Corporate Purpose in Public and Private Firms

Abstract

Analyzing data from approximately 1.5 million employees across 1,108 established public and private US companies, we find that the strength of employee beliefs related to purpose is weaker in public companies. Among public companies, those beliefs are stronger for firms with more committed owners. These patterns are most pronounced within the salaried middle and hourly ranks, rather than senior executives. Differences across firms can be attributed, in part, to differences in leadership and incentive characteristics. Our findings are consistent with higher owner commitment, and the corresponding policies that arise alongside this higher commitment, enabling a stronger sense of purpose inside organizations.

Keywords: Corporate Purpose, Corporate Ownership, Corporate Governance, Investor Type

JEL Classification: M12, M14, M54, G23, G32, G34