León Valdés, Associate Professor of Business Administration
BS, Universidad de Chile
MS, Ecole Centrale Paris
PhD, MIT
Why did you decide to set out on this research topic?
One of my primary research objectives is to gain a deeper understanding of how motivations beyond pure profit maximization influence decisions throughout the value chain. Before this project, I explored this question from the perspective of consumer preferences for sustainable products, as well as their implications for firms and their relationships with suppliers. However, I had not studied the role and impact of a key set of stakeholders, namely, workers. This project offered that opportunity, as my colleagues and I set out to evaluate whether and when job postings that signal corporate purpose attract job-seekers.
In addition, the topic offered interesting challenges for us to address. First, there is no agreed-upon “dictionary” (or set of keywords) to identify purpose language, so we had to begin by using machine learning techniques to measure—and later validate—the extent to which a job posting included this language. Second, we really had no idea whether purpose claims would have any effect on job applications; after all, any firm can make claims about its mission and purpose, and it is very difficult for a job applicant to evaluate how credible those claims are. Finally, this research project offered me the opportunity to collaborate with colleagues from across the business disciplines, as our team included scholars from organizational behavior, marketing, and operations management.
Is this research published anywhere yet?
Not yet, but the paper was accepted and is forthcoming in Management Science. In the meantime, it is available here.
What were your key findings?
First, we find a clear topic (roughly speaking, a collection of keywords) that companies use to convey corporate purpose to job seekers. Consistent with the literature, these words communicate an ambitious and challenging goal that has a societal orientation and seeks to galvanize employees.
Second, we observe that purpose claims indeed attract more job applicants. However, the strength of this effect is much stronger among large companies. Through a series of empirical analyses and behavioral experiments, we show that this is due to perceptions of capacity playing a key role: job seekers see purpose claims as more credible and authentic when a firm demonstrates that it has the capacity to achieve its ambitious goals. The good news for smaller companies is that we also find ways in which they can signal capacity, for example, through affiliations with other organizations.
How do the findings of your research contribute to your field?
Our research is novel in that we study corporate purpose as a claim that needs to be evaluated by an audience, particularly job seekers. In this context, we are among the first to show a link between purpose claims and employee attraction, and to shed light on some of the conditions for, and mechanisms behind, this effect.
From the perspective of Operations and Supply Chain Management (my field), I think that our study casts the importance of a firm’s capacity in a different light. We tend to think of it mostly as the ability and resources to produce something or offer a service, but our research also highlights how important it is in lending credibility to a firm’s claims—in our case, about corporate purpose. While other studies have emphasized the importance of a firm’s willingness or motives when evaluating the authenticity of its claims, we show the importance of the often-overlooked dimension of their capacity to actually carry out its goals.
Finally, we construct a new metric of corporate purpose language that is based on machine learning techniques and validated with behavioral experiments and a careful review of the literature. We also develop a methodology so that researchers and practitioners can follow a similar approach to measure and study purpose in other settings.
How do your research findings contribute to society (locally, regionally, nationally, globally)?
Our findings highlight the extent to which ambitious goals with societal impact are important for job applicants. Though our focus is on the effect of corporate purpose at the application stage, other work has shown that it is also an important tool to retain and motivate workers once they are part of an organization. Taken together, I hope that this body of work contributes to companies realizing the value in communicating clear and credible purpose goals.
To be clear, the societal contribution in corporate purpose claims is not necessarily related to things like sustainability or social responsibility, and in most instances, it is clearly distinct. Instead, we see examples of companies that, for instance, highlight the importance of providing financial services to enhance opportunities for people, or that emphasize the criticality of their work in protecting data privacy. One of the things that I find most exciting about the concept of corporate purpose is precisely that it highlights the role of organizations as societal actors: they are identifying and communicating ways in which the core of who they are (their identity) and what they contribute to society, and this resonates with job applicants.
Aside from your research, what is the most exciting advancement in your field right now?
This is completely unrelated to the topic of corporate purpose, but from a methodology perspective, most of my work uses behavioral experiments. In these experiments, we gather responses from participants (either online or in person) to better understand how they make decisions in our settings of interest. One of the developments that I am curious about is the potential use of LLM- / AI-generated subjects, known as “synthetic agents”, in this type of study. I look forward to learning more about this area of research—not because I think that these synthetic agents will (or should) replace human subjects, but to better understand the degree to which they can replicate known patterns of behavior, may be used to pilot future experiments, etc.