The Purpose of Business in a Post-Pandemic World

In this project, we investigate why businesses exist. We examine what their purpose is. Traditionally, companies have been providing jobs and paying taxes, and they have equally been generating profits. However, the COVID- 19 pandemic has demonstrated that society requires more than corporate success, and that businesses need to give back to society. In addition, the grand societal challenges of our time including the climate crisis or increasing inequalities support this tendency. We know little though about the purpose of companies, which is why in this project we empirically explore the purpose of business in a broad way. Based on a large sample of traditional companies with classical profit orientation, we seek to understand how corporations define their purpose. In so doing, we are interested in two key aspects. First, we examine to what extent the purpose of business actually aligns mostly with traditional profit-maximization goals and to what extent businesses might adopt a perspective on purpose as a more encompassing mission. Here, we scrutinize whether corporate purpose beyond profits is in fact reflected in business models and how companies work or whether they express it merely in the form of Corporate Social Responsibility (CSR) activities. Second, we analyze why companies adopt a certain purpose and which factors explain a companys mission, considering aspects such as corporate structuring, corporate governance and leadership, industry affiliation, and several other facets. We believe that this project provides the foundation for future research into the relationships between business and society, and how companies might respond to requests for assuming new roles in a post-pandemic world. Practicing managers may find the project helpful for orientation purposes, to map their companies missions against our findings, and to potentially develop new business models with more contemporary notions of purpose.

The COVID-19 pandemic has raised fundamental questions about the role of businesses in society. These are further heightened by multiple grand societal challenges, such as climate change, military conflicts, and growing inequalities. These dynamics highlight the importance of companies contributing positively to society while simultaneously raising questions about the purpose of business. Nevertheless, there remains limited understanding of what that purpose actually is. Therefore, our project aims to explore the purpose of business both theoretically and empirically. In our conceptual work, we seek to establish clarity regarding the multiple facets of purpose. This involves reviewing the notion of purpose across various fields of management literature and identifying integrative elements that provide greater coherence. In our empirical work, we analyze a large sample of companies to understand how these corporations define their purpose. We investigate the extent to which their purposes align with traditional profit-driven goals versus broader objectives. Additionally, we examine whether these companies incorporate their broader purpose within Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) activities or integrate it into their core business. Furthermore, we explore the factors that determine corporate purpose, such as governance practices, leadership dynamics, industry affiliations, and other relevant influences. Practicing managers may benefit from our findings by systematically reassessing their companies' purpose statements. This could potentially lead to the development of new business models that embrace purpose in a way that supports resilience in a post-pandemic, poly-crisis world.