. ...analyzes all relevant data, regardless of source, before making a decision. ...does not listen carefully to different points of view before coming to a decision. ...does not like to be confronted with its limitations and shortcomings.
Awareness …seeks feedback to improve its interactions with stakeholders. ...accurately describes how stakeholders view its actions. ...is not aware of the impact it has on its stakeholders. ...is aware of why it does the things it does. ...is aware of what drives or motivates its actions. ...is not aware of what it finds truly important.
Transparency ...tells the truth. ...admits mistakes when they are made. ... does not openly share information with stakeholders. ...does not pretend to be something that it is not.
Self‐regulation ...monitors its actions to ensure that it does not violate any legal or ethical norms. ...exhibits restraint with regard to growth and profit ambitions by taking its impact on stakeholders into account. ...does not make decisions that are true to its corporate purpose. ...resists pressure to do things contrary to its corporate purpose. ...acts according to its corporate purpose even if others criticize it for it.
5 Note that for purposes of clarity, the questions described herein are grouped by their respective dimensions. In the
actual survey, the questions were presented to responders in random order.
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Ste
ward
ing
Embeddedness ...is disconnected from the world around it.
...is distant from its stakeholders.
...has lost all sense of connectedness with society.
...is not related to its environment.
Long‐term Orientation
...considers maintaining a long-term relationship with its stakeholders important.
...expects to be working with its stakeholders for a long time.
... does not plan for the long term.
...works hard for success in the future. Connectedness …does not aim to protect and improve the quality of the local community.
...aims to create a better life for future generations.
...contributes to the well-being of society.
...does not aim to protect and improve the quality of the local environment.
...respects the values, norms and traditions of the communities in which it operates.
Deliv
eri
ng
Consistency ...stays true to its corporate purpose. ...does not offer continuity. ...has a clear corporate purpose that it pursues. ...has a corporate purpose that is consistent over time.
Reliability ...has shown me that it keeps its promises. ...delivers on what it promises. ...makes promises that are not credible. ...makes reliable promises.
Dif
fere
nti
ati
ng
Reputation ...has a good reputation in the community. ...has a good reputation in the industry. ...is not actively involved in the community. ...is known as a good place to work. ...has a good reputation among its customers.
Passion ...seems passionate about what it does. ...appears highly motivated to excel in everything it does. ... does not appear to have a sense of purpose. ...is a compassionate organization.
Originality ...has a corporate purpose that is different from other companies. ...has a corporate purpose that stands out from other companies in the same industry. ...has a corporate purpose that is not unique. ...has a corporate purpose that clearly distinguishes it from other companies.
In your opinion, to what extent is the overall functioning of this company's leader satisfactory?
In your opinion, how effective is this company's leader?
In your opinion, how capable is this company's leader?
In your opinion, how important is the role of leadership in establishing the authenticity of a firm's
corporate purpose?
45
Appendix II: Qualitative Interview Protocol
Below is the interview protocol followed for each of the interviews.
---
Introduction
Thank you for taking the time to meet with us today.
Our research project aims to bring increased understanding of the determinants of the authenticity
of a firm’s corporate purpose. By corporate purpose, we mean a company's core "reason for being”
or the organization’s single underlying objective that unifies all stakeholders and embodies its
ultimate role in the broader economic, societal and environmental context. It might be
communicated through your company's mission or vision statements, but may also remain informal
and unarticulated.
Your firm was identified in our recent survey as scoring highly on having an authentic corporate
purpose. As such, we would like to hear how your company sees the importance of corporate
purpose and how this is used in decision-making processes here at ___________.
The interview should take 45 minutes and with your permission, we will be recording the session. All
responses will be kept confidential. This means that unless we get your consent, your interview
responses will only be shared with research team members and we will ensure that any information
we include in our report does not identify you as the respondent. You don’t have to talk about
anything you don’t want to and you may end the interview at any time.
Are there any questions before we begin?
Questions
1. On a scale of 1 to 7, how important would you say is the idea of an authentic corporate
purpose at _(insert company name)_?
2. How would you define the idea of an authentic corporate purpose?
3. What is your company’s corporate purpose?
4. What impact, if any, do you feel that the authenticity of your corporate purpose has had on
the organization’s internal and external stakeholders?
5. Why do you think that some companies actively pay attention to the authenticity of their
corporate purpose while others do not?
6. Do you remember when your organization began to focus on authenticity? Why did this
occur?
7. Can you give an example of how your corporate purpose has influenced the decision-making
process here at _(insert company name)__?
46
8. What helped or enabled this decision to be made?
9. What have been some of the barriers, if any, that you have encountered when trying to be
authentic in your corporate purpose?
10. How did you overcome the barrier(s)? What kind of organizational processes, structures, or
rewards are in place to help your employees overcome these barriers and to be authentic
with regards to the corporate purpose?
11. Do you encounter barriers to communicating corporate purpose externally?
12. What would you say is the role of leadership in establishing and maintaining the authenticity
of corporate purpose?
13. What recommendations do you have for other companies that are trying to establish an
authentic corporate purpose?
14. Thank you so much for your time, is there anything else you’d like to add before we end that
we haven’t covered around the topic of authenticity of corporate purpose?
Thank you!
47
Appendix III: Qualitative Interview Respondents Rating of Dimensions
In the table below, could you please rate each dimension on a scale of 1 to 7. Attached is a brief
description of the dimensions for further information.
Dimensions How important
overall is
authenticity of
corporate
purpose?
(1=Not important
at all, 7=
Extremely
important)
How important is
it to your
company?
(1=Not important
at all, 7=
Extremely
important)
How would you
rate your
company’s
performance?
(1=Poor, 7=
Excellent)
How challenging
is it for your
company?
(1=Not at all
Challenging
7=Extremely
Challenging)
How important is it
for your decision-
making process?
(1=Not important at
all, 7= Extremely
important)
Transparency
Awareness
Balance
Reliability
Connectedness
Self-regulation
Reputation
Passion
Embeddedness
Continuity
Originality
Long-term
orientation
48
Appendix IV: List of Survey Respondents
(by company and area of activity)
Company Area of Activity Interview Date
Packaging Environment Performance 23/09/2014
Technology Food Services 24/09/2014
Cement Innovation Management & Collaboration 26/09/2014
Pharmaceutical Compliance 30/09/2014
Automotive Sustainability 10/10/2014
Automotive Energy & Environmental Affairs 13/10/2014
Food & beverage FMCG Communications 14/10/2014
Food & beverage FMCG Procurement & Sustainability 28/10/2014
Food & beverage FMCG Communications 29/10/2014
FMCG Foundation 30/10/2014
Chemicals and health Communications 03/11/2014
A FMCG company Environmental Sustainability 17/11/2014
49
Appendix V: Characteristics of Survey Executives
Gender
Answer %
Male 71%
Female 29%
Total 100%
Demographics
Demographics Number
Average Age 51
Average Years of Work Experience 27
Number of Nationalities 46
Education
Answer %
Some High School 1%
High School 2%
Attended University 1%
B.A. (Bachelor of Arts) 4%
B.S. (Bachelor of Science) 10%
B.B.A. (Bachelor of Business Administration) 9%
M.A. (Master of Arts) 7%
M.S. (Master of Science) 23%
M.B.A. (Master of Business Administration) 31%
Attended Doctoral Program 2%
PhD (Doctor of Philosophy) 9%
M.D. (Doctor of Medicine) 0%
J.D. (Juris Doctor) 2%
Total 100%
50
Appendix VI: Executives and Firm Characteristics
Public versus Private
Answer %
Public 38%
Private 55%
Other 7%
Total 100%
Size of firm in Millions (Euro)
Answer %
0-100 24%
100-500 10%
500-1000 4%
1000-2500 11%
2500-5000 9%
5000-10000 7%
10000 + 35%
Total 100%
51
Appendix VII: Industry Demographics
Answer % Answer %
Academic 1% Machinery 3%
Aerospace 0% Media 1%
Agriculture and Fishing 4% Metal 1%
Airline 0% Mining 0%
Automotive 2% Non-Profit 1%
Building Materials 6% Oil and Gas 2%
Business and Professional Services 7% Paper and Packaging 5%
Chemicals 4% Pharmaceuticals and Health-care
4%
Computer 1% Power and Utilities 1%
Construction 3% Publishing 1%
Defense 0% Retailing 2%
Energy 6% Rubber 0%
Engineering 1% Software 1%
Fast-moving Consumer Goods 10% Technology and Communications
2%
Financial Services 8% Textiles 1%
Food and Beverages 7% Transport and Logistics
2%
Glass and Glassware 1% Travel and Tourism 0%
Government 1% Toys 0%
Health-care 4% Other 6%
High tech / Electronics / Telecoms 2% Total 100%
Industrial Goods 1%
Leisure and Entertainment 0%
Machinery 3%
Media 1%
Metal 1%
Mining 0%
Non-Profit 1%
Oil and Gas 2%
Paper and Packaging 5%
Pharmaceuticals and Healthcare 4%
Power and Utilities 1%
Publishing 1%
52
Appendix VIII: Ranking of Companies Identified as Having a Corporate Purpose
Question: Identify a company with corporate purpose
Rank Company Name Count Percent
1 Google 9 4.97
2 Nestlé 9 4.97
3 Apple 7 3.87
4 IKEA 6 3.31
5 Patagonia 6 3.31
6 Novartis 4 2.21
7 Roche 4 2.21
8 Caterpillar 3 1.66
9 Danone 3 1.66
10 Holcim 3 1.66
11 Innocent 3 1.66
12 Japan Tobacco International 3 1.66
13 Johnson & Johnson 3 1.66
14 Nike 3 1.66
15 Tesla 3 1.66
16 Shell 3 1.66
17 Coca-Cola 2 1.10
18 Disney 2 1.10
19 Hilton Worldwide 2 1.10
20 Kingfisher 2 1.10
21 Lego 2 1.10
22 Microsoft 2 1.10
23 Migros 2 1.10
24 Novo Nordisk A/S 2 1.10
25 Philipps 2 1.10
26 Syngenta 2 1.10
27 The Red Cross 2 1.10
28 Toyota 2 1.10
29 Unilever 2 1.10
30 Volvo 2 1.10
31 Waitrose 2 1.10
Missing 28%
53
Appendix IX: Companies Identified as Having an Authentic Corporate Purpose and
Receiving at Least One Mention - unsolicited
Companies receiving one mention
Adelholzener General Electric Save the Children Africa Finance Corporation Givaudan Schlumberger Aker Solutions Globe Telecom Sime Darby
Amazon Harley Davidson Statoil
Aston -Martin UK Hellenic Straumann AG
Audi Helsana SWATCH
Avin Oil SA Husqvarna Swiss Federal Institute of Technology
AXA IMD Swiss Re
BASF Interface Switcher
Bata Shoe Organization JP Morgan Tata Group, India
BHP Billiton Kambly S.A. Tetra Pak
BMW Kone Tha High Performance Academy
Bobst Koninklijke Vopak NV The Body Shop
Boehringer Ingelheim Lafarge The LEGO Group
Borealis Linney group TOD'S
Cargill Lufthansa Tomra ASA
Carlsberg Malayan Banking Berhad Triodos Bank
Chiquita Marriott Hotels Virgin Atlantic
Deloitte Mountain Equipment Co-op (Canada)
Xylem
dm-drogeriemarkt Germany Nigerian National Petroleum Corporation (NNPC)
Doctors Sans Frontiers Norsk Hydro
Driscoll's Odlo
Eaton PGB Ltd
ebbf PH Group
Ecover PricewaterhouseCoopers
EI DuPont de Nemours Qatar Fuel
Evonik Industries RioTinto
Ernst & Young Robert Bosch GmbH
F.Hoffmann-La Roche AG Rockwool
Fonterra San Miguel Corporation
54
Appendix X: Level of Authentic Corporate Purpose - Top 10 solicited
5.00 5.10 5.20 5.30 5.40 5.50 5.60 5.70 5.80 5.90 6.00
L'Oreal
Louis Vuitton Moët Hennessy
Danone
Adidas
Michelin
Unilever
Volkswagen
Nestlé
Patagonia
BMW
Q: In your opinion, to what extent do you believe that the following
companies have an authentic corporate purpose? Top 10 Companies:Average Score
(1-Strongly Disagree; 7-Strongly Agree)
55
Appendix XI: Ranking of Full List of 30 Companies - Solicited
Ranking Top 30 Companies
Company Average r
Standard Deviation
Count
BMW 5.87 1.16 148
Patagonia 5.82 1.42 74
Nestlé 5.79 1.48 150
Volkswagen 5.74 1.15 141
Unilever 5.64 1.21 135
Michelin 5.59 1.30 125
Adidas 5.46 1.15 132
Danone 5.44 1.22 122
Louis Vuitton Moët Hennessy 5.39 1.58 123
L'Oreal 5.35 1.45 124
Novartis 5.34 1.39 119
Christian Dior 5.26 1.46 112
Daimler 5.25 1.43 117
Schneider Electric 5.17 1.19 70
Siemens 5.16 1.39 136
Koninklijke Philips Electronics 5.15 1.25 102
ABB 5.13 1.29 96
Zurich Insurance Group 5.08 1.38 90
Vodafone 5.06 1.39 107
Henkel & Company KgaA 4.95 1.27 84
Bayer 4.95 1.24 125
BASF 4.90 1.28 114
Sanofi Aventis 4.86 1.44 74
Shell 4.80 1.62 137
Nokia Corporation 4.77 1.56 121
SCA 4.58 1.18 48
Interface 4.53 1.34 36
Gas Natural 4.52 1.31 58
Kering Group 4.50 1.33 42
E.ON 4.49 1.33 84
Total 4.46 1.60 109
Telefonica 4.42 1.37 81
In yoINEOS 4.38 1.53 42
GDF Suisse 4.32 1.33 50
BHP Billiton 4.32 1.36 69
RWE (Rheinisch-Westfälisches Elektrizitätswerk) 4.25 1.21 56
Average 5.02
56
Appendix XII: Presence of Authentic Corporate Purpose in Respondents
companies
(The table represents the percentage of executives that voted in each category.)
Now thinking about your organization, to what extent do you believe your organization has an authentic corporate purpose?
Strongly Disagree
2 3 Neutral 5 6 Strongly Agree
Total
Public 0.00 3.23 4.84 8.06 25.81 29.03 29.03 100.00
Private 2.25 1.12 4.49 11.24 19.10 33.71 28.09 100.00
Other 0.00 0.00 9.09 0.00 18.18 54.55 18.18 100.00
Total 1.23 1.85 4.94 9.26 21.60 33.33 27.78 100.00
(The table represents the percentage of executives that voted in each category.)
Firm Size Millions of Euro
Now thinking about your organization, to what extent do you believe your organization has an authentic corporate purpose?
Strongly Disagree
2 3 Neutral 5 6 Strongly Agree
Total
0-100 0.00 0.00 0.00 5.26 18.42 52.63 23.68 100.00
100-500 0.00 12.50 6.25 6.25 37.50 12.50 25.00 100.00
500-1000
0.00 0.00 0.00 0.00 33.33 16.67 50.00 100.00
1000-2500
0.00 5.56 5.56 0.00 22.22 38.89 27.78 100.00
2500-5000
0.00 0.00 28.57 21.43 14.29 28.57 7.14 100.00
5000-10000
8.33 0.00 8.33 8.33 16.67 25.00 33.33 100.00
10000 + 0.00 0.00 1.82 14.55 21.82 29.09 32.73 100.00
Total 0.63 1.89 5.03 9.43 22.01 33.33 27.67 100.00
57
Appendix XIII: Status of Authentic Corporate Purpose in Companies
Questions on Leadership & Strategy
Questions Average Standard Deviation
Count
In your opinion, how important is the role of leadership in establishing the authenticity of a firm’s corporate purpose?
6.62 0.74 165
Now thinking about your organization, to what extent do you believe your organization has an authentic corporate purpose?
5.60 1.32 164
In your organization, how often would you say that corporate purpose guides your decision-making?
5.30 1.29 164
The Company uses its corporate purpose to guide strategic decision-making.
5.91 1.08 196
In your opinion, to what extent is the overall functioning of this company's leader satisfactory?
6.14 1.25 163
In your opinion, how effective is this company's leader?
6.05 1.20 164
In your opinion, how capable is this company's leader?
6.20 1.20 164
58
Appendix XIV: Influence of Corporate Purpose on Decision-making
(The table represents the percentage of executives that voted in each category.)
In your organization, how often would you say that corporate purpose guides your decision-making?
Never 2 3 Neutral 5 6 Always Total
Public 0.00 1.61 8.06 11.29 33.87 37.10 8.06 100.00
Private 1.12 4.49 7.87 10.11 17.98 39.33 19.10 100.00
Other 0.00 0.00 0.00 18.18 27.27 45.45 9.09 100.00
Total 0.62 3.09 7.41 11.11 24.69 38.89 14.20 100.00
(The table represents the percentage of executives that voted in each category.)
Firm Size Millons of Euro
In your organization, how often would you say that corporate purpose guides your decision-making?
Never 2 3 Neutral 5 6 Always Total
0-100 0.00 0.00 0.00 13.16 23.68 39.47 23.68 100.00
100-500 0.00 6.25 6.25 18.75 31.25 25.00 12.50 100.00
500-1000 0.00 0.00 0.00 16.67 33.33 50.00 0.00 100.00
1000-2500 0.00 0.00 11.11 0.00 33.33 44.44 11.11 100.00
2500-5000 0.00 0.00 28.57 28.57 7.14 28.57 7.14 100.00
5000-10000 0.00 8.33 25.00 8.33 16.67 33.33 8.33 100.00
10000 + 0.00 5.45 3.64 7.27 27.27 43.64 12.73 100.00
Total 0.00 3.14 7.55 11.32 25.16 38.99 13.84 100.00
59
Appendix XV: Standardized item factor loadings for each dimension
Factor Item λ
Factor Item λ
Balance Q34 0.59
Originality Q6 0.67
Q35 0.54
Q7 0.89
Q36 0.77
Q8 0.50
Q37 0.64
Q9 0.91
Awareness Q14 0.65
Passion Q38 0.70
Q15 0.66
Q39 0.73
Q16 0.75
Q40 0.84
Q17 0.66
Q41 0.59
Q18 0.65
Reputation Q42 0.77
Q19 0.76
Q43 0.77
Transparency Q20 0.85
Q44 0.61
Q21 0.67
Q45 0.53
Q22 0.57
Q46 0.73
Q23 0.49
Embeddedness Q53 0.66
Self-Regulation Q29 0.55
Q54 0.62
Q30 0.51
Q55 0.62
Q32 0.61
Q56 0.62
Q33 0.63
Long Term Orientation Q49 0.63
Reliability Q10 0.82
Q47 0.76
Q11 0.85
Q50 0.77
Q12 0.83
Q51 0.70
Q13 0.83
Connectedness Q24 0.73
Consistency Q2 0.71
Q25 0.73
Q3 0.74
Q26 0.70
Q4 0.74
Q27 0.76
Q5 0.87
Q28 0.69
Leadership Q9L 0.98
Q10L 0.90
Q11L 0.88
60
Appendix XVI: Internal consistency coefficients using the McDonald’s ω and
Cronbach’s α methods for the first-order factors and Fornell & Larker’s (1981)
for composite reliability
Scale ω α
Balanced 0.79 0.69 0.73
Awareness 0.71 0.77 0.84
Transparency 0.66 0.64 0.75
Self-Regulation 0.59 0.50 0.67
Reliability 0.87 0.86 0.90
Consistency 0.81 0.79 0.85
Originality 0.79 0.79 0.84
Passion 0.74 0.74 0.81
Reputation 0.75 0.72 0.81
Embeddedness 0.59 0.59 0.72
Long Term Orientation 0.53 0.66 0.81
Connectedness 0.82 0.78 0.85
Leadership 0.92 0.92 0.76
Note. The full sample was utilized when estimating ω, whereas listwise deletion was
used when estimating α and .
61
Appendix XVII: Confirmatory Factor Analysis
62
