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Higher Purpose, Employees, and the Firm

Author

Listed:
  • Anjan V Thakor

Abstract

I present a theory of organizational higher purpose in which, in addition to profits, the firms’ owners and employees care about a purpose that guides decisions but transcends business goals. This purpose sacrifices profits but serves a greater good that generates positive utility for the owners and employees. Some purpose-driven firms insure employees against layoffs and may pay employees more or less than firms not offering such insurance. Whether purpose-driven firms offering layoff insurance pay employees more or less than purpose-driven firms not offering this insurance depends on the owner’s purpose-linked utility relative to the employee’s. (JEL D01, D21, D24, G03, G32)

Suggested Citation

  • Anjan V Thakor, 2025. "Higher Purpose, Employees, and the Firm," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 14(3), pages 651-678.
    • Handle: RePEc:oup:rcorpf:v:14:y:2025:i:3:p:651-678.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfae018
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    More about this item

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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