A Theory of Organizational Purpose

This article presents a theory of organizational purpose that is normatively neutral and, hence, can be deployed to study firms without prejudging their role in society. The argument employs two philosophical concepts: intentionality and speech acts. The first is used to conceptualize the corporate mind, which is a set of long-lived beliefs about the world-as-it-is and intentions about the world-as-it-will-be that drives organizational activity. Corporate minds allow for complex and valuable forms of social cooperation and, hence, the article argues that the purpose of any organization is to sustain a corporate mind. Five core attributes enable organizations to fulfil this purpose: those are authorization, property rights, the ability to contract, the capacity to deliberate, and conversability. Conversability allows organizations to perform speech acts: that is, to make statements about the corporate mind that are referred to in this article as meta-contractual avowals. The article provides a value-neutral account of corporate governance as the set of devices that ensures the consistency of an organization's corporate mind, meta-contractual avowals, and authorized actions. This theory sheds light upon the structure of purpose discourse and the relationship between different theories of the firm. Both authors contributed equally to this article.