Purpose: From theory to practice

While there is abundant discussion in business journals on the “how to” of purpose to achieve social good beyond profitability, academic research addressing the theoretical and practical impact of purpose on an organization's performance is limited. Some management scholars claim that organizations that are not purpose-driven and fail to consider the needs of their relevant stakeholders will not be able to create long term value for their companies. There is also concern that organizations may use purpose to show intention towards social good but lack tangible actions to demonstrate their commitment. To determine whether purpose impacts the long-term value creation of organizations, this research paper examined a deeper understanding of the meaning of purpose from both individual and organizational perspectives. With clarity on individual purpose as the ability for humans to consciously set their intentions to achieve good, organizational purpose can be considered as the conscious intentions of individuals to work collectively towards social good beyond the singular goal of profitability. Building on this theoretical understanding of purpose, together with an exploration of the shift occurring in organizational responsibility from a singular focus on shareholder returns towards stakeholder inclusivity, this paper proposes a Stakeholder Purpose Framework which links the impact of purpose to long-term value creation by aligning an organization's purpose with their stakeholders and measuring the outcomes of relevant environmental, social, and governance (ESG) metrics. Activating this framework will provide analytical data supporting whether (or not) purpose does impact an organization's ability to create long-term value.