Purpose Claims and Capacity-Based Credibility: Evidence from the Labor Market

Abstract

Organizational scholars have long recognized the importance of corporate purpose, defined as a goal beyond profit maximization, meant to galvanizeworkers in the firm. Increasingly, however, companies are making claims about corporate purpose to external audiences, and we have little understanding how these claims may be perceived. A key question is credibility; under what conditions are these claims believed by audiences?We argue that purpose claims can attract external stakeholders, and that the ambition and future-orientation of these claims makes firm capacity a key source of credibility. We examine these issues in the labor market context, where employers make claims of corporate purpose in recruitment efforts. In our first study, with job posting and application data from an online job board, we develop a novel measure of purpose claim language and examine its effect on application likelihood. We then examine the moderating effect of firm size, as a proxy for capacity. We find that high purpose job posts receive approximately 52% more applications than low purpose job posts when the firm has more than 1,000 employees, but only receive a 13% increase when the firm has fewer than 50 employees. In a second study, we use an online experiment to test whether differences in firm size are interpreted as differing degrees of capacity to realize purpose claims, and whether these different perceptions of capacity impact application likelihood. Our results confirm that perceptions of capacity help to explain the relationship between corporate purpose claims, firm size, and job attraction.

Keywords: corporate purpose, credibility, labor market, authenticity, social impact