research paper on fortune 500 company

Culture 500

Culture matters. now we can measure it..

Measuring Culture in Leading Companies

Introducing the mit smr /glassdoor culture 500, june 24, 2019, by: donald sull, charles sull, and andrew chamberlain, culture matters for corporate performance.

On Feb. 5, 2018, Wells Fargo, then the third largest bank in the United States by assets, lost nearly $30 billion in market capitalization in a single day. The Federal Reserve had barred the bank from growing, as a penalty for opening more than 2 million accounts without authorization from customers. 1 An investigation commissioned by the bank’s independent directors concluded that the root cause of the fraudulent behavior was the culture of the division whose employees opened the accounts. 2

See how major companies in the world economy rank across the nine dimensions of corporate culture, based on more than one million Glassdoor reviews.

Explore the Culture 500 »

The link between a toxic corporate culture and unethical behavior would come as no surprise to most executives. According to a recent survey, 85% of CEOs and CFOs believe that an unhealthy corporate culture leads to unethical behavior. 3 The cost of a dysfunctional culture can be substantial. Public companies caught committing corporate fraud lose, on average, 25% to 44% of the value of their equity. 4

On the flip side, a healthy company culture can turbocharge corporate performance. The same survey of CEOs and CFOs found that 9 out of 10 believe that improving corporate culture would increase their company’s value, and nearly 80% ranked culture among the five most important factors driving their company’s valuation. A growing body of research by financial economists has shown that a good corporate culture is correlated with higher profitability and returns to shareholders. 5 Companies listed among the best places to work based on their corporate culture, for example, delivered nearly 20% higher returns to shareholders than comparable companies over a five-year period. 6

Measuring Culture With Glassdoor Data

Culture matters for performance, but how can we quantify corporate culture and compare it across organizations? To understand how a company’s culture plays out in practice, we would need candid data from a large cross section of employees. To dig beneath simplistic assessments of culture as good or bad requires nuanced descriptions of the specific elements of corporate culture that are working well or poorly. Consistent data across a large number of companies is required to benchmark corporate cultures. Finally, linking culture to results requires data that can reliably predict corporate outcomes, financial performance, or innovation.

As it turns out, such a data source exists, and you may have used it when researching potential employers. Glassdoor is one of the largest job and recruiting sites in the world. Since its launch in 2008, Glassdoor has collected more than 49 million reviews and employee insights, covering approximately 900,000 organizations. Employees submit anonymous reviews, which means they can offer their candid opinions without fear of reprisal. Companies, moreover, cannot remove critical reviews. By aggregating these reviews, we can construct a comprehensive picture of a company’s culture that moves beyond the anecdotes and personal observations that managers often rely on to understand their corporate culture.

On Glassdoor, employees rate their company’s culture and values on a five-point scale, but these quantitative scores alone shed little insight on the specifics of a company’s culture. The real value for understanding and measuring culture lies in the free text responses that each reviewer provides. Here, employees describe — in their own words — the pros and cons of working at a particular company and offer advice to management. By analyzing this textual data, we can assess how well a company is doing on critical dimensions of culture — including diversity, collaboration, or integrity — in the eyes of employees.

Glassdoor reviews also provide clues to a company’s future performance. Wells Fargo’s reputation plummeted after regulators announced the bank’s financial fraud, but Glassdoor reviews signaled the bank had a problem with corporate ethics well before the fraud was made public. 7 A series of studies have used Glassdoor data to predict a range of corporate outcomes, including future profitability, stock market returns, innovation, customer satisfaction, and financial fraud. 8 In the years prior to the scandal, Wells Fargo employees were nearly twice as likely to discuss integrity in their reviews, and half as likely to discuss the bank’s ethics in positive terms compared with other large banks. 9

To create the MIT SMR /Glassdoor Culture 500, we analyzed 1.2 million reviews using a natural language processing (NLP) methodology that accurately classifies free text into more than 90 culture-related topics. The combination of Glassdoor’s rich data set and our NLP algorithms allows us to present, for the first time, an online tool to compare the corporate cultures across companies that collectively employ 34 million people — the equivalent of one-quarter of private sector employment in the United States. 10 This article describes how we define culture, the advantages of the Glassdoor reviews, how we analyzed the free text, and how to use the Culture 500 interactive tool to see how companies’ cultures stack up.

Defining Culture as Values and Norms

Most large companies describe their official corporate culture in terms of the values they want employees to practice on a day-to-day basis. Over 75% of the Culture 500 companies published an official statement of their corporate culture listing the specific values, such as integrity, customer-centricity, or respect, that together defined the culture the company aspired to achieve. 11 Of course, employees do not always live up to their company’s espoused values, but official statements nevertheless shed light on which elements of corporate culture executives consider most important.

For the Culture 500, we follow Charles O’Reilly and Jennifer Chatman, who define organizational culture as “a set of norms and values that are widely shared and strongly held throughout the organization.” 12 Shared values express what is important to employees, while norms provide clear guidance on behavior that is consistent with those values. Employees might all agree, for example, that integrity is worthwhile. But an organization needs norms — such as employees speak up when they see ethical breaches and managers protect whistle-blowers — to translate an abstract value like integrity into concrete behavior. This definition has been widely adopted by researchers studying the relationship between corporate culture and performance. 13

Identifying the Big Nine Cultural Values

Given the diversity of corporate values across different companies, we faced the practical question of addressing which values matter most. In a separate study, we identified more than 60 distinct values that companies listed in their corporate values statements. 14 Measuring and reporting dozens of values would be overwhelming, so we narrowed down the values to the nine that were cited most frequently by companies. 15 These values, which we call the Big Nine, are agility, collaboration, customer, diversity, execution, innovation, integrity, performance, and respect.

Big Nine Cultural Values

For each of the Big Nine, we calculate the percentage of each company’s Glassdoor reviews that mention the value (incidence) as well as the percentage of reviews that discuss the value in positive terms (sentiment). The Culture 500 interactive tool provides users a snapshot of how frequently and positively employees within a company talk about the Big Nine values.

To illustrate culture at a glance within a company, consider the example of Amazon. (See “What Culture Looks Like at Amazon.”)

What Culture Looks Like at Amazon

This visualization shows how employees at Amazon rate culture across the Big Nine values in Glassdoor reviews. The values are normalized so that 0 is the average score for each Big Nine value for the company, and the axis labels denote standard deviations above or below the average when it comes to frequency (how often employees discuss this value) and sentiment (how positively employees discuss this value).

The values are normalized so that 0 is the average score for the Big 9 for the company, and the axis labels denote standard deviations above or below the average frequency or sentiment

Consistent with the company’s official culture, which emphasizes customer obsession and innovation, we see that Amazon employees were most positive about innovation and assessed the retailer’s customer orientation very favorably as well. On the negative side, Amazon employees were much less enthusiastic about how well the company respects its workers.

Internally, Amazon employees rate the company highly on innovation, but how does Amazon stack up to other large information technology companies when it comes to innovation? The Culture 500 allows users to benchmark companies against their competitors on each of the Big Nine values. (See “How Tech Giants Compare on Innovation.”)

How Tech Giants Compare on Innovation

This visualization shows how companies considered giants in the tech industry measure up on innovation in Glassdoor reviews. The values are normalized so that 0 is the average score for innovation for all tech giants, and the axis labels denote standard deviations above or below this industry average when it comes to frequency (how often employees discuss this value) and sentiment (how positively employees discuss this value).

The values in this visualization are normalized so that 0 is the average score for agility for all big tech companies, and the axis labels denote standard deviations above or below the industry average frequency or sentiment

This industry comparison suggests that Amazon excels at innovation, even when benchmarked against other tech giants.

With the Culture 500 interactive tool, users can also construct their own customized set of companies and compare them along any of the Big Nine values. For instance, we can look at how Amazon measures up against companies from other industries — Nordstrom, Disney Parks, and the Four Seasons Hotels and Resorts — that enjoy excellent reputations for customer centricity. (See “Comparing Customer-Centricity Across Different Companies.”)

Comparing Customer-Centricity Across Different Companies

The Culture 500 allows direct company comparisons across industries. Here, we see how customer focus at Amazon compares with other customer-obsessed companies from other industries. The numbers denote percentiles across all companies in the Culture 500 sample.

Each company’s sentiment for a value is expressed as a percentile of all companies in the sample, which allows direct comparisons across industries.

Using Glassdoor Data to Understand Corporate Culture

Glassdoor is a gold mine of information for job seekers, and the Culture 500 demonstrates how employee reviews can help leaders understand their organization’s culture as well. In their open text responses, employees are free to talk about whatever matters most to them. Nearly all employees — 93% by our analysis — discuss some element of culture in their reviews, and 41% discuss one or more of the Big Nine values. 16

Any single review could reflect an employee’s idiosyncratic view, but when hundreds or thousands of reviews are aggregated together, they paint an accurate picture of a company’s culture. The average company in our sample had 2,182 reviews, which represent about 4% of its total employment. 17 To put this number in perspective, consider that the typical political poll surveys a sample of 1,000 people — approximately 0.001% of all registered voters in the United States — to assess the political climate. 18

Understanding Spikes in Glassdoor Reviews

A large sample of reviews means nothing unless they accurately represent the views of a company’s workforce as a whole. A common concern with online reviews is that they skew toward a polarized distribution with many glowing reviews, a disproportionate number of extremely negative ones, and relatively few moderate opinions. The polarization of online reviews is well documented in a range of settings, from products on Amazon to restaurant reviews on Yelp. 19 This polarized pattern occurs when only those users with extremely positive or extremely negative views are motivated to write a review. 20

Yelp Versus Glassdoor Reviews

Like many online ratings platforms, Yelp reviews tend toward the extremes of very positive or very negative. Glassdoor minimizes the polarization through a series of user policies, creating a more equal and representative distribution of user ratings.

Data from 177 million Yelp reviews across all categories from https://www.yelp.com/factsheet . Distribution of overall rating for 1.2 million reviews for Culture 500 companies.

Unlike Yelp, Glassdoor reviews gravitate toward the center of the distribution with fewer extremely positive or negative ratings. (See “Yelp Versus Glassdoor Reviews.”) 21 A recent study compared the polarization of reviews across online rating platforms based on the percentage of extreme reviews. 22 Of the 25 online platforms analyzed, 21 were more polarized than Glassdoor.

Glassdoor minimizes polarization through a series of policies designed to promote honest and representative reviews. Employees, for example, can post no more than one review per company per year. This prevents vocal workers from stuffing the ballot box. Glassdoor has also minimized polarization with its “give to get” policy, which requires users to leave a review in order to access content on the website.

Reviews might also not present an accurate picture of organizational culture if companies incentivize or pressure employees to write glowing evaluations. Glassdoor has explicit community standards that prohibit companies from coercing, coaching, or incentivizing positive reviews. The company uses algorithms to detect content that might violate community standards, and users can flag questionable content. Glassdoor moderators review all flagged content and reject approximately 10% of submitted reviews deemed to violate community standards. There are also consequences for companies that try to cheat — employers caught violating community standards can be banned from consideration for Glassdoor’s Best Places to Work list and other awards.

We would expect to see large spikes in the number of positive reviews if companies were trying to incentivize reviews, but not all spikes indicate a company is gaming the system. Several factors can account for a surge in the number of reviews a company receives in a month. Some spikes occur purely by chance. 23 News events — positive or negative — can also cause spikes. Intel, for example, experienced an upsurge in the number of reviews after announcing it would exit the smartphone chip market and lay off 12,000 employees. 24 Companies can also ask employees to write honest reviews without attempting to influence the content. Increasing the number of reviews without skewing their distribution is good news since it provides us with more data to analyze.

To detect potentially problematic reviews, we identified months for companies that saw two or more standard deviations above the monthly mean for the number of reviews and the overall rating for the company, which we call positive spikes. Positive spikes were exceedingly rare — accounting for 0.1% of the company months in our sample. Nor do all positive spike months result from companies violating community standards. Some positive spikes happen by chance and others could be triggered by positive news. To be on the safe side, however, we dropped all positive spike months from our sample. When the positive spikes were removed, the remaining months with a large number of reviews were indistinguishable from our full sample. 25

Codifying Culture With Machine Learning and Human Expertise

When describing culture, Glassdoor reviewers deploy rich and varied language — full of slang, idioms, acronyms, buzzwords, and colorful phrases. Nearly 80,000 employees discussed integrity in their reviews, for example, but less than 5,000 mentioned that specific word. Instead, employees used hundreds of synonyms and antonyms (ethics, deceit, amoral), idioms (sweep under the rug, cut corners), and slang (shady, shenanigans). Their language paints a nuanced picture of corporate culture but also defies simplistic approaches to textual analysis.

We initially analyzed the Glassdoor data with standard natural language processing tools, but the results were disappointing. 26 To accurately classify text into topics that matter to managers and researchers, we built a custom dictionary from the ground up by combining machine learning tools and human expertise. This approach dramatically improved the accuracy of our models. 27

To create a customized machine learning dictionary, we began by selecting topics that companies frequently included in their corporate values or that had been researched extensively. We then constructed a preliminary dictionary of high-fidelity words or phrases for each topic, and two of our research team members analyzed a random sample of at least 20 reviews that included each term. Terms that were at least 90% accurate were included in the dictionary for a topic. Ethical , for example, was a first ballot shoo-in for the integrity dictionary. If a word or phrase was less than 30% accurate, we dropped it. Terms that fell in between were fine-tuned until they could be included in the dictionary or dropped. This bootstrapping approach produced tens of thousands of terms, which human experts reviewed and refined.

To improve the accuracy of our results, we specified the sequence of words in a phrase — backdating has a very different meaning than dating back — as well as the distance between the words. Rather than applying a one-size-fits-all approach to handling close variants of a word, we differentiated between different uses. Employees, for example, typically use the word management to describe top leaders, manager when talking about their own boss, and manage to describe, for example, how they manage to get their work done despite distractions. We also identified words that meant a reviewer was not talking about a specific topic. The word vision typically refers to a company’s strategy, unless it appears in a sentence with dental , pension , or 401(k) , in which case it describes a company’s benefits package.

For each term, we specified its component words, close variants, sequence and distance between words in a phrase, exclusion terms, and common misspellings. We also incorporated company-specific language. In most companies, for example, a shopper is a customer, but in Instacart a shopper is a worker. We reviewed the refined terms in context and also tested their fit with a topic by using a variety of algorithmic tools. This painstaking process took three years and produced a dictionary consisting of over 20,000 highly accurate terms mapping to more than 90 topics.

Exploring the Culture 500 Companies

The average company in our sample has over 2,000 employee reviews — the equivalent of three full-length books’ worth of textual data. 28 Nearly all of the organizations in the Culture 500 are for-profit companies, and most are headquartered in the U.S. (We have included some international companies with large numbers of employees based in the U.S.) Regardless of where the company is headquartered, we included reviews only from employees based in the U.S.

Companies in the Culture 500 are divided into 33 clearly defined industries, with an average of 18 companies per industry. 29 (See “Overview of Culture 500 Industries.”) Organizing companies into industries with at least 10 competitors allows for meaningful comparisons of corporate culture. It is not particularly useful to compare Amazon to Five Guys Burgers or Tim Hortons on innovation, but benchmarking Amazon against Facebook, Alphabet, Apple, and Netflix provides real insight. Companies that compete in multiple industries — Johnson & Johnson, for example, makes medical devices, drugs, and consumer goods — are included in more than one industry. We also include lists that cut across industries, like companies with the most patents and the most-admired companies. 30

Overview of Culture 500 Industries

The Culture 500 represents 33 industries with an average of 18 companies within each industry. The number to the right of each bar graph denotes the number of companies included in that industry.

How Leaders Can Use the Culture 500

The Culture 500 provides a data-based view of the corporate cultures of some of the largest and most powerful organizations in the world. Leaders of these companies can benchmark their organizations against direct competitors and also best-in-class corporations that excel, for example, in the kind of agility, innovation, and customer orientation required to thrive in dynamic markets. Corporate leaders can also gauge whether employees believe they are living up to their stated values by, for instance, respecting every worker, acting with integrity, and providing an inclusive environment for a diverse workforce. Armed with these insights, executives can highlight cultural strengths to incorporate into their employer brand, spot warning signals for potential problems, and identify opportunities to improve their culture. They can also analyze acquisition and partnership candidates to identify cultural mismatches that could derail deals.

Entrepreneurs, likewise, can use the Culture 500 to assess the cultural fit between their startup and a large corporation before entering into a partnership or being acquired. They can identify companies or industries that struggle with innovation or customer orientation that could be targets for disruption. (See “Innovation Sentiment by Industry in the Culture 500,” which ranks industries in terms of employees’ assessment of innovation. It shows how employee reviews can predict industry changes, such as fintech startups’ disruption of financial services — including regional banks, insurance, and investment services industries.)

Innovation Sentiment by Industry in the Culture 500

This chart shows which industry’s employees rate innovation most favorably within Glassdoor reviews. This chart is based on over 1.2 million reviews. The numbers denote the number of standard deviations above or below the mean sentiment score across all industries.

Corporate culture matters beyond its power to drive financial results. The average employee spends 40% of her waking hours at work. A vibrant culture can help people thrive professionally, enjoy their job, and find meaning in their work. A toxic culture, in contrast, can be soul destroying. Large corporations are arguably the most powerful players in the global economy. By committing to values like diversity, integrity, and respect, influential companies can raise the bar of what is possible and desirable for competitors, suppliers, partners, and startups. Organizations that compromise their values breed cynicism and undermine the norms required for society as a whole to flourish. The Culture 500 celebrates excellence in culture, rewarding it with public recognition, and spurring it forward by identifying areas where some of the world’s most influential companies can improve their culture.

About the Partners

Mit sloan management review.

Glassdoor combines all the latest jobs with millions of reviews and insights to make it easy for people to find a job that is uniquely right for them. The company is on a mission to help people everywhere find a job and company they love. In pursuit of the mission, Glassdoor helps employers hire truly informed candidates at scale through effective recruiting solutions like job advertising and employer branding products. Launched in 2008, Glassdoor now has reviews and insights for approximately 900,000 companies located in more than 190 countries.

CultureX delivers actionable insights organizations need to measurably improve their cultures. Harnessing cutting-edge artificial intelligence developed at MIT, CultureX measures culture with high accuracy and pinpoints concrete ways to improve. Based on decades of research and work with dozens of Fortune Global 500 companies, CultureX provides evidence-based interventions tailored to the client’s unique needs. CultureX builds vibrant cultures to enrich the lives of employees and win in the marketplace.

About the Authors

Donald Sull is a senior lecturer at the MIT Sloan School of Management and cofounder of CultureX. Charles Sull is a cofounder of CultureX. Andrew Chamberlain is chief economist at Glassdoor.

Contributors

Desiree Barry, Sean Brown, Carolyn Ann Geason, Ryan Melehan, Allyson MacDonald, Lauren Rosano, Pedro Henrique Santos, James Yoder

1. E. Glazer, “ Fed Rebuke Costs Wells Fargo About $29 Billion in Lost Market Value ,” The Wall Street Journal, Feb. 5, 2018.

2. Wells Fargo, “ Independent Directors of the Board of Wells Fargo & Company Sales Practices Investigation Report ,” April 10, 2017.

3. J.R. Graham, C.R. Harvey, J. Popadek, et al., “ Corporate Culture: Evidence From the Field ,” working paper 23255, National Bureau of Economic Research, Cambridge, Massachusetts, March 2017.

4. A. Dyck, A. Morse, and L. Zingales, “ How Pervasive Is Corporate Fraud? ” working paper, April 2017.

5. A. Edmans, “Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices,” Journal of Financial Economics 101, no. 3 (September 2011): 621-640; L. Guiso, P. Sapienza, and L. Zingales, “The Value of Corporate Culture,” Journal of Financial Economics 117, no. 1 (July 2015): 60-76; E. Symitsi, P. Stamolampros, and G. Daskalakis, “Employees’ Online Reviews and Equity Prices,” Economics Letters 162, issue C (2018): 53-55; T.C. Green, R. Huang, Q. Wen, et al., “ Crowdsourced Employer Reviews and Stock Returns ,” Journal of Financial Economics, forthcoming; and A. Chamberlain, “ Does Company Culture Pay Off? Analyzing Stock Performance of ‘Best Places to Work’ Companies ,” Glassdoor research report, Mill Valley, California, March 2015.

6. Edmans, “Does the Stock Market Fully Value Intangibles?”

7. The Harris Poll, “ Corporate Reputation Politically Polarized as Companies Wrestle With Taking a Stand for Their Values ,” PR Newswire, Feb. 9, 2017, www.prnewswire.com.

8. For articles using Glassdoor data to predict financial returns, see Green et al., “ Crowdsourced Employer Reviews and Stock Returns ” and Chamberlain, “ Does Company Culture Pay Off? Analyzing Stock Performance of ‘Best Places to Work’ Companies ”; M. Huang, P. Li, F. Meschke, et al., “Family Firms, Employee Satisfaction, and Corporate Performance,” Journal of Corporate Finance 34 (October 2015): 108-127; J. Hales, J.R. Moon Jr., and L.A. Swenson, “A New Era of Voluntary Disclosure? Empirical Evidence on How Employee Postings on Social Media Relate to Future Corporate Disclosures,” Accounting, Organizations, and Society 68-69 (July 2018): 88-108. For research using Glassdoor data to predict financial fraud, see Y. Ji, O. Rozenbaum, and K.T. Welch, “ Corporate Culture and Financial Reporting Risk: Looking Through the Glassdoor,” working paper, SSRN, June 1, 2017; M. Huang, A. Masli, F. Meschke, et al., “Clients’ Workplace Environment and Corporate Audits,” Auditing: A Journal of Practice & Theory 36, no. 4 (November 2017): 89-113. For research on corporate culture and innovation, see M. Corritore, A. Goldberg, and S.B. Srivastava, “Duality in Diversity: How Intrapersonal and Interpersonal Heterogeneity Relate to Firm Performance,” Administrative Science Quarterly, April 17, 2019; K-T. Nguyen, “Trust and Innovation Within the Firm: Evidence From Matched CEO-Firm Data,” working paper, London School of Economics, January 2019. For research on culture and customer satisfaction, see J.S. Wolter, D. Bock, J. Mackey, et al., “Employee Satisfaction Trajectories and Their Effect on Customer Satisfaction and Repatronage Intentions,” Journal of the Academy of Marketing Science, May 18, 2019.

9. On Sept. 8, 2016, the Consumer Financial Protection Bureau (CFPB) announced Wells Fargo would pay $185 million in fines. In the two years prior to the CFPB’s action, Wells Fargo employees mentioned terms related to integrity, honesty, and ethics 1.8 times more frequently than employees in other large, diversified financial service firms in our sample over the same time period. When ethical issues were raised, Wells Fargo employees discussed them in positive terms at less than half the frequency (48%) than employees in other diversified financial institutions expressed positive sentiment about their bank’s ethics.

10. According to the U.S. Bureau of Labor Statistics , approximately 128 million people were employed in the private sector in the United States in April 2019.

11. D. Sull, S. Turconi, and C. Sull, “When It Comes to Corporate Culture, Does Your Company Walk the Talk?” working paper, MIT Sloan School of Management, Cambridge, Massachusetts. Guiso and his coauthors found that 85% of companies in the S&P 500 in 2011 listed their official values on their corporate website. See Guiso et al., “The Value of Corporate Culture”: 64.

12. C.A. O’Reilly and J.A. Chatman, “Culture as Social Control: Corporations, Cults, and Commitment,” in Research in Organizational Behavior, Vol. 18, eds. B.M. Staw and L.L. Cummings (Greenwich, Connecticut: JAI Press, 1996): 166.

13. See, for example, Guiso et al., “The Value of Corporate Culture”; L. Zingales, “The ‘Cultural Revolution’ in Finance,” Journal of Financial Economics 117, no. 1 (July 2015); Graham et al., “Corporate Culture”; Corritore et al., “Duality in Diversity”; J.A. Chatman, D.F. Caldwell, C.A. O’Reilly, et al., “Parsing Organizational Culture: How the Norm for Adaptability Influences the Relationship Between Culture Consensus and Financial Performance in High-Technology Firms,” Journal of Organizational Behavior 35, no. 6 (August 2014): 785-808.

14. The first two authors along with Stefano Turconi reviewed the websites of over 600 large companies (including all companies in the Culture 500). We identified 64 distinct values that were listed by at least 1% of the companies in our sample. For a list of the values and a description of our methodology, see Sull et al. “When It Comes to Corporate Culture.” The Organizational Culture Profile, a compendium of corporate values widely used by management scholars, also lists more than 60 values. See C.A. O’Reilly, J. Chatman, and D.F. Caldwell, “People and Organizational Culture: A Profile Comparison Approach to Assessing Person-Organization Fit,” Academy of Management Journal 34, no. 3 (1991): 487-516.

15. We began with a list of the 12 most commonly listed official values among companies in our sample. The three values we excluded from the Big Nine are people, excellence, and social responsibility. The term “people,” as commonly used in company descriptions and value statements (“We believe in people,” for example), was too vague to measure in the Glassdoor data. The term “excellence” similarly was used as a general term to refer to multiple organizational dimensions and values. Finally, social responsibility relates more to a company’s interactions with external stakeholders than with day-to-day behavior of employees throughout the organization, so it was excluded from the final list. We consolidated closely related values together for integrity (such as honesty), agility (speed and entrepreneurship), and execution (accountability). The Big Nine are broadly consistent with values identified by earlier research. All of the Big Nine were included among the values listed in the Organizational Culture Profile. Charles O’Reilly and his coauthors conducted a principal components analysis of the values listed in the OCP and identified six broad dimensions of culture, which they labeled adaptability, integrity, collaborative, results oriented, customer oriented, and detail oriented. See C.A. O’Reilly, D.F. Caldwell, J.A. Chatman, et al., “The Promise and Problems of Organizational Culture: CEO Personality, Culture, and Firm Performance,” Group & Organization Management 39, no. 6 (December 2014): 595-625. There is a one-to-one correspondence between four of their six dimensions and the Big Nine values (integrity, collaboration, results oriented/performance, and customer). The term “detail” only appeared twice in the descriptions of the 3,359 values we coded, and did not pass the frequency threshold required for inclusion as a separate value. We divided their dimension of adaptability into agility and innovation in the Big Nine. Diversity, respect, and execution were not included among the O’Reilly et al. cultural dimensions.

16. Nearly all (93%) of reviews mentioned at least one of the more than 90 topics that our algorithm codes. These represent a broad set of cultural topics, including values that are not included in the Big Nine (e.g., ambition, curiosity) as well as topics such as perks, work space, and benefits that are sometimes considered part of corporate culture even if they are not values.

17. Our analysis is based on reviews from Jan. 1, 2014, and March 31, 2019. Across our full sample of 531 organizations, the average number of reviews was 2,182 and the median number of reviews was 1,221. We compared the number of reviews to the number of employees two ways. First, we used Glassdoor’s estimated number of employees per employer. For the 531 companies in our sample, the average number of reviews per average number of employees was 3.4%, and the median number of reviews per median number of employees was 4.5% using the Glassdoor employee data. To validate these estimates, we took a subset of 327 publicly listed companies in our sample that listed their total employment in Securities and Exchange Commission filings. For this subset, the average number of reviews was 2,186, which represented 4.1% of the average number of employees for this subset of public companies. The median number of employees was 1,172, which represented 3.7% of the median number of employees in the subset of 327 companies.

18. For Gallup’s methodology and sample size, see “ How Does the Gallup U.S. Poll Work? ” www.gallup.com. For another reference point, Fortune magazine surveys approximately 5% of participating companies’ workforce to assess corporate culture when compiling its annual Best Companies to Work For list. See also: Guiso et al., “The Value of Corporate Culture”: 65.

19. For evidence of polarized online reviews, see J.A. Chevalier and D. Mayzlin, “The Effect of Word of Mouth on Sales: Online Book Reviews,” Journal of Marketing Research 43, no. 3 (Aug. 1, 2006): 345-354; N. Hu, P.A. Pavlou, and J. Zhang, “Why Do Online Product Reviews Have a J-Shaped Distribution? Overcoming Biases in Online Word-of-Mouth Communication,” Communications of the ACM 52, no. 10 (March 1, 2007): 144-147; M. Luca and G. Zervas, “Fake It ’Til You Make It: Reputation, Competition, and Yelp Review Fraud,” Management Science 62, no. 12 (December 2016): 3393-3672; S.F. Lu and H. Rui, “Can We Trust Online Physician Ratings? Evidence From Cardiac Surgeons in Florida,” Management Science 64, no. 6 (June 2018): 2473-2972.

20. For recent reviews of how self-selection of reviewers influences the distribution of online reviews, see X. Li and L.M. Hitt, “Self-Selection and Information Role of Online Product Reviews,” Information Systems Research 19, no. 4 (December 2008): 397-521. For an overview of factors that induce people to write online reviews, see W.W. Moe, D.A. Schweidel, and M. Trusov, “What Influences Customers’ Online Comments,” MIT Sloan Management Review 53, no. 1 (fall 2011): 14-16.

21. Yelp, “ An Introduction to Yelp Metrics ,” review of cumulative Yelp reviews across all categories through Dec. 31, 2018, www.yelp.com.

22. Verena Schoenmueller and her coauthors define polarity as the number of extreme reviews (1 and 5 on a five-point scale) divided by the total number of reviews, and measure polarity across 25 online review platforms. They find that polarity varies from 9% (RateBeer) to 93% (Frag Mutti). See V. Schoenmueller, O. Netzer, and F. Stahl, “ The Extreme Distribution of Online Reviews: Prevalence, Drivers, and Implications ,” Columbia Business School research paper no. 18-10, Feb. 15, 2019. Using the author’s measure of polarity, the distribution of overall ratings in the Culture 500 sample is 29% (19% five star + 10% one star), which we compared to the polarity scores for the 25 online rating platforms listed in Table 1 of the paper.

23. We tallied the number of reviews for each Culture 500 company on a monthly basis and identified those months when a company experienced a significant surge in reviews (two or more standard deviations above the average number of reviews that company received in a month). We called these spike months. There were 1,079 spike months, which represented 3.2% of all company months. If the volume of reviews were normally distributed, we would expect 2.3% of months to be spikes.

24. V. Savov, “ Intel’s New Smartphone Strategy Is to Quit ,” The Verge, May 3, 2016, www.theverge.com.

25. After we eliminated the 47 positive spike months from our sample, we compared the remaining 1,032 spike months to the full sample of all company months. The remaining spike months were 0.06 standard deviations above the average overall rating for all months in our sample. The percentage of five-star reviews was 0.04 standard deviations above the full sample mean.

26. We initially used latent Dirichlet allocation (LDA) to allocate terms to topics, but this approach produced only a few useful categories (e.g., benefits, perks, job security). The other topics generated by LDA were either too broad to be useful (management, processes) or lumped together terms that were conceptually and practically distinct from one another. The topics generated by this approach, moreover, did not map well to the values that companies listed as elements of their culture or to constructs that academics had identified as important for corporate performance. These algorithmically generated categories did a poor job of predicting classifications of text produced by expert human coders. To test the topics generated by LDA, we created a test set of 4,500 randomly chosen text instances (pros, cons, or advice to management fields from Glassdoor reviews) for the electrical equipment industry. The first author and another trained coder classified each text instance for 14 topics based on whether it discussed or did not discuss a given topic. The inter-rater reliability was 92%. We fit a variety of models, including random forest and logistic regression models, to predict the human coding using the topics generated by LDA as features, along with unigrams and bigrams. The average F-score across all topics was 0.63.

27. For the ground-up approach, we created a set of terms corresponding to the 14 topics, and then included these in features to classify 4,500 text instances from the electrical equipment industry. The average F-score using the hand-curated terms increased to 0.92 across all 14 topics. To test whether we had overfit on a single sector, we selected a different industry (insurance) and took a random sample of 1,200 text instances from Glassdoor reviews of insurers. A trained coder, who had not analyzed the electrical equipment data, classified the insurance text instances on the same 14 topics. We then used the same curated terms as features to predict the hand-coding of the 14 topics in the insurance industry data. The average F-score using a random forest model was 0.86 across all 14 topics.

28. The average company in our sample had 2,182 reviews from January 2014 through March 2019, and the average review was 69 words long, which equals 150,558 words per company, or the equivalent of just over three 50,000-word-long books. Focusing on employers with a large number of reviews helps ensure that even infrequently discussed values will have a sufficient number of reviews for robust results. Diversity, for example, is the least frequently mentioned value, and is discussed by 4% of employees in our sample. The low incidence multiplied by the large number of reviews still translates into nearly 90 employees talking about diversity in the average Culture 500 company, which prevents a few extreme reviews from skewing our results.

29. We primarily organized companies using the Global Industry Classification Standard (GICS), which does a better job than alternative classification schemes in predicting a variety of financial outcomes. See S. Bhojraj, C.M.C. Lee, and D.K. Oler, “What’s My Line? A Comparison of Industry Classification Schemes for Capital Market Research,” Journal of Accounting Research 41, no. 5 (Nov. 14, 2003): 745-774. Sixteen of the 33 Culture 500 industries correspond most closely to GICS subindustries, 12 correspond to GICS industries, and 5 correspond to GICS industry groups. To increase the number of companies per industry, we expanded our sample of companies to 531 in total.

30. Top 30 U.S. companies in Fortune’s 2019 “The World’s Most Admired Companies” list. Mercedes Delgado of MIT Sloan generously shared her list of 30 companies with the most U.S. patents assigned between 2000-2015 (includes those assigned to subsidiaries).

i. I.E. Marinescu, N. Klein, A. Chamberlain, et al., “ Incentives Can Reduce Bias in Online Reviews ,” working paper, SSRN, Feb. 26, 2018.

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“waging war” for doing good the fortune global 500’s framing of corporate responses to covid-19 pandemic.

1. Introduction

2. literature review, 2.1. redefining corporate social responsibility: the role of corporate social advocacy, 2.2. corporate social advocacy and corporate pandemic response communication, 3. theoretical framework: framing the covid-19 pandemic discourse, research questions, 4. materials and methods, data collection and coding procedures, 5.1. csr communication during the pandemic, 5.1.1. companies by country, 5.1.2. companies by industry, 5.1.3. companies by csr placement, 5.1.4. analysis of corporations by csr titles, 5.1.5. csr annual reports, 5.2. covid-19 pandemic related information: placement and content, 5.3. framing the corporate pandemic discourse: content analysis, 6. discussion.

“In the next…pandemic, be it now or in the future, be the virus mild or virulent, the single most important weapon against the disease will be a vaccine. The second most important thing will be communication.”—John M. Barry, author of The Great Influenza: The Epic Story of the Deadliest Plague in History.

7. Conclusions

Study limitations and future research, author contributions, institutional review board statement, informed consent statement, conflicts of interest.

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Uysal, N.; Aksak, E.O. “Waging War” for Doing Good? The Fortune Global 500’s Framing of Corporate Responses to COVID-19 Pandemic. Sustainability 2022 , 14 , 3012. https://doi.org/10.3390/su14053012

Uysal N, Aksak EO. “Waging War” for Doing Good? The Fortune Global 500’s Framing of Corporate Responses to COVID-19 Pandemic. Sustainability . 2022; 14(5):3012. https://doi.org/10.3390/su14053012

Uysal, Nur, and Emel Ozdora Aksak. 2022. "“Waging War” for Doing Good? The Fortune Global 500’s Framing of Corporate Responses to COVID-19 Pandemic" Sustainability 14, no. 5: 3012. https://doi.org/10.3390/su14053012

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Strategic Direction

ISSN : 0258-0543

Article publication date: 7 July 2020

Issue publication date: 21 July 2020

This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.

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This research paper concentrates on the relationship between diversity management, corporate ethics, and commercial performance in a sample of Fortune 500 companies. Diversity management was found to positively influence internal ethics, yet strategically pursuing internal ethics did not increase commercial performance. Implementing a program of external ethics did, on the other hand, enhance commercial performance, and diversity management did boost external ethics – as seen, for example, in the charitable activity of employees. A thoughtful ethical stance can therefore be a profitable asset once companies consistently invest in initiatives such as ethics training.

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• Diversity management
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(2020), "Exploring diversity-boosting strategies in fortune 500 companies: Insights into how corporate ethics and diversity management elevate commercial performance", Strategic Direction , Vol. 36 No. 8, pp. 21-23. https://doi.org/10.1108/SD-05-2020-0105

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• Open access
• Published: 19 September 2023

Do corporate values have value? The impact of corporate values on financial performance

• Ahmed Taher   ORCID: orcid.org/0000-0001-6915-003X 1  

Future Business Journal volume  9 , Article number:  76 ( 2023 ) Cite this article

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Metrics details

Do corporate values affect financial performance? The observed corporate values of the Fortune Global 500 companies were inductively clustered under key attributes, and then, the attributes were grouped under value orientations. The variables used to measure financial performance were given by Fortune 500 report. Finally, the research developed and tested a new model that explored if and how the declared corporate value orientations impacted the financial performance of their organizations. The model showed that all values indirectly affected income and operational performance through human values. The paper reconciled and explained inconsistent findings in the literature over decades, redefined corporate values, and established their impact on financial performance when human values are implemented. The attention to human values is the key to harnessing the positive impact of visionary, ethical, work, and customer-oriented values.

Introduction

Corporate values are created and eloquently word-crafted to foster the aspired perception of the organization's stakeholders. Yet what do corporate values mean, and what value do they add? Previous research found it difficult to operationalize 'values' and consequently measure their impact on financial performance. The links were not consistent or conclusive in the few cases where values were linked to performance [ 42 ].

There is a clear gap in the literature that is addressed by our research question: do corporate values affect financial performance? Testing this will require quantifying corporate values, but can "values" be quantified? Can a normalized scale be developed to measure an organization's corporate values so their correlation with its financial performance indicators is tested?

Before delving into these inquiries, it is necessary to conduct a review of previous conceptualizations and categorizations of values. The establishment of corporate values as a concept requires clear definition, operationalization, and validation. A thorough examination of existing literature is essential to ascertain the positions taken by scholars and professionals regarding management orientations and their effects on financial outcomes. The observed corporate values were inductively clustered under key attributes and categorized under value orientations. The financial indicators provided in the Fortune Global 500 (Global 500) annual list for 2019 were used to measure financial performance. Finally, a new model was developed and tested to explain how the declared corporate value orientations impact their organizations' financial performance.

Literature review

• Corporate values

Values are normative beliefs about proper conduct and preferred results [ 20 , 38 ]. Values aid people seeking to make sense of behaviors or justify them [ 72 , 76 ]. But these definitions focus on personal values, albeit in a corporate context, such as the personal value system of the manager or executive. Our focus in this article is on corporate rather than personal values. Lee et al. [ 48 ] defined corporate values as "a corporation's institutional standards of behavior."

Volk & Zerfass [ 87 ] discussed corporate values as a compass to align corporate communication, culture, behaviors, decisions, and human resources to the organization's strategy. Corporate values deserve a universal definition that captures their multiple orientations, parameters, and assertions. In this paper, we define corporate values as:

Visionary, ethical, and managerial orientations organizations choose to declare, promote and practice as public commitments toward all stakeholders.

Lee et al. [ 48 ] noted that corporate values are becoming a competitive asset, and business leaders aggressively promote values as the stimulus for driving managerial excellence. Formalizing corporate values is a relatively new phenomenon triggered when Peters and Waterman [ 65 ] highlighted in their search of excellence that virtually all firms with exceptional results have a definite set of shared values. Strategy consultants discuss at length the importance of carefully choosing the corporate values [ 91 ], how to write them [ 86 ], and using them to drive corporate strategy [ 57 ]. They also warn against misusing corporate values to the detriment of performance and management credibility [ 8 ].

The subtle differences between corporate values and related concepts such as corporate cultures, codes of ethics, organizational norms, and corporate governance are well articulated by Lobrij et al. [ 54 :906]. They draw a compelling conclusion by presenting how national corporate governance codes incorporate three layers of the corporate culture. The first layer is the corporate values, defined and aligned by the board of directors, and the second is the organizational norms, fostered and implemented by management. In contrast, the third layer is employees' behaviors and management monitoring to assess compliance with the first two layers.

• Value orientations

Although the values incorporated into the economic perspective have received considerable attention [ 26 , 34 , 78 ], these values collectively reflect the organization's strategic intent, management philosophy [ 79 ], and corporate culture [ 42 ]. Corporate culture, in particular, whether aspired or actualized, is manifested in the choice of averred corporate values and their definitions. In the cyber world, organizations develop a firm digital handshake [ 10 ] where declared values are much more visible and articulated to stakeholders, including the general public.

Declared values reflect management's orientation, the underlying philosophy behind strategic and tactical decisions [ 6 ], and employees' attitudes and behavior [ 23 ]. After conducting a thorough review of the literature for types of business and management orientations and their effect on organization financial performance, we found five main orientations with elaborate discussions of their meaning and implementation. These five were visionary leadership orientation, customer (or market) orientation, ethics orientation, work orientation, and human orientation, which we will explain below.

Several scholars have studied the direct relationship between the orientations discussed in this paper and financial performance. The management orientations were not linked back to the corporate values that promote the management orientations. Nevertheless, we clustered the corporate values and the concepts used to define them under five value orientations (VO). The attention of scholars progressed from personal values [ 69 , 70 ] to managerial values and value orientations [ 9 , 17 , 60 , 66 ], and [ 90 ] and finally to corporate values [ 32 , 51 ] and their applications across nations [ 16 , 29 , 30 ].

Visionary leadership

Visionary leadership orientation refers to the willingness to set farsighted goals and embrace the change necessary to attain them [ 81 ]. Tellis [ 81 :38] noted that "success and failure are probably the results of internal cultural aspects of the firm. Important among these is visionary leadership that embraces change and is willing to cannibalize existing assets to serve customers with new technologies."

Kantabutra and Avery [ 37 ] found that visionary leadership was associated with better organizational performance when the employees felt guided by and emotionally committed to the vision. Koene et al. [ 43 ], Sully de Luque et al. [ 77 ], and Wang et al. [ 89 ] all found that visionary leadership related positively to firm performance but was mediated by employees exerting extra effort. Nwachukwu et al. [ 59 ] concluded that visionary leaders experience changes in organizational function and growth by inspiring and empowering their followers. Lencioni [ 49 ] warns that aspirational values may dilute the core values if not embraced by management and believed by all.

Gartenberg et al. [ 24 ] surveyed 500,000 workers in US firms for their perceptions of their employers' corporate purpose and reported that this measure of purpose showed no direct relationship to financial performance. However, high-purpose companies where mid-level employees had strong beliefs in their organization's purpose and clarity in the path toward that purpose experienced better performance. Likewise, Thakor and Quinn [ 83 :1]report that although having a higher purpose for the organization dispels agency tensions and motivates employees to work harder, it always leads to lower profits. Maximizing economic output requires an intermediate commitment to a higher purpose. They explain that the mediating commitment is the organization's human orientation.

Several studies have related leadership to financial indicators such as net profit margin [ 43 , 88 ], business-unit sales [ 3 ], and percentage of goals met regarding business-unit performance [ 31 ]. The relationship between leadership orientation and financial indicators is indirect [ 50 ] and affected by other internal and external variables [ 12 , 36 ]. Furthermore, when selecting performance measurements, some scholars (e.g., [ 39 , 52 ]) neglected to focus on the correlation between financial performance (i.e., net profits and controllable costs) and non-financial measurements (i.e., customer satisfaction and employee satisfaction). This lack of focus confounded the validity of the research findings [ 36 ].

The literature does not support a direct relationship between visionary leadership orientation and financial performance. The literature involves human orientation as the primary mediating variable, with the possibility of other internal and external mediating and moderating variables. Our first hypothesis is:

There is a statistically significant effect of visionary VO on financial performance mediated by human orientation .

Customer (or Market) orientation

Customers are the one stakeholder no company can afford to cross; therefore, having a set of values addressing the company's relationship with its customers is expected. The key attributes here are customer care and customer satisfaction as higher-order constructs. The values descriptors include satisfaction , customer loyalty, customer needs, value to customers; customer care , customer focus, passion to serve, accessibility, listen to customers, and flexibility with customers.

Kohli and Jaworski [ 45 ] suggested that market orientation includes all company business processes, spreading market intelligence, and responding to customer needs (hence customer orientation). Slater and Narver [ 75 ] (and recently [ 63 , 73 ]) discuss market orientation as an organizational culture that creates customer value and satisfaction and consequently increases company profit. Zhu and Nakata [ 93 ] concluded that by influencing market performance, customer orientation contributes to business performance and consequently financial performance.

Through several mediating variables, Lytle and Timmerman [ 56 ] show that service or customer orientation significantly leads to higher financial performance. It is crucial to notice the pattern of variables mediating and moderating the relationship between customer or service orientation and financial performance [ 64 ]. Customer orientation is manifested through customer-contact employees before yielding market competitiveness and financial results. Therefore, our second hypothesis is:

There is a statistically significant effect of c ustomer VO's on financial performance mediated by human orientation.

Ethics orientation

Organizations that subscribe to higher moral standards for dealing with the environment, the economically disadvantaged, and society articulate a set of values that affirm an ethics orientation. This set of values also encompasses notions of corporate governance, sustainable development, and corporate social responsibility (CSR). These values and descriptors include ethical standards , code of conduct, professional duty, integrity, honesty; governance , credibility, discipline, disclosure, stewardship, whistleblowing; CSR , sustainability, and earned respect.

In their analysis of 132 papers published in high-quality journals, Alshehhi et al. [ 1 ] found that the majority (78%) of articles discuss a favorable correlation between business sustainability and financial success. They come to the conclusion that further study is required to help people reach agreement on how sustainable business practices relate to bottom-line results. A total of 33,878 observations were pooled from 52 studies in a meta-analysis by Orlitzky et al. [ 62 ]. The results of this meta-analysis point to the positive returns that may be expected from CSR and, to a lesser extent, environmental responsibility.

Nejati et al. [ 58 ] collected data from 182 small businesses in Malaysia to confirm that small firms' responsible practices toward the environment, customers, communities, employees, and suppliers positively affect their financial performance. Jiang et al. [ 35 ], using data from 264 Chinese firms, concluded that green entrepreneurial orientation positively influences environmental and financial performance. The most recent literature suggests a positive relationship between ethics orientation and financial performance [ 80 , 85 ] in large, small, and even entrepreneurial organizations of a single origin.

However, research on multinational corporations similar to the 2019 Global 500 companies' case does not corroborate the direct positive relationship [ 13 ]. It is possible that for the largest 500 corporations globally, too many markets, technological, operational, and global factors interact to shape and even impede the direct link to financial performance.

In their seminal research, Barnett and Solomon (2006) studied 72 funds that use social screening to identify more socially responsible investments. They found that financial performance varies according to social screen types. Community relations screening increased financial performance, but environmental and labor relations screening decreased financial performance. Inoue and Lee [ 33 ] disaggregated CSR into five dimensions based on voluntary corporate activities for five primary stakeholder issues to examine how each dimension would affect financial performance. They concluded that employee relations are a powerful catalyst in yielding long-term financial performance.

According to Awaysheh et al. [ 2 ], organizations with high CSR ratings do better than their competitors in terms of operating performance, but not financial performance, and are valued at a higher multiple. CSR has the potential to impact the bottom line of multinational corporations. Still, customer satisfaction, reputation, and competitive advantage [ 71 ] are external and internal factors that mediate the effect [ 21 ]. We, therefore, posit the following hypothesis:

Ethics VO significantly affects financial performance mediated by human orientation .

Work orientation

The Global 500 work orientation category combines diverse operative and pragmatic concepts, although they all pertain to the organization's performance culture. Three concepts seem to capture the essence of work orientation more than the rest: process, quality, and safety. Other concepts are antecedents, consequences, or indicators of process, quality, and safety.

Škrinjar et al. [ 74 ] found that business process orientation positively influences organizational performance but that the impact on financial performance is through behavioral factors. Kohlbacher's [ 44 ] review showed that process orientation positively affected performance, driven by commitment. The effects most often reported are rapid improvements, increased customer satisfaction, improvements in quality, reduced costs, and, consequently, improved financial performance.

Riaz and Saeed [ 67 ] maintained that firms that adopt ISO 9001 certification do not perform better financially than firms that do not assume the certification. The investors even negatively evaluated them in the short and long run. As for total quality management (TQM), Easton and Jarrell [ 14 ] conclude that most studies show a positive financial impact associated with TQM. Yet, they include some methodological limitations. O'Neill et al. [ 61 ] demonstrate that quality management orientation provides a statistically significant financial performance advantage.

Fernández-Muñiz et al. [ 19 ] studied 455 Spanish companies and found that safety management, one aspect of work orientation, positively influences financial performance. Fan and Lo [ 18 ] found that adopting occupational health and safety certification positively affects fashion and textile-related companies' sales but hurts ROA performance. Beauvais et al. [ 5 ] suggest that improved hospital safety scores are associated with better operating margins, net patient revenues, and operating income.

The evidence for a substantial direct link between work orientation and financial performance is not convincing. Work orientation includes process, quality, and safety, among several underlying variables. Any relationship to financial performance will be through management's human orientation at all levels. We, therefore, posit the following hypothesis:

Work VO's significant effect on financial performance is mediated by human orientation.

Human orientation

Human orientation, sometimes called human capital orientation, refers to values about the norms of expected and accepted behaviors and work ethics. These values have warmth and empathy nuances toward employees and society. The key values and descriptors under human orientation include our people , health, well-being, inclusion, diversity, development, empowerment, enablement, engagement, passion, humility, humor, openness, fairness, gratitude, trust each other, and respect for one another; our community , society, civic role, partnership.

Late in the last century, Lam and White [ 47 ] presented data from 14 manufacturing industries, supporting the proposition that companies with solid HR orientation performed significantly better than companies with weak HR orientation. A few years later, Ellinger et al. [ 15 ] suggested a positive association between the learning organization concept, which captures the essence of human orientation, and companies' financial performance. Zehir et al. [ 92 ] showed a strong relationship between strategic human resource management and company financial performance mediated by its entrepreneurial orientation. Kerdpitak and Jermsittiparsert [ 41 ] found a positive relationship between human resource capabilities (skills, innovation, competence, and commitment) and pharmaceutical firms' financial performance in Thailand. Umair et al. [ 84 ] show that all worker/employee attitude determinants in Korean firms significantly influenced financial performance through job satisfaction.

According to Bryl [ 7 ], a strategy that is focused on human capital orientation generates above-average financial performance and profitability. This is particularly true in terms of equity growth and stock market valuation. According to De Bussy and Suprawan (2019), there is evidence that an orientation toward employees contributes more to financial performance than an orientation toward any other key stakeholder group. These primary stakeholder groups include consumers, suppliers, communities, and shareholders.

Human orientation is about human capital's development, empowerment, and motivation, directly related to financial performance. One could argue that the other four VO needs to be empowered through human means to realize financial results. We here posit the last hypothesis:

Human VO has a significant direct effect on financial performance.

Data and methods

This study attempts to answer the question: do values have value? Answering that question necessitated a large sample of relatively similar corporations in size, spanning a wide range of industries and countries of origin. Such a sample would support universal external validity. The corporate financial performance had to be measured using standards and currency to avoid noise due to accounting practices. All those conditions were satisfied in this paper's sampling frame, the 2019 Fortune Global 500, which signifies corporations' ultimate global ranking system based on their financial performance. The year 2019 was the last normal year before COVID-19 hit the global economy in 2020 and beyond. The world's 500 largest public corporations turned $2.15 trillion in profits over revenues of $32.7 trillion in 2018. Together, 2019 Fortune Global 500 companies represented 34 countries and employed 69.3 million people worldwide. We endeavored to extract the declared values, not as part of visions, missions, or embedded in the chairman's words of the 500 companies on the list, but by thoroughly perusing their websites, annual reports, public documents, and official social media platforms [ 82 ].

Only 370 companies reported one to eight declared values each. Overall, 1,649 stated or defined values. Still, 130 companies did not declare their values publicly and were discarded from the sample. A quick analysis was conducted to test whether the 130 companies that did not declare values differed from the 370 declaring values. Table 1 shows how those 130 companies had significantly less average rank, revenue, profits, profitability, assets, and return on assets. Forty-nine percent of those 130 companies were Chinese compared to 17% in the rest of the sample; 12% and 13% were American and European, respectively, compared to 30% and 30% in the rest of the dataset. A t-test was conducted to detect and report significant differences in descriptive variable and financial indicators. Despite their differences, our research focuses on the value of declared values, so they are not part of our population.

Grouping and quantification of values

We studied the 1,649 values and identified 304 unique corporate values and their definitions when given. Two professors and two professional strategy development consultants held two 6-h workshops and inductively grouped similar values until we reached twelve groups and labeled them as key attributes. Each grouping had to earn consensus, and any differences were discussed until an agreement was reached. In the final round, we combined the twelve key attributes under the five value orientations, reviewed the entire taxonomy, and labeled the value orientations using our knowledge of the literature. The five VO were labeled as previously described: visionary leadership orientation, customer orientation, work orientation, ethics orientation, and human orientation. Although this process does not produce quantitative interrater reliability, academics and professionals' deliberated consensus ensured validity that was measured quantitatively later.

Table 2 provides the corporate values grouped under each of the five VO and the key attributes of each orientation. Note that values are configured under orientations depending on their definition. For example, "trusting each other" and "respecting one another" were classified under human orientation, but to be "worthy of trust " or "earn respect " (of the stakeholders) were grouped under ethics orientation.

Normalization of value scores

Each company had five tallies indicating how many of its values were classified under each value orientation (VO). Those tallies were then normalized as VO scores (percentages) using the max–min normalization formula [ 53 ]:

\({\text{VO}}_{{{\text{norm}}}} = [{\text{VO}}_{{{\text{tally}}}} - {\text{ min}}\left( {{\text{VO}}_{{{\text{tally}}}} } \right)]{\mkern 1mu} / [{\text{max}}\left( {{\text{VO}}_{{{\text{tally}}}} } \right){\mkern 1mu} - {\text{ min}}\left( {{\text{VO}}_{{{\text{tally}}}} } \right)]\) .

And since max(VO tally ) = sum of tallies, and min(VO tally ) = zero, the normalized VOscore in percentage form is VO score (%) = (VO tally  × 100) / (sum of VO tallies). Therefore, if a company had four values, each tally would count for a 25-percent VO score, but if the company had five values, each tally would count for a 20-percent VO score. For example, a company declaring five values may have a tally of 20-percent visionary, 40-percent ethics, 40-percent human VO scores, and 0-percent work or customer VO scores. The five VO scores should add to 100%.

We integrated the five hypotheses into the partial least squares (PLS) path model depicted in Fig.  1 , where only human orientation directly relates to financial performance. The other four orientations indirectly relate to financial performance mediated by the human orientation. In this case, there are four financial indicators given by the Global 500: revenues, profit, profitability, and assets. The full methodology for extracting the financial indicators for the Global 500 can be found in Fortune [ 22 ]. We derived and tested an additional indicator, return on assets (profits/assets).

The bootstrapped PLS model with path coefficients, loadings, and p-values linking the four value orientations to income and operational performance through human orientation as a mediating variable

Fortune 500 provided a limited set of financial indicators, but Kountur and Aprilia [ 46 ] Footnote 1 provided a useful classification into new dimensions based on their factor analysis. Return on assets is the highest loading variable in the "operational performance" dimension, while profitability loading was very low and was discarded. Assets, profits, and revenue belong to the second dimension, called "asset-income performance." In our model, "assets" loading was very low, and its removal improved the model fit significantly, and the latent variable was renamed the "income performance."

The full model was analyzed using SmartPLS 3.3.3 [ 68 ]. The SmartPLS assesses both the measurement and structural models. Bootstrapping of 5,000 resamples was also executed. Bootstrapping is a nonparametric resampling procedure that evaluates a statistic's variability by examining the sample data's variability rather than using parametric assumptions to assess the precision of the estimates [ 28 ].

The heterotrait–monotrait ratio of correlations (HTMT) proposed by Henseler et al. [ 27 ] was used to evaluate discriminant validity in variance-based PLS. The model has acceptable discriminant validity because all off-diagonal correlations are below 0.40, which is significantly lower than the threshold of 0.80 proposed by Henseler et al. (see Table 3 ).

For a good fit, the PLS model should have an SRMR of less than 0.08 and an NFI of more than 0.9 [ 68 ]. The PLS model showed an excellent fit, SRMR = 0.074, NFI = 0.971 (see Fig.  1 ). Our model showed significant direct effects (all p  < 0.01) to the human orientation from the visionary orientation ( b 1  = −1.028), customer orientation ( b 2  = −0.963), work orientation ( b 3  = −1.217), and ethics orientation ( b 4  =  − 1.396) supporting the five hypotheses as depicted in Fig.  1 . The negative effects are expected, given that the higher the human orientation score, the greater the probability other orientations' scores will be less since all five scores always add up to 100 percent for any firm. Nevertheless, the human orientation had a significant direct positive effect ( b 5  = 0.152, p  < 0.01) on income performance, and a less significant effect (b 6  = 0.146, p  = 0.055 ) on operational performance supporting H5.

Theoretical implications

This article structured values under the value orientations with a reliable methodology. This structure will enable researchers to develop and test hypotheses about the relationships between those values and organizational, behavioral, strategic, and performance constructs. The research also established how the value orientations relate to financial performance and tested the proposed conceptual model.

The PLS results posit that all values indirectly affect income and operational performance through human values. The results also concur with the most significant global study findings regarding sample size and quality, conducted on a comparable sample by the Aspen Institute [ 40 :10]. Booz Allen Hamilton and The Aspen Institute invited approximately 9,500 senior executives from 365 companies in 30 countries worldwide to participate in a global study. The objective of their research was to understand how companies deal with the challenges of managing values. Public companies who categorized themselves as leaders in their industries and whose financial results for the past three years were at least 10 percent ahead of industry competitors were labeled financial leaders .

Kelly et al. [ 40 : 4] report that 98 percent of these confirmed financial leaders include ethical behavior/integrity in their values statements, compared with 88 percent for other public companies. Financial leaders emphasized more commitment to employees (88% vs 68%), honesty/openness (85% vs 47%), and drive to succeed (68% vs 29%). Forty-two percent of financial leaders stressed adaptability in their values statements, compared to only nine percent for other public companies.

Only financial leaders have come closer to deriving financial performance from values. They relied on a diverse set of values achievable through the human orientation values of commitment to employees, openness, engagement, empowerment, and trusting and respecting one another. These financial leaders set the example for their people to link corporate values to strategy and reflect them in management decisions.

Neither professors nor professionals have acquired adequate knowledge and insight to formulate and manage corporate values in a way that makes a difference financially. While values are standard practice for complementing and, sometimes, garnishing corporate strategies, their value is still questioned. We agree with Kelly et al. [ 40 : 9] that "the next set of imperatives is for business leaders to move from talking about values … to embracing them to drive corporate performance and change." Gehman et al. [ 25 ] discussed the chasm between the declared and the practiced values, explaining the lack of a direct relationship between the four VO and financial indicators.

We propose the four gaps thesis in Fig.  2 to articulate the chasm. The first gap is between declared corporate values and management interpretation of these values, which varies from one executive to another and from one context to another.

The four gaps between values and their implementation

Moreover, there is a second gap between management interpretation of the corporate value and its implementation. Then, there is a third gap between how executives communicate their understanding of corporate values to the employees and what the employees understand [ 49 ]. Finally, there is a fourth gap between employees' interpretation of the values and their actual implementation on the ground.

The four gaps operate in a noisy environment, and the noise of pressures from the markets, targets, and life-demands [ 55 ] further increases the gaps. These pressures work in different and sometimes opposite directions to dissipate the mental energy needed to close the gaps and realize financial results. It is also clear that tools and scales to measure and close the four gaps are open to future research. After all, you cannot manage what you cannot measure. The four gaps framework and its empirical validation are available for future research to explore and validate.

Limitations and future research

This first limitation was using Global 500 of 2019, as it was the last normal year before the pandemic and geopolitical instability clouded and blurred such data. One illustration is the rise of information technology-, telecom-, and e-commerce-related companies. But as global trading and industry adapt and stabilize, replication will be needed to represent the new normal.

Another limitation is dealing with the five value orientations as mutually exclusive and collectively exhaustive when probably that is not the case. Technology and digital transformation have become a potential new value orientation accelerated by the pandemic. Our research showed that other exploratory methods, such as cluster analysis, may shed new light on the value orientations working together simultaneously rather than sequentially.

A limitation of the aggregation of 500 global companies is merging several cultures that may favor or frown upon specific values and confound the findings. But within the Global 500, subgroups can be created by region or industry, which may yield interesting data to compare and contrast. There is an open arena for qualitative research to explore corporate values and value orientations in every dimension, with several implications, and from all perspectives.

All five corporate value orientations were identified to affect the Global 500 club members' operational and income performance, but only through human orientation. The message is clear and straightforward: reinforcing human values is the only path toward activating corporate values and garnering financial results. This research affirms that the new work culture and the priority organizations place on human capital promise higher returns on income and operational performance dimensions.

Effective human orientation gives a boost to customer orientation, credibility to ethics orientation, meaning to work orientation, and significance to visionary leadership.

Availability of data and materials

The datasets generated and/or analyzed during the current study are available in Taher, A. (2023, July 5). Dataset Values Fortune 2019. http://www.osf.io/6d4pw

Kountur and Aprilia [ 46 ] collected 20 financial indicators from 120 listed companies and factor analyzed them to identify 5 dimensions of financial performance: Asset-Income Performance,Operational Performance; Leverage performance; and Owner Return Performance. Our three indicators fell under the first two. The first was renamed Income performance since only profit and revenue were left in that dimension.

Abbreviations

Corporate social responsibility

Total quality management

Return on assets

Human resources

Minimum or maximum

Heterotrait–Monotrait ratio of correlations

Partial least squares

Standardized root-mean-squared residual

Normed fit index (NFI) or Bentler and Bonett Index

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Taher, A. Do corporate values have value? The impact of corporate values on financial performance. Futur Bus J 9 , 76 (2023). https://doi.org/10.1186/s43093-023-00254-9

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