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Content analysis mission_statements_us_firms

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    Content analysis mission_statements_us_firms Content analysis mission_statements_us_firms Document Transcript

    • 296 International Journal of Management Vol. 23 No. 2 June 2006A Content Analysis of the Mission Statements of UnitedStates Firms in Four IndustriesJoseph PeyrefitteUniversity of Southern MississippiForest R. DavidFrancis Marion University This study analyzes the mission statements of 57 large U.S. firms for their inclusion of nine components identified in the strategic management literature. We propose that although mission statements provide motivation and direction and are an important way for firms to communicate their corporate identity to stakeholders, firms may be subject to institutional pressures that influence what mission statements contain. Wefound similar use of mission components across and within four industry environments suggesting that firms respond to stakeholders in similar ways, creating unique industryprofiles of mission statements. IntroductionMission statement development is widely considered to be the first step in strategicplanning and the basis or starting point for all activities in formulating strategies (Abell,1980; David, 1989). Despite this importance, however, there is limited and inconsistentempirical research on mission statement content (Bart & Baetz, 1998; Pearce, 1982;Pearce & David, 1987). This study analyzes mission content to suggest that missionstatements may be written to portray organizational objectives and values consistentwith those of key stakeholders rather than to reveal organizational distinctiveness(Ashforth & Gibbs, 1990). Thus, we predict that mission statement content will beshared by firms. Our study helps to explain why some mission statements are perceivedas failing to provide direction and lacking specificity (Bart, 1997; Leuthesser & Kohli,1997), and why there have been few direct associations between mission content andperformance (Bart, Bontis, & Taggar, 2001). Mission Statement SimilaritiesBy defmition, when published in an annual report or other official document, the missionstatement presents a companys unique character or organizational identity (Albert &Whetten, 1985). Both economics and strategic management theorists portray managersas aggressively seeking for their firms to be advantageously different from others(Daniels, Johnson, & de Chernatony, 2002). Nonetheless, successful firms mustdifferentiate themselves from competitors in ways that provide competitive advantagewithout sacrificing legitimacy, the perception that firm actions are desirable and proper(Deephouse, 1999;Suchman, 1995). Firms must therefore be responsive to their multipleconstituents in order to meet the dual demands of task and institutional environments.We suspect that there will be commonalities across mission statements as firms respondto their shared constituents in similar ways.
    • International Journal of Management Vol. 23 No. 2 June 2006 297It might not be premature to believe that elements of the mission statement have becomeinstitutionalized. Institutional forces lead firms to be similar to one another throughcoercive, normative, and mimetic pressures (DiMaggio & Powell, 1983). For example,in the twentieth century many organizations adopted the multidivisional organizationstructure. These adoptions were not because of strategic similarities, but because thesefirms watched one another, had CEOs from elite business schools, and had interlockingboard relations (Scott, 2001). Similarly, we suspect that the mission statement hasbecome institutionalized since it has become ingrained in management education. ABain and Company survey of 500 firms report that nine out of ten firms use a missionstatement, making it the most popular management tool in decades (Bart, 1997).Researchers have shown that large firms regularly include up to nine components intheir mission statements (David, 1989). As a result, we suspect that the use of missioncomponents will be used similarly to some degree across many firms.We also expect to fmd mission statement component usage to be related to a firmsindustry because stakeholder recognition might be similar within industries. The normsof mission statement content might vary by industry because organizational fields placedifferent demands in different industries. Firms might attempt to mimic high status /higher reputation firms within their industry in order to gain legitimacy (Porac, et. al,1995) and satisfy stakeholders that provide access to resources. Mission statementcontent might also become part of an organizational macroculture, or idiosyncraticorganization-related belief system that is shared among top managers acrossorganizations (Abrahamson & Fombrun, 1994). There may also be common ways ofoperating or competing that become industry recipes (Spender, 1989) that are followedby most firms and is refiected in their mission statements. Deephouses (1996) study ofcommercial banks suggests that when firms follow industry norms, they may be viewedas more legitimate by their industry stakeholders. For these reasons we propose ourhypotheses,H1: The use of mission statement components will be similar across industry boundaries.H2: The use of mission statement components will be similar within industry boundaries. MethodsA sample of mission statements was collected from the banking, computer hardware,computer software, and food processing industries so that our sample would be stratifiedaccording to differing degrees of institutional influence. The influence of professionalor trade associations, regulatory agencies, and generalized belief systems are likely tovary across sectors (Scott & Meyer, 1991). We elected to analyze large U.S. firms sothat our study would be consistent with and comparable to prior studies of missionstatement components (e.g. David, 1989; Pearce & David, 1987). Our sample consistsof 57 firms from the four industries as listed in the 1999 Business Week CorporateScoreboard (February 28,2000) whose missions were available in either of two missionstatement sources: Abrahams (1999) and Haschack (1998). These sources contain themissions of large U.S. firms in the 1995-1998 period, roughly equivalent to the time
    • 298 International Journal of Management Vol. 23 No. 2 June 2006period of the Business Week Corporate Scoreboard used to identify the companies withintheir respective industries.We content analyzed the mission statements for their inclusion of nine componentscommonly included by large firms (as shown in tables one and two) (David, 1989). Abinary coding procedure was used to rate each firms use of a particular missioncomponent. The component received a rating of 0 if it was not mentioned, whereas itreceived a rating of 1 if the component was either identified or discussed. Nonparametricchi-square analyses and Kruskal-Wallis one-way analysis of variance tests were usedto test our hypotheses. The chi-square analyses compare the observed and expectedfrequencies to test for differences between categories (included or not included missionstatement components). The Kruskal-Wallis tests use the rankings of scores on variablesrather than the actual observations to test for differences across the industries. ResultsOur first hypothesis predicted that the use of mission statement components would besimilar across industry boundaries and was strongly supported. As presented in Table1, chi-square tests show that six of the nine components were used similarly by oursample of 57 firms (p-value < .05). The "customers, "products and services,", and"self-concept" components were used by seventy percent or more of the sample firms.In contrast, the "technology," "philosophy," and "concern for public image" componentswere more often not included across our sample. Thirty-seven percent or less of oursample included these components in their mission statements. There was nosignificantly different usage of "markets," "survival," and "employees" componentsacross the firms.We also found support for hypothesis two which proposed that the use of missionstatement components would be similar within industry boundaries. The chi-square Table 1. Relationship between component type and component usage* Included Not Included p-valueComponent Firms Percent Firms PercentCustomers 42 74% 15 26% 12.789 .000Products and Services 49 86% 8 14% 29.491 .000Markets 24 42% 33 58% 1.421 .233Technology 20 35% 37 65% 5.070 .024Survival, Growth, Profitability 34 60% 23 40% 2.123 .145Philosophy 21 37% 36 63% 3.947 .047Self-concept 40 70% 17 30% 9.281 .002Public Image 19 33% 38 67% 6.333 .012Employees 26 46% 31 54% .439 .508* italicised cells highlight significantly different categories (included vs. not included)
    • Internationat Journal of Management Vol. 23 No. 2 June 2006 299analyses in Table 2 (columns 2 - 5 ) reveal that there were distinct similarities withrespect to mission statement component usage unique to each industry. For example,banks were also most likely to include "customers," "survival," and "self-concept"components, whereas they were likely to exclude "markets" and "technology." Asfurther support for hypothesis two, the last column of Table 2 presents the results ofKruskal-Wallis analyses of variance tests that show statistically significant differences(p-value < . 10) for seven of the nine mission statement components across industries.Only "products and services" and "self-concept" were not significantly different acrossthe four industries. There appear to be well-defmed industry profiles of mission statementcomponent usage in our sample. Table 2. Relationship between component type and component usage by industry*Mission Computer Food Computer Kruskal-Statement Banking hardware processing software WallisComponent (n = 18) (n = 13) (n=13) (n = 13) Analyses of Variance Included, (Percent included), H ratio, x p-value p-value 17(94%) 9 (69%) 5 (38%) 11 (85%) 13.020Customers 14.222 1.923 .692 6.231 .005 .000 .166 .405 .013 14 (78%) 10(77%) 13(100%) 12(92%) 4.359Products and 5.556 3.769 9.308 .225Services .018 .052 .002 3 (17%) 7 (54%) 9 (69%) 5 (38%) 9.341Markets 8.000 .077 1.923 .692 .782 .025 .005 .166 .405 2(11%) 9 (69%) 1 (8%) 8 (62%) 19.132Technology 10.889 1.923 9.308 .692 .000 .001 .166 .002 .405Survival, Growth, 14 (78%) 5 (38%) 10 (77%) 5 (38%) 8.762Profitability 5.556 .692 3.769 .692 .033 .018 .405 .052 .405 9 (50%) 2 (15%) 7 (54%) 3 (23%) 6.470Philosophy .000 6.231 .077 3.769 .091 1.000 .013 .782 .052 15 (83%) 6 (46%) 9 (69%) 10 (77%) 5.267Self-concept 8.000 .077 1.923 3.769 .153 .005 .782 .166 .052 11(61%) 2(15%) 3 (23%) 3 (23%) 9.201Public Image .889 6.231 3.769 3.769 .027 .346 .013 .052 .052 11(61%) 3 (23%) 4(31%) 8 (62%) 6.767Employees .889 3.769 1.923 .692 .080 .346 .052 .166 .405* shaded cells highlight significantly different categories (included vs. not included) by industry
    • 300 Internationat Journal of Management Vot. 23 No. 2 June 2006 Discussion and ConclusionsThe purpose of our study was to show that in addition to demonstrating organizationaldistinctiveness, corporate mission statements might be comparable as firms respond tocommon stakeholders in similar ways. We hypothesized that mission statementcomponents would be used in the same way across as well as within industries due tothe institutionalization of mission components and the differential impact oforganizational constituencies. Our examination of the missions of 57 companies infour industries provided convincing support for our hypotheses. Some missioncomponents were included, and others excluded, by the majority of firms in our sample.We also found similarities within each industry with respect to commonly included andexcluded components. Our findings suggest that managers should be aware of themission statement norms of their industry when preparing or revising their firms missionstatements. Mission statements might be an important way for firms to demonstratetheir awareness and responsiveness to constituents concerns (Pfeffer, 1981). Amanagerial challenge is to draft a mission statement that both challenges and inspiresthe firm and pleases critical organizational constituents.While our results suggest that missions might be used for multiple reasons, additionalresearch is needed to explore the implications of our findings more deeply. Our resultsshould be interpreted as representative of only large-size organizations, and samples inadditional industries are needed before widespread generalizations about the roles ofmission statements can be made. The cross-sectional nature of this study also does notallow us to provide insight with regard to how institutional influences on missionstatements may be changing over time. ReferencesAbell, D. (1980). Defining the Business: The Starting Point of Strategic Planning.Englewood Cliffs, NJ: Prentice-Hall.Abrahams, J. (1999). The Mission Statement Book: 301 Corporate MissionStatements from Americas Top Companies. Berkeley, CA: Ten Speed Press.Abrahamson, E., & Fombrun, C. J. (1994). Macrocultures: Determinants andconsequences. Academy of Management Review, 19, 728-755.Albert, S., & Whetten, D. A. (1985). Organizational identity. In L. L. Cummings, & B.M. Staw (Eds.), Research in Organizational Behavior, 7, (pp. 263-295). Greenwich,CT: JAI Press.Ashforth, B. E., & Gibbs, B. W. (1990). The double-edge of organizational legitimation.Organization Science, 1(2), 177-194.Bart, C. K. (1997). Sex, lies, and mission statements. Business Horizons, 40(6), 9-18.Bart, C , & Baetz, M. (1998). The relationship between mission statements and firmperformance: An exploratory study. Journal of Management Studies, 35, 823-853.
    • International Journal of Management Vol. 23 No. 2 June 2006 301Bart, C. K., Bontis, N., & Taggar, S. (2001). A model of the impact of mission statementson firm performance. Management Decision, 39, 19-35.Daniels, K., Johnson, G., and de Chernatony, L. (2(X)2). Task and institutional influenceson managers mental models of competition. Organization Studies, 23, 31-62.David, F. (1989). How companies define their mission. Long Range Planning, 22(1),90-92.Deephouse, D. L. (1996). Does isomorphism legitimate? Academy of ManagementJournal, 39, 1024-1039.Deephouse, D. L. (1999). To be different, or to be the same? Its a question (and theory)of strategic balance. Strategic Management Journal, 20, 147-166.DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutionalisomorphism and collective rationality in organizational fields. American SociologicalReview, 48, 147-160.Haschack, P. (1998). Corporate Statements: The Official Mission, Goals, Principlesand Philosophies of Over 900 Companies. Jefferson, NC: McFarland.Leuthesser, L., & Kohli, C. (1997). Corporate identity: The role of mission statements.Business Horizons, 40(3), 59-66.Pearce, J. II. (1982). The company mission as a strategic tool. Sloan ManagementReview, 23(3), 15-24.Pearce II, J., & David, F. (1987). Corporate mission statements: The bottom line.Academy of Management Executive, 1(2), 109-116.Pfeffer, J. (1981). Management as symbolic action: The creation and maintenance oforganizational paradigms. In L. L. Cummings, & B. M. Staw (Eds.), Research inOrganizational Behavior, 3, (pp. 1-52). Greenwich, CT: JAI Press.Porac, J., Thomas, H., Wilson, R, Paton, D., & Kanfer, A. (1995). Rivalry and theindustry model of Scottish knitwear producers. Administrative Science Quarterly,40, 203-227.Scott, W. R. (2001). Institutions and Organizations. Thousand Oaks, CA: SagePublications.Scott, W. R., & Meyer, J. H. (1991). The organization of societal sectors: Propositionsand early evidence. In W. W. Powell, & P. J. DiMaggio (Eds.), The New Institutionalismin Organizational Analysis (pp. 108-140). Chicago, IL: University of Chicago Press.Spender, J-C. (1989). Industry recipes: An enquiry into the nature and sources ofmanagerial judgement. Oxford, England: Basil Blackweil.Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches.Academy of Management Review, 20, 571-610.Contact email addresses: joseph.peyrefitte@usm.edu StrategyClub@aol.com(F.R.David)