The purpose of firms and its influence on formulating their missions and visions

Abstract

The aim of this article is to investigate the relationship between firm's purpose (i.e., profit, shareholder value or service to society) and the formulation of its mission and vision. The article is based on quantitative research in the form of questionnaires distributed among 200 companies. To verify the above relationship, six hypotheses were put forward. They were verified with the test of good fit and the T-test. We found statistically significant differences between the perception of firm's purpose and revenues of firms, and formulation of their mission and vision. On the other hand, no statistically significant differences were noticed between concrete mission interpretation and firm's purpose. It was revealed that most of enterprises perceive their purpose as profit (61%). The purpose of enterprise in the form of profit-making negatively influences firm’s formulation of mission. Out of the total number of enterprises without mission (in written form), 74% of them are oriented toward profit-making. Mission is formulated by 67% of enterprises. Of these, the most frequent formulation of mission is similar to goals and strategy (36%) and what firms do (34%). Of the total number of companies (200) only 13.5% of them have the mission that reflects the company's reason being. More than half of enterprises (54%) formulated their mission and vision, but 27% of them exist without it. The absence of vision very often leads to reluctance to formulate firm's mission. Out of the total number of enterprises without formulated mission 82% of them are without written formulation of vision. Based on our research it can be stated that third of the surveyed enterprises did not formulate their mission and 40% of companies did not formulate their vision. © 2019, Economic Laboratory for Transition Research. All rights reserved.