Tag: research



The president of an energy company was not a believer in a business entity being able to have a higher organizational purpose … until he saw it work for others. So he went back to his company and launched the initiative. It all started with a video that described the higher purpose of the company.

The company’s new video showed its people — from truck drivers to corporate officers — and described how their daily work affected the everyday life and well-being of their community, at every level.

The first workers to watch the video stood and applauded. The video captured the company’s new statement of purpose: “We serve with our energy, the lifeblood of communities and the engine of progress.”

Anjan Thakor

Businesses can have a higher purpose. More than that, they should, finds research by WashU Olin’s Anjan Thakor and the University of Michigan’s Robert E. Quinn.

An organization of higher purpose is a social system in which the greater good has been envisioned, articulated and authenticated, they write in their just-released book “The Economics of Higher Purpose: Eight Counterintuitive Steps for Creating a Purpose-Driven Organization.”

Published August 20, the book expands on the authors’ 2018 Harvard Business Review article.  For that piece, they interviewed more than 35 CEOs and other leaders over two years. And they talked with many more for the book.

“The Economics of Higher Purpose,” from Berrett-Koehler Publishers, is organized into two parts. The first examines theories that govern organizational behavior. The second shifts from theory to practice: It offers eight steps drawn from the authors’ research and interviews with leaders of higher-purpose organizations.

Practical implications

“The steps are to help leaders discover their organizations’ purpose and imbue the organization with it”, said Thakor, the John E. Simon Professor of Finance, director of the PhD Program, and director of the WFA Center for Finance and Accounting Research at Olin.

Purpose has practical implications for a company’s financial health and competitiveness, Thakor and Quinn report. People who find meaning in their work give it their energy and dedication. They grow rather than stagnate. They do more, and they do it better.

“We like to emphasize that a higher purpose is something that transcends your usual business goals, but it also intersects with those goals,” Thakor said.

“The higher purpose becomes the arbiter of all business decisions,” he said. “It has to become the lens through which every decision is viewed.”

Like all organizations, an organization of higher purpose is a cauldron of conflict. Yet people find meaning in their work and in their relationships despite the conflicts, Thakor said. They share a vision and are fully engaged.

In an organization of higher purpose, people interact with one another with respect and engage in constructive confrontation. Trust is continually repaired, and conversations are authentic. The people have a win-win mentality, and positive peer pressure emerges to support high levels of collaboration, the authors discovered. Leadership not only flows from the top down, but it also emerges from the bottom up. Employees believe they work in an organization of excellence.

The paradox

As a consequence of adopting a higher purpose, the organization often makes short-term economic sacrifices but benefits from long-term economic gains.

“The paradox of organizational higher purpose is that it actually does improve financial and economic performance but only if you don’t do it primarily for that reason,” Thakor said. If purpose is undertaken solely for economic gain, it loses authenticity and credibility, and fails to produce positive economic outcomes.

Perhaps the most important finding of the authors’ research is the importance of the authenticity. If the purpose is just a PR gimmick, like a slogan printed on posters and plastered on walls, employees will see right through it, Thakor said. “Everybody will look at it and say, ‘OK. Fine.’

“That’s very different from what we’re talking about,” he said. “This is about values you truly believe in and practice.”

Thakor and Quinn have been scholars of higher-purpose firms for a long time, and they set out to write the definitive book on it. They examined the theories that govern organizational behavior, some of which also are formally articulated in economics.

“We believe these conventional assumptions of economics are valid but incomplete,” Thakor said. “We offer a new logic that transcends the conventional assumptions and includes them.”

They show that higher purpose helps to resolve the classic principal-agent problem at the heart of microeconomics. They also explain why numerous books and articles on higher purpose have failed to gain traction in the workplace.

From theory to practice

How to bring this theory to practice? Here are eight counterintuitive guidelines, which are drawn from their research and interviews with leaders of higher-purpose organization:

  • Envision a purpose-driven organization
  • Discover the purpose
  • Meet the need for authenticity
  • Turn the higher purpose into a constant arbiter of all business decisions
  • Stimulate learning
  • Turn mid-level managers into purpose-driven leaders
  • Connect the people to the purpose
  • Unleash the positive energizers

“Although a higher purpose does not guarantee economic benefits, we have seen impressive results in many organizations,” Thakor said. “Our study and other research suggest positive results, both in operating financial performance and performance measurement.”

So purpose is not just a lofty ideal. It has practical implications for a company’s financial health and competitiveness, according to the book. Allowing people to find meaning in their work means they can grow, do more, do better. Tap into that employee empowerment, and you can transform an entire organization.

This article is partially excerpted from the book “The Economics of Higher Purpose.”


Imagine you and your significant other finally carved out some time for a vacation getaway. You did your research—booked flights, picked a few promising restaurants, dug up your favorite fanny pack—and now it’s time to find a place to stay.

You’ve heard a lot about Airbnb, so you decide to give it a try. After some deliberation, you’ve both agreed on a place within walking distance of all the local attractions, so you send a request to the owner.

But after a couple hours, you get a message from Airbnb saying that your request has been denied without explanation. For a significant number of Airbnb users, this scenario is all too real.

Dennis Zhang

Dennis Zhang

In the Boeing Center for Supply Chain Innovation’s latest video, Dennis Zhang, Olin assistant professor of operations and manufacturing management, discusses the topic of racial discrimination on peer-to-peer platforms.

According to Zhang, Airbnb requests made by accounts with distinctly African American names were 19 percent less likely to be accepted compared to other accounts. However, if those accounts have additional review data (i.e., at least one positive or negative review), all accounts are equally likely to be accepted.

Zhang believes that people require a bit more information to nudge them in a non-discriminatory direction. He thinks that if Airbnb offered more information within the platform, it would reduce the likelihood of discrimination by those looking to rent out their space.

Zhang goes on to mention that platforms conducting business via peer-to-peer transactions face a higher likelihood of discrimination. He says that discovering how discrimination happens on those platforms is a critical step to ensuring equal consumer treatment. Zhang’s research emphasizes the importance of information, and hopes it will be effective in the fight against discrimination.

[RELATED: Airbnb nondiscrimination policy may backfire]


In this installment of The Boeing Center’s In the Pipeline, Kaitlin Daniels, assistant professor of operations & manufacturing management, shares some motivation for her recent research on the “gig economy,” which engages contract workers for short-term work. A perfect example of a gig economy is Uber.

Daniels is particularly interested in the operational challenges companies face in the gig economy. Gig economy workers get to decide when, where, and how long they will work, in contrast to the traditional employment arrangement, where the firm directly controls its workers’ shifts. Daniels focuses particularly on the incentives offered by gig economy firms, and the policy implications of those incentives.

Another area of focus in Daniels’ research is surge pricing, or the increase in cost to consumers during times of high demand. While she notes that surge pricing certainly improves Uber’s profitability, she wonders if the practice is actually better for consumers. Daniels is also interested in driver welfare. “There has been a lot of talk recently about how to ensure that drivers or gig economy workers are ensured some base level of welfare in the same way that we protect employees,” Daniels said. As interest and opportunity in the gig economy rises, research on the topic will become increasingly important.

In the Pipeline is a Boeing Center digital series that highlights in-progress academic research in the fields of supply chain, risk management, and operational excellence. It features professors from Washington University’s Olin Business School, and demonstrates The Boeing Center’s ongoing pursuit of cutting-edge research and knowledge dissemination.

For more supply chain digital content and cutting-edge research, check us out on the socials [@theboeingcenter] and download our app on iOS or Android for access to exclusive content and events!


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As the passive investing strategy has taken the market by storm, criticism of index funds and common ownership have increased: Are index funds evil (as asked by The Atlantic)? Are they bad for the economy?

Common ownership came under fire last year with a study finding that “airlines compete less vigorously on price because they are owned by the same handful of investors,” writes David Nicklaus.

However, in an interview with The St. Louis Post-Dispatch, Olin’s Todd Gormley, associate professor of finance, provides a defense for companies with higher index-fund ownership: They actually have better governance.

An active money manager who doesn’t like the way a company is run can simply sell the shares. The passive manager doesn’t have that choice. “In their view, the only way they can protect themselves is to make sure there are good governance structures in place,” Gormley said.

Besides, he said, long-term passive investors often back activist hedge funds that attempt to shake up a company. “We found a positive influence on governance,” Gormley said. “The presence of these index funds makes it easier for other investors, the activists, to get into a company and provide discipline over management.”

Gormley was recently quoted in the Princeton Alumni Weekly on the same subject, where he discusses the evidence of some positive effects of passive ownership.

Read the full article on The St. Louis Post-Dispatch and Princeton Alumni Weekly.




The value of empowering employees to make decisions is well known. So is the importance of holding workers accountable. And employers often go to great lengths to provide incentives for great performance among team members.

For the first time, however, research suggests that companies simply cannot achieve optimal performance without a balance of all three components: empowered decision making, accountability for performance, and incentives for strong work.

Using purchasing card data from 586 organizations, Olin Professor Mahendra Gupta and his coauthors analyzed the effect of a balanced deployment of these strategies. The findings showed companies that delegated decision-making, used a performance measurement system, and provided managers with incentives outperformed the companies with a different organizational structure.

Purchasing cards or “P-cards” allow corporate managers to make company purchases on a credit card that aggregates company purchases, allowing the firm to pay a single invoice for such company purchases. The P-card data gave researchers an entry point into the question by allowing them to examine the effects of delegating decision-making to a purchasing card administrator, as well as using a performance measurement system to track the administrator’s performance, and incentives to nudge the administrator’s behavior in the right direction.

“The study provides unique empirical evidence on the relevance of organizational architecture as a concept to explain organizational performance,” the authors wrote.

Gupta, former dean and Geraldine J. and Robert L. Virgil Professor of Accounting, said the findings show the three components are akin to a three-legged stool. If any leg is missing, the structure cannot stand.

Update: View a recording of Mahendra Gupta’s presentation below. Read a deeper summary of the research paper on Olin’s Research that Impacts Business page.