Inside-out and Outside-in Perspectives on Corporate Purpose

Abstract

Corporate purpose is receiving an extraordinary amount of attention from both scholars and practitioners. But do existing theories of management help us to understand this unexpected development? This study represents an effort to understand purpose better. I characterize inside-out and outside-in perspectives on purpose as distinct but connected phenomena related to different research traditions. Inside-out purpose is a channeling of the passion and commitment employees feel toward fulfilling stakeholder needs; outside-in purpose is society and external stakeholders urgently calling on the organization to live up to its responsibilities. I devote special attention to theories that best explain the present moment’s unique awareness of corporate purpose. Among them is the work of Philip Selznick, emphasizing values, and the literature on the new institutionalism and institutional logics. I conclude with a section on how leaders can leverage the benefits of both perspectives while mitigating their risks. I also make recommendations for future research.History: This paper has been accepted for the Strategy Science Special Issue on Corporate Purpose.Funding: This work benefited from funding from the Social Trends Institute and the Juan Antonio Perez Lopez Chair at IESE Business School.