Role And Value Of Mission Statements

Role and Value of Mission Statements 1

ROLE AND VALUE OF MISSION STATEMENTS

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Role and Value of Mission Statements 2

Role and Value of Mission Statements

1.0 Introduction

Mission statements play an integral role in the strategic management of business. There is

probably not authorship of strategic management that fails to mention the significance of mission

and vision statements. Recently, notable examples of successful business people including Steve

Jobs, Bill Gates, and Henry Ford form an essential part of many books and articles that analyze

the role and value of mission statements in the enterprise (Vizeu & Regina 2013). In the face of a

challenging business environment, organizations use key elements of vision and mission to attain

a competitive edge. Many researchers have studied the subject of this paper in a broad sense

showing both consensus and divergent perspectives. Moreover, different organizations employ

varying philosophical views while formulating mission statements (Leggat & Holmes 2015).

There is a consensus among many experts in this field that there is not one conventional way of

creating mission statements. Nevertheless, many researchers admit that mission statements

should serve the purpose of strategic management in firms. The present paper explores the role

and value of mission statements in the enterprise. Further, it delves into theoretical and evidence-

based conceptualization and application of mission statements in enhancing organizational

functions.

2.0 Literature Review

2.1 Definitions of mission statements

There are varying definitions of mission statements by different organizations. However,

mostly, they define the nature, purpose, and significance of companies, notably guiding planning

and directing resources (Anderson & Jamison 2015). On the one hand, some theorists hold the

belief that mission statements are key drivers of strategic planning while others observe that they

Role and Value of Mission Statements 3

mirror institutional reality. Business communication experts maintain that mission statements are

important communicative devices of organizations. Anitsal, Anitsal, and Girard (2013, p. 14)

hold the belief that the creation of mission statements fosters communication and attachment to a

common organizational goal. The process calls for negotiations among the participants regarding

the implication of constituent words, phrases, and concepts (Krzyżanowska & Tkaczyk 2014).

The ultimate objective of the participatory process of developing mission statements is to invest

generic-sounding language with deep meaning for the community (Wright & Pandey 2011).

Research shows that mission statements become effective only when the process of creating

them is participatory. The exclusion of any voice attracts grave consequences in the future.

A Mission statement, according to McDonald and Sarfraz (2015, p. 77) is a vital element

of strategic management that should tell members of an organization about the future of its

direction. In fact, mission statements form part of one of the basic elements of strategic

management called strategy formulation. As such, the crafting of the mission statement precedes

the development of the plan. Researchers observe that a mission statement defines the space in

which an organization creates an approach (Jha et al. 2013). It relates to both present and future

directions of a firm. Without the mission statement, the organization and its people are likely to

lose focus on the communicative device shapes identity, purpose, and direction of the entire firm.

Castro & Lohmann (2014, p. 10) observes that mission statements provide information to

stakeholders, clients, and the public about the doctrines by which the enterprise operates.

Therefore, the definition of mission statements should center on its purpose, which primarily

communicates to the target audience. The authors note that a flawed mission statement expresses

an uninformed agenda for a firm (p.14). As a consequence, the internal and external target

audience interprets wrong information leading the failure in the long-term.

Role and Value of Mission Statements 4

2.2 The Role of Mission Statements

2.2.1 The Role of Mission Statements to Stockholders

Peter Drucker refers mission statements to as the foundation for organizational priorities,

strategies, plans, and work assignments (Wang 2011). It is a valuable tool that distinguishes one

organization from another. It provides the reason for its existence. The mission statements should

include principal stakeholders including sponsors, customers, suppliers, institutions, and

employees. Research has shown that large corporations include members in their current mission

statements. One of the most critical roles of mission statements is to communicate the firm’s

reason for being and values to stakeholders. Partakers form an integral part of in influencing the

organizational stake in the future. Anitsal, Anitsal, and Girard (2013, p. 18) maintain that the

statements should circulate widely to ensure that interested parties discuss, understand, share,

and internalize them. A better understanding of the firm’s mission statement provides that each

commits to the organization’s strategy and its implementation.

2.2.2 Role of Mission Statements in Strategy Development

Mission and visions of an organization create a target for policy formulation. Research in

the field of strategic management reveals that its level of effectiveness measures a useful strategy

in helping the firm’s efforts to realize its missions. A collective visualization can help one to

identify the correlation that exists between organizational strategy and its mission statement. On

one end of the plan, it provides an explicit, clear indication of what the firm intends to do to

achieve the mission. Mission statements provide a bridge between a company’s vision and

strategy. As such, a good mission statement creates tension and restlessness among stakeholders

concerning organizational direction and purpose. Koch, Galaskiewicz, and Pierson (2015, p.510)

add that it provokes a spirit of commitment and innovation for improvement. For example,

Role and Value of Mission Statements 5

research shows that competitive firms such as CNN, British Airways, and Apple Inc. displaced

rivals with unmatched reputations and deeper pockets via their ambition to stretch their

organizations through innovation (Babnik et al. 2014).

Research shows that mission statements received less attention in the marketing literature

despite their perceived significance in the commercialization strategy of organizations (Keeling

2013). Researchers argue that aligning the content, research, and practice of mission statements

from an internal to the external environment can enhance customer satisfaction. As competition

escalates and consumption behaviors keep changing, mission statements should be examined and

crafted in a manner to attract and retain customers (Krzyżanowska & Tkaczyk 2014). Other

authors add that mission statements should serve as a valuable marketing tool if it creates and

nurtures an emotional bond with their clients. As such, mission statements should focus on

customer perspective as a wise way enhancing attraction and retention in a competitive market

environment.

2.2.3 Mission Statements and Strategic Management

Most practitioners and academic researchers of strategic management observe that

suitable mission statements often comprise several elements including customers, products,

markets, technology, growth and profitability, philosophy, self-concept, public image, and

employees. Strategic management is a model that involves four key components: environmental

scanning, strategy formulation, strategy implementation and evaluation, and control. Candemir &

Zalluhoğlu (2013, p. 628) support Peter Drucker’s assertion that developing mission and vision

statements of a firm fall within policy development. Strategy formulation entails a specification

of the strategic goals and objectives of a company, which often manifest in the vision and

mission statements. In fact, mission statements should tell why the organization chose a

Role and Value of Mission Statements 6

particular direction (Babnik et al. 2014). In this regard, the strategic objective becomes an

obligation as it speaks about positions that a firm should and results it intends to achieve.

In a constantly changing and uncertain environment, favorable conditions for the

development of long-term plans and strategies are unlikely to prevail (Blythe 2014). As such,

organizations need something besides strategy that provides long-term orientation and direction.

Mission statements play such a role in strategic management. The development of a mission

statement should include its strategic position. Research shows that most small and medium-

sized enterprises do not differentiate between mission and vision statements. Some companies

fail to recognize the role of mission statements in strategic management (Kirk & Beth 2010).

Nonetheless, most successful large corporations acknowledge that without properly-defined

mission statements, failure remains inevitable and sustainability is not guaranteed.

2.2.4 The Role of Mission Statements on Corporate Identity

Corporate identity has garnered increasing interest in recent decades. Many researchers

believe that a corporate identity is an important tool that firms can use to meet today’s

challenges, especially as companies seek to differentiation in the increasingly commoditized

markets and the need to attract and retain qualified staff (Wright & Pandey 2011). Corporate

legitimacy is a growing concern in the today’s business environment. As the way in which

organizations communicate their philosophies and strategies to the internal and external publics,

corporate identity manifests best when included in mission statements (David, David, & David

2014). In fact, there is a broad consensus among multiple research articles and books that

mission statements help firms to communicate their brand corporate image, purpose, and

direction (Verboven 2011). Mission statements are important instruments by which businesses

convey essential values to the external target audience. Consultants who specialize in corporate

Role and Value of Mission Statements 7

identity posit that a mission statement is the starting point in programs that aim to enhance brand

image (Verboven & Van Bets 2013). Other researchers postulate that including a mission

statement in annual reports helps corporations to leverage their identity since such reports end up

in the hands of many readers.

2.3 Value of Mission Statements

2.3.1 Value of Mission Statements on Organizational Success

The value of a mission statement on organizational performance and success continues to

receive the increased attention of researchers, particularly in the wake of the globalization of

enterprises, which has created additional turbulence to business (Jovanov & Sofijanova 2014).

The success of organizations depends on how well they formulate their mission statements and

the full implementation of its constituent elements. McMullen (2015, p. 120) warns that

organizations that state ideas without specifying the implementation fail to communicate

effectively. The author adds that mission statements give value to firms as it spells what they are

and what they do. In this light, a mission statement often reminds an organization of the reason

of being (Leggat & Holmes 2015). Also, it conveys a firm’s nature of goals and where it intends

to achieve as well as plans on how to approach its future.

The mission statement gives value to businesses by providing a sense of purpose;

promoting shared norms, creating behavioral standards, and upholding stakeholder focus on the

key strategies of an organization (Witek-Crabb 2012). Researchers argue that when stakeholders

identify with a firm’s mission statement, commitment and motivation are likely to be proactive.

In fact, mission statements give a sense of belonging to employees, customers, suppliers, and

investors (Krzyżanowska & Tkaczyk 2014). As a consequence, the organization benefits from

the support of its stakeholders and performs better than its rivals in the market, who lack such

Role and Value of Mission Statements 8

competitive edge (McDonald & Sarfraz 2015). Mission statements provide a connection between

organizational behavior and corporate purpose when the stakeholders view it as a sense of

belonging.

2.3.2 The Value of Mission Statements on Employee Motivation

Most business researchers admit that a mission statement is an effective management

instrument that has the power to motivate and keep employees focused on fulfilling the purpose

of a company (Wright & Pandey 2011). Utilizing mission statements as a management tool is

effective in enhancing employee commitment to the organization. The practice helps to develop

an understanding of the relationship between mission and the individual employees. According

to the motivational theory, the desire to form and sustain social bonds is one of the strongest

motives of humans (Cady et al. 2011). As such, employees who develop a sense of belonging to

an organization tend to show a strong commitment to its goals and objectives. Sinyaeva and

Yashin (2014, p. 1) add that creating mission statements that capture employee’s emotional

attachment often provides the bait that managers need to have loyal followers.

Developmental research reveals that a positive correlation exists between connectedness

and motivation (Jha et al. 2013). Human beings are sensitive to other people’s goals and often

attempt to create socially aligned aims. Mission statements provide a platform of socially shared

goals. The partakers including employees and other stakeholders would then try to set own goals,

which align with those of the organization. Social connectedness offers a profound incentive to

employees, who try to achieve the firm’s goals that make up the mission statement (Rajasekar

2013). This phenomenon has beneficial implications for organizational leadership which should

lead the writing of mission statements in a manner that evokes employee motivation (David,

David, & David 2014). Moreover, owing to Maslow’s theory of the hierarchy of needs, mission

Role and Value of Mission Statements 9

statements play a significant role in creating the need for membership (Orhan, Erdoğan, &

Durmaz 2014). As employees seek to satisfy the Hierarchy of Needs including association and

friendship, they admit doing the work that the organization does and enhance it.

3.0 Practical Application

Even though the contents of a mission statement witness a considerable contestation,

there seems to be a strong agreement that they serve as the foundational guide to organizational

direction besides being crucial communication tools to the stakeholders. The statement of

purposes provides guidance into what the company managers perceive as the important reason of

being in business. Evidence-based research shows that mission statements serve important roles

in creating value in many aspects of an enterprise (Castro & Lohmann 2014). For instance,

company goals include but not limited to market share, profitability, customer satisfaction,

employee motivation, staff attraction and retention, and brand identity. The mission statement

expresses desirable internal attributes, work ethics, value, and corporate culture, which

employees can apply in the line of their duties. Moreover, a mission statement should include

elements of each stakeholder to evoke the similar course of response and behavior towards

specific organizational objectives. Researchers found that mission statements, which focused on

customer values created a customer service culture that translated into improved customer

satisfaction.

Mission statements that include elements of employees’ motivation lead to a positive

behavior that directly impacts on the fiscal performance of firms (Orhan, Erdoğan, & Durmaz

2014). Managers can achieve this objective when they ensure that internal policies and programs

follow derivatives of their mission statements. Various organizations have employed the

evidence-based application of mission statements that reflect elements of each stakeholder (Lee,

Role and Value of Mission Statements 10

Barker, & Mosher 2013). For instance, Dangote Group’s mission statement includes aspects of

delivering high returns to shareholders, providing high-quality products at affordable costs,

showcasing excellent customer service, bringing economic benefits to local communities, and

leading the way in governance and sustainability. This organization’s mission statement

communicates to all stakeholders besides including brand identity, corporate responsibility, and

appealing to regulatory institutions such as the government. Also, the mission statement

describes how the company intends to get where it wants in the future by defining the primary

purpose (Yazhou & Jian 2011). The mission statement for Dangote Group touches on the nine

components including customers, products, markets, technology, employees, concern for

survival, self-concept, philosophy amongst others.

The mission statement for Diamond Bank indicates that it intends to surpass customer

expectations by offering value adding solutions through professionalism and unbeatable

motivated employees and providing the financial performance to all its markets. McDonald and

Sarfraz (2015, p. 77) note that through a critical examination of the company’s mission

statement, one can infer the emphasis put on customers, markets, services, and workers while

leaving other elements out. Different companies use varying number of words in their mission

statements. For instance, Dangote Group uses more words than Diamond Bank. All in all, the

two companies communicate their uniqueness effectively to the stakeholders and the public

through the mission statements touching on ownership, resources, future anticipations, and

environmental situations.

3.1 Empirical Framework

The success of an organization in its strategic plan, a proper formulation of the mission

statement is essential. A large number of individuals, mainly the stakeholders, must participate in

Role and Value of Mission Statements 11

the wording as they contribute to the shape the institutional identity of an organization (Holosko

et al. 2015). Mission statements distinguish one company from another through laying an

emphasis the unique attributes, which form an essential part of creating a competitive advantage.

In their research on the significance of developing mission statements for organizations, Yazhou

and Jian (2011, p. 330) found that micro and small firms, which formed about 11% of the studied

companies did not see the need of formulating them. Also, 5.5% did not see the need of having

mission statements in the future. Nevertheless, the larger proportion (68%) considered mission

statements as essential foundations of their success.

4.0 Recommendations

Rajasekar (2013, p. 138) postulates that strategic management and marketing strategy

require the development of sound mission statements, which communicate explicitly about the

purpose of business. The absence of a proper operative mission statement implies that firm’s

short-term efforts will be counterproductive to the long-term objectives. As a crucial component

of strategic management in organizations, mission statements lead the way in formulating

strategies. Therefore, firms whether small or large, which seek to remain competitive and

relevant in the constant changing and challenging business environment cannot underestimate

the role and value of mission statements (EŞI 2014). It is worth noting that the development of a

mission statement is an inclusive undertaking that should involve all the stakeholders through

adequate representation. Inclusion ensures that the mission statement captures the interests of all

stakeholders. Leaving one voice can be a cause of failure of the organization in the future.

A proper mission statement should engender to point out shared values of what the firm

intends to achieve and how each element will fall into place to attain the ultimate goal. It is

critical to note that top-level managers should develop the mission statement for the followers.

Role and Value of Mission Statements 12

Many organizations that followed that approach have failed the test of time. Since the success of

the organizations depends on the contributory effort of each stakeholder, the development of

mission statements should be a collaborative role. The formulation of mission statements should

include the nine components that Peter Drucker, the father of management points out. Each

element of the mission ensures that the firm shines on all grounds.

5.0 Conclusion

The role and value of mission statements remain a contested topic among researchers and

practitioners. Empirical evidence suggests that micro and small firms do not recognize the

usefulness of mission statements. Also, most managers of SMEs do not see the need to develop

the mission for their enterprise. Nevertheless, this paper finds a strong consensus among many

books and articles that mission statements play a significant role in many organizational

functions such as marketing management, strategic management, employee motivation, and

leveraging organizational success. This paper agrees with the statement that, ‘formulating the

[company’s] mission into a brief and concise statement can help engender a sense of shared

purpose and also provide direction on decision making and how to prioritize resource allocations

in the future.' In fact, organizations that ignore the role and value of mission statements in the

enterprise are likely to give in to the challenges of the constantly changing business environment.

6.0 References

Role and Value of Mission Statements 13

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Part A, pp. 328-333.

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