Trends of Corporate Mission Statements: From pursuing profit to distinctive and social value

Abstract

A mission statement has a significant meaning as the initial and essential step in a company’s strategic planning process. Previous studies have pointed out the necessity of monitoring and longitudinal study of corporate mission statements as they should be continuously revised against changes in companies’ strategies and business environment. This study aims to shed light on what types of strategies and values are currently highlighted in companies’ mission statements in comparison with the findings of a well-known previous study. Therefore, this study conducted a content analysis of 491 Fortune 500 companies’ mission statements. As a result, we found that “philosophy” is mostly highlighted and “profitability” is not emphasized in contemporary companies’ mission statements. Compared to the past study, these findings imply that there have been dramatic changes in the content of corporate mission statements. Besides, this study divided 491 Fortune 500 companies into two groups, high performers and low performers, according to their Fortune ranking and investigated significant differences between high and low performers using t-tests. The high performers were found to more often highlight “selfconcept” and “public image” than low performers. However, the difference in mean scores between high and low performers has become smaller than in the past finding. In particular, there is no statistical difference in mission statement component numbers between high and low performers. These findings can provide futher understanding about changes of companies’ strategic emphasis and the nature of corporate mission statements. This study provides a comparative insight for practitioners making company mission statements.

Full text

HOLISTICAVol10,Issue3,2019,pp.27‐36DOI:10.2478/hjbpa‐2019‐0027
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TrendsofCorporateMissionStatements:
Frompursuingprofittodistinctiveandsocialvalue


Seo,GANG‐HOON,
BusinessAdministration,KobeUniversity,Kobe,Japan
163b115b@stu.kobe‐u.ac.jp
Itoh,MUNEHIKO,
ResearchInstituteforEconomicsandBusinessAdministration,KobeUniversity,Kobe,Japan
itohm@rieb.kobe‐u.ac.jp



Abstract
A mission statement has a significant meaning as the initialand e ssential step in a company’s
strategic planning process. Previous studies have pointed out the necessity of monitoring and
longitudinalstudyofcorporatemissionstatementsastheyshouldbecontinuouslyrevisedagainst
changesincompanies’strategiesandbusinessenvironment.Thisstudyaimstoshedlightonwhat
types of strategies and values are currently highlighted in companies’ mission statements in
comparisonwiththe findings of a well‐knownpreviousstudy.Therefore, this study conducted a
contentanalysis of 491 Fortune 500companies’ mission statements. As a result, we found that
“philosophy” is mostly highlighted and “profitability” is not emphasized in contemporary
companies’missionstatements.Comparedtothepaststudy,thesefindingsimplythattherehave
beendramaticchangesinthecontentofcorporatemissionstatements.Besides,thisstudydivided
491Fortune500companiesinto two groups, high performers and low performers,according to
theirFortune ranking and investigatedsignificantdifferences between high and lowperformers
usingt‐tests. Thehighperformerswere foundtomoreoften highlight“self‐concept”and “public
image” than low performers. However, the difference in mean scores between high and low
performers has become smaller than in the past finding. In particular, there is no statistical
difference in mission statement component numbers between high and low performers. These
findingscanprovidefutherunderstandingaboutchangesofcompanies’strategicemphasisandthe
natureofcorporatemissionstatements.Thisstudyprovidesacomparativeinsightforpractitioners
makingcompanymissionstatements.
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Keywords:StrategicManagement;MissionStatement;Fortune500companies;ContentAnalysis
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JELClassification:M0;M1;M160
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1. Introduction
Themainpurposeofthisstudyistoshedlightonwhatkindofstrategiesand
valuesare highlighted incontemporary companies’mission statements. Hence,
thisstudyfocusesoncontentanalysesof491Fortune500companies’mission
statements.
This study’s main findings demonstrate that current companies do not
strategicallypursueprofit merely,butpursue distinctiveand socialvalueat the
sametime.Theseresultsimplythattherearesignificantchangesincompanies’
strategicemphasiscomparedtothe past.Therefore,thisstudy hasimplications
forstrategicplanningandtheunderstandingofthenatureofcorporatemission
statements.
Thispaperconsistsof5sections.Thenextsectionwillfocusondiscussions
aboutstudiesofmissionstatementsinstrategicmanagementbeforeclarifyingthe
research questions. In section 3, to fill research gaps, content analyses of 491
Fortune500companies’missionstatementsandt‐testsareintroduced.Inchapter
4, the results of the content analyses and further statistical analyses are
presented. In section 5, based on the results and discussions, theoretical and
practicalimplicationsaredescribed.

2. ResearchBackground
Amissionstatementisdefinedasageneralexpressionofacompany’s
purpose(Kemp&Dwyer,2003)andanidealcompany’sfuture,whichdefinesthe
strategicdirection(Law&Brenznik,2018).Furthermore,amissionstatementhas
been defined as “vision”, “values, beliefs”, “principles”, “strategic intent”,
“philosophy”,andsoon(Lin&Ryan,2016).
There has been an extensive discussion about the mission statement’s
implicationsforthestrategicplanningaspect.Ackoff(1987)notedthatacompany
withoutasharedmission islikeatraveller withoutadestination.Pearce (1987)
arguedthatthemissionstatementisacompany’svaluablestrategictool.Pearce
&David(1987)arguedthattheprogressofdevelopingamissionstatementisan
importantfirststepinstrategicplanning.Besides,Kemp&Dwyer(2003)suggested
that developing an organizational mission is an essential part of strategic
management. Moreover, a mission statementisnecessaryforformulating,
implementing,andevaluatingacompany’sstrategy(Law&Brenznik,2018;Kemp
&Dwyer,2003).
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There are reasons why a mission statement is related to a company’s
strategic planning. Firstly, a well‐established and clear mission statement is
essentialforformulatingacompany’sshort‐termandlong‐termgoals,priorities,
andfuturedirections(Linetal.,2018;Ingenhoff&Fuhrer,2010;Kingetal.,2010;
Kemp&Dwyer,2003;Pearce&David,1987,Pearce,1987).Second,themission
statement plays a significant role in positioning the organization and
differentiatingitfromothers(Law&Brenznik,2018;Linetal.,2018;Lin&Ryan,
2016;Ingenhoff& Fuhrer,2010;Kemp &Dwyer,2003).Mostofthe companies
have unique mission statements (Kemp & Dwyer, 2003), which express their
corporatepersonalities(Linetal.,2018).
Infact,manyscholarshavereportedthattheexistenceofaclearandwell‐
organized mission statement is associated with higher levels of organizational,
financial(Hirotaetal.,2010;Alavi& Karami,2009;Atrillaetal.,2005)andnon‐
financialperformance(Dermol&Širca,2018;Linetal.,2016;Dermol,2012;Hirota
etal.,2010),so thatacomprehensivemission statementindicatesacompany’s
high‐qualitystrategic planning endeavorand capability (Pearce &David, 1987).
AccordingtoPearce&David(1987),thehighperformersmoreoftenhighlighted
“customer”, “product”, and “location” than low performers. However, Bart &
Baetz(1998)notedthatthereisnoclearstatisticalevidenceabouttheassociation
betweentheexistenceofamissionstatementandacompany’sfinancial
performance.Ontheotherhand,Dermol&Širca(2018)arguedthattherewasa
significantassociationbetweentheexistenceofacompanymissionstatementand
non‐financialperformance suchas organizationalvalues. Accordingto Linet al.
(2016),thecustomer’sbrandtrustandbrandequityarepositivelyaffectedbya
goodmissionstatement.Also,Dermol(2012)notedthattheexistenceofamission
statementispositivelyconnectedwithValueAddedperEmployee(VAE).
Inpastdecades,alargebodyofliteratureemergedinthefieldofcorporate
missionstatements.However,verylittleattentionhasbeengiventothecurrent
mainthemesofthecorporatemissionstatement.AlthoughKingetal.(2010)and
Linetal.(2018)triedtoshowthetrendofcorporatemissionstatements,Kinget
al. (2010)’s data set (50 Fortune 500 firms) and Lin et al. (2018)’s industrial
background(onlytheairlineindustry)werelimited.Ithasbeenpointedoutthat
themonitoringandlongitudinalstudyofmissionstatementsisnecessary(Linet
al., 2018; Kemp & Dwyer, 2003), as corporate mission statements should be
revisedgraduallyagainstchangesofenvironment,strategy,andbusinesspractices
(Linetal.,2018;Kingetal.,2010;Kemp&Dwyer,2003).Thisresearchgapcanbe
bridgedbyinvestigating contemporarytrends andthemes ofcorporatemission
statements.
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Basedonpreviousdiscussions,thisstudysettworesearchquestions:
RQ1:Whatkindofthemesarehighlightedinmissionstatementscompared
toPearce&David(1987).
RQ2:Aretheredifferencesbetweenhigh‐performersandlow‐performers’
mission statement component numbers compared to Pearce & David
(1987).

3. Researchmethodology
This study adopted content analysis as the research method.
“(Quantitative)contentanalysis isthe systematicandreplicableexaminationof
symbolsofcommunication,whichhavebeenassignednumericvaluesaccording
to valid measurement rules, and the analysis of relationships involving those
valuesusingstatisticalmethods,todescribethecommunication,drawinferences
about its meaning, or infer from the communication to its context, both of
productionandconsumption”(Riffeetal.,2014,pp.19).
Accordingto Riffeet al.(2014), thismethod’sadvantage isthat content
analysisis a nonreactive measurement technique.That is, by adopting content
analysis,researcherscanavoidthebiasarisingfromtheprocessofidentifyingMS
componentsasthetextualcontentorcommunicationdataisseparateandapart
from communicators and receivers. Moreover, it makes possible longitudinal
studies,because“contentoftenhasalifebeyonditsproductionandconsumption”
(Riffeet al., 2014,pp.30). This studyaims to contributeto longitudinal mission
statement studies by shedding light on the changing themes of the corporate
missionstatement.Therefore,weadoptcontentanalysisastheresearchmethod.
Tocompare with Pearce& David (1987),the seminal work incorporate
missionstatementresearch,weusedthesameFortune500companies’dataand
researchmodel.Weattemptedtocollectall500Fortune500companies'mission
statementsfromtheirofficialwebsitesmanuallyfromJuly1sttoJuly30th,2019,
andsucceeded in collecting 491 statements. Apple (Fortune ranking 3) did not
disclose an official mission statement, while the following companies’ mission
statementscouldnotbeaccessedfromoutsidetheUS;EnergyTransfer(Fortune
ranking 60), HCA Healthcare (Fortune ranking 68), US Foods Holding (Fortune
ranking 126), Advance Auto Parts (Fortune ranking 327), Constellation Brands
(Fortuneranking404),NVR(Fortuneranking425),AscenaRetailGroup(Fortune
ranking458),andAmeren(Fortuneranking469).Afterthat,wedividedthedata
intotwogroups(high‐performersandlow‐performers)accordingtotheirFortune
ranking,whichisdecidedbyrevenue,profits,assets,andemployees.Inthisstudy,
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the high‐performers consist of companies with Fortune ranking 1 to 250 (246
companies),whilelow‐performersconsistofthoseranking251to 500 (245
companies).
Ithasbeenpointed outthatsubjectiveness isadisadvantageof content
analysis.Toavoidthisdisadvantage,Riffeetal.(2014)suggestedshowingaclear
codingruleandinter‐raterreliability.Table1showsthecodingrule.
Table1.Codingrule

Components Definition
Customer

“Thespecificationoftargetcustomerandmarkets”
(Pearce&David,1987,p.109)
Products/Services

“Theidentificationofprincipalproducts/services”
(Pearce&David,1987,p.109)
Location/Market

“Thespecificationofgeographicdomain”
(Pearce&David,1987,p.109)
Technology

“Theidentificationofcoretechnologies”
(Pearce&David,1987,p.109)
Concernforprofitability

“Theexpressionofcommitmenttosurvival,growth,and
profitability”(Pearce&David,1987,p.109)
Philosophy

“Thespecificationofkeyelementsinthecompanyphilosophy”
(Pearce&David,1987,p.109)
Sel
f
‐concept

“Theidentificationofthecompanyself‐concept”
(Pearce&David,1987,p.109)
Concernforpublicimage

“Theidentificationofthefirm’sdesiredpublicimage”
(Pearce&David,1987,p.109)

Source:Pearce&David,1987

Thecodingruleincludesthecomponentsandtheirdefinitionsinamission
statement.When applyingthe codingrule, thenumber ‘1’was assigned tothe
componentifcorrespondingcontentswerepresentinthemissionstatement,and
‘0’wasassignedtothevariableifcorrespondingcontentswereabsent.Theresults
werethensubjectedtot‐testsusingSPSS.
To assess inter‐rater reliability, two coders were involved in this study.
Each coder independently analyzed andclassifiedthemissionstatements. To
assesstheinter‐raterreliability,Cohen'sKappawascalculatedbySPSStobe0.465,
whichindicatesmoderateinter‐rateragreement(Landis&Koch,1977).

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
4. Results
Table 2 shows the frequency of components of 491 Fortune 500
companies'missionstatements.ThefrequencywascalculatedbySPSS.
Table2.Frequencyofcomponentscomparedtopastfindings

Component
Pearce&David(1987) PresentResearch
Number Percentage Ranking Number Percentage Ranking
Customer 29 48% 6 412 84% 3
Product 41 67% 5 421 86% 2
Location 25 41% 7 293 60% 6
Technology 12 20% 8 281 57% 7
Profitability 55 90% 1 198 40% 8
Philosophy 48 79% 3 427 87% 1
Sel
f
‐concept 47 77% 4 351 72% 4
Publicimage 53 87% 2 327 67% 5
Source:Pearce&David,1987andAuthors,2019
Thisfinding indicates that, compared to Pearce& David (1987), current
Fortune500companiesmostlyhighlight“philosophy”.Ontheotherhand,current
companiesdonotexplicitlyemphasize“profitability”intheirmissionstatements.
It is a dramatic change from Pearce & David (1987), in that companies now
highlight“philosophy”insteadof“profitability”.
Table3showsthestatisticaldifferencebetweenhighandlowperformers’
missionstatementcomponentscomparedwithPearce&David(1987)asshown
byt‐tests.
Table3.Statisticaldifferencesbetweenhighandlowperformers’MScomponentcontent

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Note:A“Yes”meansat‐valuestatisticallysignificantatlessthan0.05.
Source:Pearce&David,1987andAuthors,2019
In the past finding, the three components were statistically different
betweenhighandlowperformers.Also,overall,thehighperformers’meanscores
werebiggerthanthelowperformers.Inthepresentresearch,thesetendencies
arechanged.Onlytwocomponentsaresignificantlydifferentbetweenhighand
lowperformers,thatis,highperformersmoreoftenhighlight“self‐concept”and
“publicimage”thanlowperformers.Moreover,thedifferenceinmeanscores
betweenhighandlowperformersishasbecome.
In addition to these findings, Table 4 indicates the statistical difference
betweenhighandlowperformers’missionstatementcomponentnumbersinthe
presentresearch.
Table4.Statisticaldifferencebetweenhighandlowperformers’MScomponentnumbers
 Mean Std.Deviation t p
High
Performers
n=246
Low
Performers
n=245
High
Performers

Low
Performers

Component
Number
6.49 6.29 2.006 1.891 1.125 0.261
Note:*p<0.05
Source:Authors,2019
AsTable4shows,there isnosignificantdifference inmissionstatement
componentnumbersbetweenhighandlowperformers.

5. Discussion,andConclusions
Asdescribed above, currentcompanies mostly highlight“philosophy” in
theirmissionstatements.Moreover,thehighperformersmoreoften highlight
“self‐concept” than low performers. “Self‐concept” indicates a company’s
competitiveadvantageandsellingpoint.Also,accordingtoKemp&Dwyer(2003),
“philosophy”is relatedto the company’sunique identityand culture. Itcan be
inferred that “self‐concept” and “philosophy” make a company’s unique
personality, culture and appeal. A company’s strong culture is relevant to
sustainedcompetitiveadvantage(Barney,1986).Furthermore,asmanyscholars
havepointedout,themissionstatementplaysasignificantroleinpositioningthe
organizationanddifferentiatingitfromothers(Law&Brenznik,2018; Linetal.,
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2018; Lin & Ryan, 2016; Ingenhoff & Fuhrer, 2010; Kemp & Dwyer, 2003).
Therefore,itispresumedthatduetointensifyingcompetitionacrossindustries,
companies recognize well that differentiating themselves from competitors is
important. Therefore, “philosophy” and “self‐concept” are highlighted in
contemporary corporate mission statements, while “profitability” is not
emphasized. Furthermore, the high performers more often highlight “public
image” than low performers. This finding is consistent with King et al. (2010),
which noted that contemporary companies emphasize ethical value in mission
statements. Pursuing “profitability” is still a significant strategic direction for
companies,butitispresumedthatthechangeisduetoestablishingtheconcept
of Creating Shared Value (CSV). CSV indicates the link between competitive
advantageandcorporatesocialresponsibility.TheconceptofCSVhighlightsvalue‐
creatingthroughacommitmenttosociety (Porter&Kramer,2011).Thereisno
doubtthatcurrentcompaniesareembracingmoreresponsibilitiestosocietyand
communities than ever before. Contemporary companies do not pursue profit
merely,butpursuesocialvalueatthesametime.
Besides,thedifferenceinmean scorebetweenhighandlow performers
hasbecome smaller andthere is no significant differencein mission statement
component numbers between high and low performers. These findings do not
deny the previous finding of a positive association between a good mission
statementandthe company’sperformance, butindicate that,compared tothe
past,current companies well understand the meaning of effortto manage the
mission statement, so the gap is diminished. Most of the 491 Fortune 500
companieshaveeitherexplicitorimplicitmissionstatements.Also,morethanhalf
of the 491 Fortune 500 companies in this study have comprehensive mission
statements.Thatis,330companies’(67.20%)missionstatementsconsistoffrom
sixtoeightcomponents,147companies’(29.93%)missionstatementsconsistof
from three to five components, and only 14 companies’ (2.85%) mission
statementsconsistoffromzerototwocomponents.
This study’s theoretical implication is that it shedslight on the trend of
current companies’ strategic priorities and direction through analysing 491
Fortune 500 companies’ mission statements. Current companies highlight a
differentiatingstrategy.Moreover,theydonotpursueprofitmerely,butpursue
socialvalueatthesametime.Also,thisstudycanprovidefurtherunderstanding
of the nature of the corporate mission statement by presenting the change of
missionstatement contents. Asa practical implicationfor managerswhomake
companies’mission statements, thesefindings are beneficialfor a comparative
purpose.Thus,whenmanagersdecidethestrategicdirectionand futuregoalof
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theircompaniesbyreferencingcurrentcasesofexcellentcompanies,theywillfind
theseresultsinformative.

Acknowledgement
Wearethankfulfor theacademicresearch grants we received fromtheOtukaToshimi
scholarshipfoundation.

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