Role of corporate purpose in influencing individual performance; how pathways to performance differ in for-profit enterprises and rational social enterprises

Discussions on corporate purpose have gained momentum in the management field, with an increased focus on the need to create value for multiple stakeholders as against only shareholders. We have also seen the recognition of rational social enterprises in the academic literature that balance profit-making goals and social benefit goals in businesses. Corporations are seen as social agents with the responsibility to generate value for multiple stakeholders in society hence the need for organisations to be purpose-driven has been highlighted in academic and practitioner journals. While researchers have emphasised the significance of corporate purpose in influencing individual performance, empirical research in this area has been scarce.
Through a cross-sectional study covering over 1400 employees across four participating organisations, this research empirically establishes that corporate purpose is positively associated with individual performance and that this influence has both a direct effect on individual performance and an indirect effect on individual performance through transformational leadership and learning climate. This study also establishes that the direct influence of corporate purpose on individual performance is stronger in rational social enterprises when compared with for-profit enterprises, emphasising the significance of well-embedded purpose in organisations. The findings also uncover the difference in pathways through which purpose influences individual performance in rational social enterprises when compared with for-profit enterprises.