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Business purpose refers to the wider, long-term goals of a commercial enterprise. It expresses the corporate's reason for existing, its particular commitment with respect to the surrounding world. A business purpose statement serves as an affirmative reminder of the company’s core identity to employees, customers, and other stakeholders; a common ground hopefully enabling them to focus on their particular tasks while feeling what they do is part of a wider, socially valued endeavor.[1][2][3][4] Alongside established normative, purpose is a fundamental component of business ethics and is closely related to corporate statements such as vision, mission, and values.[5][6] A simplifying, although debatable view, contends that business purpose may exist in one of two forms: current purpose, or mission; and future purpose, or vision.[7] The term has gained wide media attention in recent times.[8][9]

History

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Aristotle contemplated the importance of business ethics and business purpose in his Nicomachean Ethics, where he describes the moral and intellectual traits accompanying virtuous human behavior in society. Also in his Politics, where he discerns between "productive knowledge" and the political abilities required for "good wealth" acquisition.[10] Other classic philosophers cited for dealing with matters relevant to the purpose of business are Kierkegaard, David Hume, and Nietzsche.[11]

Ideas on the purpose of business have evolved and undergone deep revision in the present era. Early modern discussion on business purpose doctrine took place in mid-20th century in the context of its relevance to tax-saving provisions in the US Internal Revenue Code.[12] In 1964, American businessman Frederick Kappel published a volume containing a selection from his speeches dealing with the theme and its relation to performance.[13]

The advent of social responsibility theories in the 1960's brought about demands for businesses to widen the scope of their beneficiaries to include actors beyond the owners themselves, and for companies to share with the state the economic burden of attending social needs in the communities related to their areas of operation.[14][15]

CSR theories were confronted by Milton Friedman in 1970 in a widely referred article originally published in the New York Times Magazine, where he categorically contends that the one and only social responsibility of business is to increase its profits so long as it stays within the rules of the game without deception or fraud.[16] Although controversial, such views by Friedman received ample support from liberal quarters throughout the late 20th century; for instance by British philosopher Elizabeth Vallance in 1993,[17] and later on by Henderson, in his book "Misguided Virtue: False Notions of Corporate Social Responsibility." [18] Exclusive, shareholder-centered ideas of business purpose were subsequently challenged by authors like Drucker in 1985,[19] and Carson in 1999,[20] who questioned the limitations of Friedman's perspective, contending that, since a firm is made up of people to serve other people, the purpose of a business must also comprehend the company's responsibilities towards people, clients, shareholders, and society at large. Despite passionate dispute on the legitimacy of CSR, compromising, midway positions eventually made their way to reconcile extremes.[21]

A plethora of books covering the importance of corporate purpose have been published in recent times, among them Leading with Purpose by Richard R. Ellsworth in 2002, Purpose: The Starting Point of Great Companies by Nikos Mourkogiannis in 2006, Start with Why by Simon Sinek in 2009, Conscious Capitalism by John Mackey and Rajendra Sisodia in 2014, Good is the new Cool by Afdhel Aziz in 2021, and Deep Purpose by Ranjay Gulati in 2022.

Further reading

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  • Drucker, Peter F. (1985). Business Purpose and Business Mission, in "Management: tasks, responsibilities, practices" (1st ed.). New York: Harper & Row. pp. 74–94. ISBN 978-0060110925.
  • Ellsworth, Richard R. (2002). Leading with purpose: the new corporate realities. Stanford: Stanford Business Books. ISBN 0-8047-4385-1.
  • Mourkogiannis, Nikos (2006). Purpose: the starting point of great companies (1st ed.). New York: Palgrave. ISBN 1-4039-7581-7.
  • Duska, Ronald F. (2007). Contemporary reflections on business ethics. Dordrecht, the Netherlands: Springer. ISBN 978-1-4020-4984-2. OCLC 209942380.
  • Spence, Roy (2011). It's not what you sell, it's what you stand for: why every extraordinary business is driven by purpose. Haley Rushing. New York, N.Y.: Portfolio/Penguin. ISBN 978-1-59184-447-1. OCLC 751805918
  • Mackey, John and Raj Sisodia (2014). Conscious capitalism: liberating the heroic spirit of business. Boston, Mass.: Harvard Business Review Press. ISBN 1-62527-175-1.

References

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  1. ^ Vallance, Elizabeth (1995). Business ethics at work. Cambridge [England]: Cambridge University Press. ISBN 0-521-40535-1. OCLC 31045995.
  2. ^ Mayer, Colin (2021). "The Future of the Corporation and the Economics of Purpose". Journal of Management Studies. 58 (3): 887–901. doi:10.1111/joms.12660. ISSN 0022-2380.
  3. ^ Conger, Jay A. (1991-01-01). "Inspiring others: the language of leadership". Academy of Management Perspectives. 5 (1): 31–45. doi:10.5465/ame.1991.4274713. ISSN 1558-9080.
  4. ^ Ellsworth, Richard R. (2002). Leading with purpose : the new corporate realities. Stanford: Stanford Business Books. ISBN 0-8047-4385-1. OCLC 49775350.
  5. ^ Salem Khalifa, Azaddin (2012-08-03). "Mission, purpose, and ambition: redefining the mission statement". Journal of Strategy and Management. 5 (3): 236–251. doi:10.1108/17554251211247553. ISSN 1755-425X.
  6. ^ Kenny, Graham (2014-09-03). "Your Company's Purpose Is Not Its Vision, Mission, or Values". Harvard Business Review. ISSN 0017-8012. Retrieved 2022-03-07.
  7. ^ Horwath, Rich. "Discovering Purpose: Developing Mission, Vision & Values" (PDF). strategyskills.com.
  8. ^ Gunderson, Garrett. "Purpose=Value, Value=Profits". Forbes. Retrieved 2022-08-12.
  9. ^ "Business Doesn't Need a 'Social Purpose' Revolution". Bloomberg.com. 2022-01-18. Retrieved 2022-08-12.
  10. ^ Hartman, Edwin M. (2020). Arriving where we started : Aristotle and business ethics. Cham, Switzerland. ISBN 978-3-030-44089-3. OCLC 1204139303.{{cite book}}: CS1 maint: location missing publisher (link)
  11. ^ Mourkogiannis, Nikos (2006). Purpose : the starting point of great companies. Basingstoke: Palgrave Macmillan. ISBN 978-0-230-60530-5. OCLC 181601151.
  12. ^ Summers, Robert S. (1961). "A critique of the business-purpose doctrine". Oregon Law Review. 41: Summers, Robert S. "A critique of the business-purpose doctrine." Or. L. Rev. 41 (1961): 38.
  13. ^ Kappel, Frederick R. (1964). Business Purpose and Performance. Duell, Sloan and Pearce, 1964. Duell, Sloan and Pearce.
  14. ^ Engel, David L. (1979-11-01). "An Approach to Corporate Social Responsibility". Stanford Law Review. 32 (1): 1. doi:10.2307/1228440.
  15. ^ Blumberg, Phillip (1972-01-01). "Selected Materials on Corporate Social Responsibility". Faculty Articles and Papers.
  16. ^ Friedman, Milton (1970-09-13). "A Friedman doctrine‐- The Social Responsibility Of Business Is to Increase Its Profits". The New York Times. ISSN 0362-4331. Retrieved 2022-03-05.
  17. ^ Vallance, Elizabeth (1993). "What is Business For? Ethics and the Aim of Business". Business Strategy Review. 4 (1): 45–52. doi:10.1111/j.1467-8616.1993.tb00042.x. ISSN 0955-6419.
  18. ^ Henderson, David (2001). Misguided virtue : false notions of corporate social responsibility. New Zealand Business Roundtable. Wellington, N.Z.: New Zealand Business Roundtable. ISBN 1-877148-70-9. OCLC 48927879.
  19. ^ Drucker, Peter F. (1985). "7". Business Purpose and Business Mission, in "Management: tasks, responsibilities, practices" (1st ed.). New York: Harper & Row. pp. 74–94. ISBN 978-0060110925. OCLC 701417.
  20. ^ Carson, Thomas (1993). "Friedman's Theory of Corporate Social Responsibility". Business & Professional Ethics Journal. 12 (1): 3–32. ISSN 0277-2027.
  21. ^ De Angelis, Massimo (2005). "The Political Economy of Global Neoliberal Governance". Review (Fernand Braudel Center). 28 (3): 229–257. ISSN 0147-9032.
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