Corporate mission, corporate policies and business outcomes: evidence from Japan

Abstract

Purpose -This study sets out to explore questions such as: "Does mission statement matter? If so, in what ways?" Using data on mission statements of 128 large Japanese firms, the paper aims to show that corporate mission has a significant impact on corporate policies that determine employment, board, and financial structures. Design/methodology/approach -The paper provides evidence that strong-mission firms are more likely to retain incumbent employees, promote managers from within firms, and have less debt and a higher percentage of interlocking shareholdings than weak-mission firms. Findings -The evidence supports the view that strong-mission firms value their organizational capital and thus tend to adopt policies to preserve it. It also confirms that corporate mission and its embedded policies contribute to better corporate performance. The paper suggests that the effect of explicit corporate mission and its implementation has practical impacts in corporate policies and business outcomes.Research limitations/implications -The sample is based on firms from Japan. The criteria used to discriminate between strong mission and weak mission firms need further refinement with more rigorous sub-dimensions. In the Japanese context the percentage of inside directors is an important indication of internally promoted managers -one might argue that a measure of external pressures (e.g. law, codes, investors, etc.) might be a better one. The small number of cases and the richness of statements need a richer qualitative analysis in the future. Practical implications -The empirical results provide helpful insight on the organizational behavior of Japanese firms during the long economic downturn from the 1990s to 2000s in Japan and an insight on what to do in view of the challenges facing Japanese firms. Originality/value -The paper presents a model that clarifies the role of mission statement. The extensive literature review includes a diverse set of papers on the role of mission statement. The empirical results suggest how strong Japanese corporate mission, expressed in mission statements, might have impact on corporate outcomes through the formation and utilization of Monozukuri.

Mission Statements and Financial Performance in Latin-American Firms

“…The improved performance of the employees leads to better use of the company's assets and equity, thereby increasing productivity and optimizing the ROA and ROE. This result is in line with results from previous studies on the relationship between MSs and ROA (Bart 1997b, Bartkus et al 2006, Hirota et al 2010. As for the relationship between MSs and ROE, to the best of the authors' knowledge, this is the first study to analyze this relationship.…”

“…In addition, several studies have found both positive perceptions by CEOs (Analoui and Karami 2002) and a measurably positive relationship between MS comprehensiveness (e.g., by integrating several components of Pearce's (1982) framework) and performance in several regions and countries such as US, Japan, and Europe (Bartkus et al 2000, Hirota et al 2010, Sidhu 2003, Williams 2008. In the case of Turkish small and medium-sized enterprises (SMEs), Duygulu et al (2016) concluded that three of Pearce's (1982) MS components (i.e., survival, growth, and profit; philosophy and value; and public image) served as independent variables that explained high levels of organizational performance.…”

Reinvigorating the mission statement through top management commitment

“…Sidhu (2003), in his study of firms competing in the dynamic Dutch multi-media industry, found that complete mission statements correlated with exceptional performance. Likewise, while studying Japanese firms, Hirota et al (2010) found empirical evidence for a positive relationship between mission statements and firm performance and between mission statements Reinvigorating the mission statement and desired organizational behavior. Other studies have also provided evidence of a positive relationship between mission statements and desired organizational behaviors (Bart, 1997a;Bart and Baetz, 1998;Bart et al, 2001;Desmidt et al, 2011).…”

Using corporate stories to build the corporate brand: an impression management perspective

“…The vision and mission elements could be used as part of an illustrative strategy, as this IM strategy focuses on the organisation's wider purpose and aims, and these can be encapsulated in the organisation's vision and mission (Hirota, Kubo, Miyajima, Hong and Park, 2010;Verma, 2009Verma, -2010. The demonstrative and illustrative strategies could influence audiences' perceptions by informing them about key aspects of the corporate brand, in terms of both specific activities and its broader purpose, although these strategies have not been explored so much in the literature as the assertive and defensive strategies.…”