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  • November 2017
  • Editorial
  • Harvard Business Review (website)

Facebook, BlackRock, and the Case for Purpose-Driven Companies

By: George Serafeim
  • Format:Electronic
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Abstract

Purpose-driven companies have been shown to outperform their peers over the long term. But purpose-driven companies are also hard to come by. Why is that? Because purpose is costly. At the very least, it requires a credible commitment to that purpose. And credible commitments are those that come at a cost; in the absence of a cost, all companies can claim that they are purpose-driven, and as a result the commitment stops being credible. If Facebook was last week’s indication that corporate leaders care about more than short-term profits, this week’s comes from BlackRock chair and CEO Larry Fink, who on Tuesday sent a letter to the companies his firm invests in demanding that “every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” Mark Zuckerberg seems to agree and seems willing to pay a price to demonstrate it.

Keywords

Facebook; BlackRock; Purpose; Corporate Purpose; ESG; Short-termism; Mission and Purpose; Corporate Governance; Leadership

Citation

Serafeim, George. "Facebook, BlackRock, and the Case for Purpose-Driven Companies." Harvard Business Review (website) (January 16, 2018).
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About The Author

George Serafeim

Accounting and Management
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