The Value of Values

Importance and Key Contributions Corporate value statements are a means for a company to make a declaration of how the company and its employees will interact with all of their stakeholders. These statements are an... [ view full abstract ]

Importance and Key Contributions

Corporate value statements are a means for a company to make a declaration of how the company and its employees will interact with all of their stakeholders. These statements are an opportunity for a company to make clear that they will not negatively impact their customers, employees or communities, while being good stewards of their shareholders’ investments. These statements are also an opportunity for a company to claim to be better than their peers, to act beyond the basic requirements and to positively affect its stakeholders. In some instances companies will use a corporate value statement to claim a positive effect on the world beyond what would be expected its industry.
Recent studies have questioned the validity of value statement by corporations. These studies (Weiss 2015, Anderson and Jamison 2015) argue that value statements often lack authenticity, or have immeasurable standards which make them unenforceable. These arguments further the perspective that value statements are merely creative writing assignments that are handed to underlings as a website assignment. This view would suggest that a correlation could not be found between a company’s value statement and its performance. This perspective discounts the power the value statement has as a communication tool for corporate leaders. It has been identified that some companies do not put effort into crafting and living their value statements. However, this does not mean that other companies cannot gain value, and drive performance, by effectively communicating to their stakeholders through their value statement.
The hole in the literature on the topic of corporate values that this study could help to fill is the analysis of the message that is being delivered in corporate value statements. The existing literature analyzes what the value statements say about the company, they do not analyze what the company is trying to say through their value statement. This is important because the act of espousing the values is the powerful act. It is declaring to all stakeholders the type of company that the leaders of the company aspire for it to be. This study suggests that there is a performance variable that can be correlated to companies that declare great things in their value statements. This study will attempt to identify those correlations and suggest a causal relationship between the strength of the statements and the performance of the company.

Theoretical Base
Ever since Milton Friedman questioned the concept of corporate social responsibility, there has been a debate as to the role of public corporations in society. The debate centers around the paradox that corporations acting in the interests of their stockholders have created a more prosperous society than the planned economies of socialism (Dent 2008).Adam Smith identified this paradox long ago as capitalism and free markets were emerging. In the centuries that followed capitalism, and the corporations that it bred, showed its greatest promise in the prosperity of western nations. However, it also showed the degradation and suffering possible in the slums of London, slaughter houses of Chicago and many other examples of unchecked capitalism. Society has sought a middle ground where there can be limits to unbridled capitalism that do not restrict the ability to provide wealth and prosperity to the community. In recent years, this has manifested itself in the concepts of corporate social responsibility and values driven companies. These concepts began as burdens that were put upon companies, but recently these burdens have been linked to superior performance. Companies that have embraced these responsibilities, and the culture that they build, have outperformed their peers.
The theoretical perspective of this study is that company value statements have the potential to be a powerful communication tool for corporate leaders. This perspective suggests that this communication tool is powerful enough to positively affect firm performance. The statement is so powerful because it is one of the few pieces of communication that is shared by all stakeholders in the same form. It is not filtered or altered when it is presented to employees, stockholders, vendors, customers, or the community at large. This makes it a standard that the company is held against.

Research Question and Method
The first hypothesis of this study is that a company’s performance will match the focus of its value statement. This means that a company which espouses in its value statement that it is not a bad company will achieve results that are just that; not bad. A company that espouses in its value statement that it is a good company will achieve results that are good. A company that espouses in its value statement that it is a special company will achieve special results. This hypothesis is founded on the principle that a company achieves what it sets out to achieve.
The second hypothesis takes a counter-intuitive approach to the research question, suggesting that companies who put their efforts into steadfastly making sure they are not bad are by nature special and will achieve special results. Companies that espouse special values have lost sight of the core values and will be undone by failing to simply not be bad.
The population for this study is three hundred companies that are listed on the New York Stock Exchange. Public companies were chosen because they offered a consistent approach to value statements. This excluded governmental organizations, public utilities, and non-governmental organizations because those organizations are founded to serve a public good, which makes value statements a foundation of the organization. Private companies were excluded because private owners have the control to sacrifice potential profits for personal goals. This means that value statements can reflect the personal owner instead of the organization. Public companies are unique in that they have one founding goal, to make profit for their investors. However, they have value statements that espouse higher standards and goals. This means that they believe that they must “do good in order to do well”. This connection between performance and values is what this study is attempting to identify.
The statements were published on company websites and labeled as company values. Companies were excluded from the study if the value statement was not clearly published. These companies also had consistent financial performance data that could be retrieved publicly. This allowed the companies to be identified and rated, then analyzed for performance data. A cross section of industries was chosen for the sample so that industry type could be used as a control. Each industry type included multiple companies, so that companies could be compared within their industry type.
The data from the qualitative study of value statement focus has been collected into a spreadsheet that rates each value individually. The average for each company has been taken from that dataset and put into a spreadsheet that includes the company name, industry type, and rating for each value focus.
The data will be analyzed to determine if there is a correlation between a low, medium, or high rating on all three of the value statement focuses and the stock performance for the companies. The analysis will try to isolate combinations that show a correlation, understanding that many of the companies may not have a correlation. The analysis will look for positive and negative correlations, understanding that the impact or correlation may be from a particular focus, or the lack of a particular focus.

Findings
The analysis of the corporate values statements shows an array of approaches to values statements. Many companies simply list a number of values and do not expound upon their interpretation in the company. Others add a tagline that gives an insight into their focus for the values. The majority of the values statements provide a description of how the values are embodied in the company, allowing these statements to be classified consistently. The analysis of any correlation between the focus of the value statements and the performance of the firms is still being conducted.

Implications
The findings in this study can show the potential for corporate value statements to be an effective communication tool. The study may also reinforces the positive impact of values driven companies.

References
Anderson, S.E., & Jamison, B. (2015). Do the top U.S. corporations often use the same words in their vision, mission, and value statements? Journal of Marketing and Management, 6(1), 1-15.
Dent, G. W. Jr., (2008). Stakeholder governance: A bad idea getting worse. Case Western Reserve Law Review, 58(4), 1107-1144.
Friedman, M. (1970). The social responsibility of business is to increase its profits. New York Times Magazine, September 13, 1970
Weiss, H. (2015). Capitalist normativity: Value and values. Anthropological Theory, 15(2), 239-253.

Values Corporate values statements Ethics Culture [ view full abstract ]

Values
Corporate values statements
Ethics
Culture