(When) Should a Company Have Purpose? [full submission]

Abstract

Organizations in Catalonia and elsewhere are facing mounting pressures to embrace social, environmental, and governance (ESG) goals beyond profit maximization. Yet, these objectives are rarely aligned in ways that create value for shareholders and society. I use an organizational economics lens to survey recent evidence, tackling the question: when should a company have purpose? I focus on firms’ ability to attract talent and finance via social activities, contrasting the experiences of smaller, younger organizations with those of larger, established ones. This review does not aim to be comprehensive or to dismiss social activities’ value across the board, but simply to interpret poignant recent (empirical) evidence bearing on this important debate among researchers, practitioners, and policymakers. In doing so, I highlight modern methods scholars use to study the role of organizational purpose