KEY CONCEPT

Employee perception of their company’s purpose is a key driver of their sustainability behaviours at work, in part because corporate purpose increases psychological ownership of sustainability. This psychological ownership is even more intense for employees who believe strongly in the importance of being moral—and who have the autonomy to make sustainability decisions.

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IDEA SUMMARY

The business world has increasingly accepted the concept of a corporate purpose that extends beyond profit and shareholder value. More and more companies recognize that their core purpose is to benefit all stakeholders, including customers, employees, and suppliers, as well as their communities and society at large.

Sustainability is a key element in a company’s commitment to community and society. New research explains why working for a purpose-driven company inspires employees to engage in sustainability behaviours.

Employee sustainability behaviours can be ethically complex: to “do the right thing,” employees must take into consideration different and sometimes conflicting stakeholder interests—for example, how to best benefit society by helping the environment but without hurting the company’s economic interests.

In this situation, rules and regulations or universally accepted moral codes (e.g., “thou shalt not steal”) are too narrow. To guide employees, companies need to frame the ethical issues involved in sustainability in a broader, more expansive manner.

Corporate purpose provides employees with this more expansive ethical guiding frame. The reason: while rules and regulations tell employee what right or wrong, corporate purpose inspires employees to take psychological ownership of sustainability.

Working for a purpose-driven company gives employees the sense that they are good, ethical people (self-identity), and the sense that they belong to a group that is working together for the greater good (belongingness). Self-identity and belongness are two of the basic human needs that sparks psychological ownership.

In the study, the researchers surveyed approximately 350 employees of the Indian subsidiary of a global manufacturer of heavy machinery. Analysis of the survey results confirmed the significant effect of corporate purpose on sustainability ownership, and the ensuing impact of sustainability ownership on sustainability behaviours.

The researchers also conducted a laboratory experiment that divided participants into two groups. The first group was asked to imagine that they worked for a fictional company with the stated purpose of “maximizing shareholder value.” This purpose, the participants were told, “guided all of the company’s policies and procedures, from procurement to marketing to packaging.”

The second group imagined that they worked for a fictional company with a stated purpose of “nourishing families so they can flourish and thrive”—a purpose that, as with the first group “guided all of the company’s policies and procedures, from procurement to marketing to packaging.”

The respondents working for the “nourishing family” company expressed significantly greater ownership of sustainability and were significantly more likely to engage in a list of sustainability behaviours.

Two further studies, both surveys of actual employees, revealed two additional factors that reinforced the link between corporate purpose and employee sustainability behaviours.

The first survey of 241 employees of a German construction company showed that the greater the autonomy granted to employees for decisions related to sustainability, the greater the ownership felt by employees toward sustainability.

The second survey of more than 1000 employees from a variety of industries showed that sustainability autonomy had a greater impact on sustainability ownership the more individuals considered being a moral person (e.g., being caring, compassionate, fair, generous, hardworking, and honest) to be important.

The breadth of this last survey also confirmed the wide application of the link between corporate purpose and sustainability behaviours.

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BUSINESS APPLICATION

The implications for managers and leaders are clear:

 

• Defining a corporate purpose that goes beyond shareholder value is a necessary first step to encouraging sustainability behaviours.

 

• To reinforce the impact of corporate purpose on sustainability behaviours, leaders should allow as much autonomy in sustainability decisions and actions as possible—not only at the employee-level, but also at the business unit or geographical location level since sustainability is often context-specific. For example, different locations may have different environmental issues; local units are thus better positioned than central headquarters to understand which actions benefit the environment and social issues most in their locations.

 

• Companies may want to make a special effort to “prime” their employees morally—giving them moral nudges through signages, webcasts, or sustainability ambassadors, for example—to further ensure the success of the company’s sustainability efforts.

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FURTHER READING

Corporate Purpose and Employee Sustainability Behaviors. C. B. Bhattachary, Sankar Sen, Laura Marie Edinger‐Schons, Michael Neureiter. Journal of Business Ethics (March 2022).

https://doi.org/10.1007/s10551-022-05090-5

 

 

 

 

Further Relevant Resources:

1. B. Bhattachary’s profile at Pittsburgh Katz Graduate School of Business

https://business.pitt.edu/professors/cb-bhattacharya/

 

Sankar Sen’s profile at Baruch Zicklin School of Business

https://zicklin.baruch.cuny.edu/faculty-profile/sankar-sen/

 

Laura Marie Edinger‐Schons’ profile at University of Mannheim

https://www.bwl.uni-mannheim.de/en/schons/team/prof-dr-edinger-schons/

 

Michael Neureiter’s profile at LMU München

https://www.en.gsi.uni-muenchen.de/people/academic/neureiter_michael/index.html

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