The Benefits of Mission Statements

The prevalence of missions statements in large organizations suggests that there are benefits
to developing public mission statements. Benefits cited in the literature include the following:
* developing of a unity of purpose within the organization (Campbell, Devine, and Young
1990);
* providing a guide to behaviors and decisions (Ledford, Wendenhof, and Strahley 1995;
Falsey 1989);
* motivating staff (Collins and Porras 1991);
* communicating the corporate image (Gray and Smelzer 1985);
* reducing culpability when charged with "unethical" behavior (Fahrnam 1993);
* enhancing performance (for example, Pearce and David 1987).
However, there is a remarkable lack of empirical evidence for the acclaimed and assumed
positive effects of mission statements (Piercy and Morgan 1994). A few studies have lent
limited empirical support to the idea that mission statements are valuable and contribute to
higher profits (Rarick and Vitton 1995; Klemm, Sanderson, and Luffman 1991; Germain and
Cooper 1990; Falsey 1989; Pearce and David 1987). These studies implicitly assume that
mission statements are a determinant of success, rather than addressing the possibility that
successful organizations are more likely to adopt formal systems and procedures that involve
the writing of a formal mission statement.
Rarick and Vitton (1995) concluded that having a mission statement significantly increases
shareholder equity. The average return on shareholder equity for firms with mission
statements was 16.1 percent compared to the 9.7 percent for those without mission
statements. Collins and Porras (1991) examined whether such documents as statements of
corporate philosophy and mission statements motivate employees and make a firm more
competitive. By asking U.S. executives to identify "visionary" companies and investing a
nominal dollar in each of these companies, Collins and Porras (1991) showed that these
visionary firms significantly out performed other companies listed on U.S. stock exchanges.
Germain and Cooper (1990) concluded that firms with a customer service mission statement
improve customer performance due to a more ...