Mission statements and financial performance in Latin-American firms
Abstract
Mission statements (MSs) are one of the most widespread managerial practices. However, a deeper understanding of the relationship between MS’s characteristics and firms’ financial performance is still necessary. The vast majority of the research on this topic has been performed on companies of the global north, rather than global south. The present study addresses this literature gap through a qualitative and quantitative analysis of MS characteristics (i.e., keywords and readability) for Latin-American firms and their relationship to financial performance. The content analysis of the MS was conducted using Voyant Tools, the MS readability was measured through six readability indices (i.e., FI, FKRE, FKGL, SMOG, CL and ARI) and the relationship between MS readability and financial performance was determined using regression analysis (i.e., OLS). The results of the content analysis suggest differences among industries and an international convergence toward isomorphism regarding key terms. The results of the quantitative analysis revealed a positive relationship between MS readability and return on assets (ROA) and return on equity (ROE). These results suggest a positive relation of the MS on a company’s long-term financial performance, highlighting the importance of having a readable MS.
Keyword : mission statements, content analysis, financial performance, Latin America
How to Cite
Cortés-Sánchez, J. D., & Rivera, L. (2019). Mission statements and financial performance in Latin-American firms. Business: Theory and Practice, 20, 270-283. https://doi.org/10.3846/btp.2019.26
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Sidhu J (2003) Mission statements: Is it time to shelve them? European Management Journal 21 (4): 439-446. https://doi.org/10.1016/S0263-2373(03)00072-0
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Subramanian R, Insley RG, Blackwell, RD (1993) Performance and readability: a comparison of annual reports of profitable and unprofitable corporations. Journal of Business Communication 30 (1): 49-61. https://doi.org/10.1177/002194369303000103
Sydserff R, Weetman P (1999) A texture index for evaluating accounting narratives: An alternative to readability formulas. Accounting, Auditing & Accountability Journal 12 (4): 459-488. https://doi.org/10.1108/09513579910283503
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Williams LS (2008) The mission statement: a corporate reporting tool with a past, present, and future. Journal of Business Communication 45 (2): 94-119. https://doi.org/10.1177/0021943607313989
Ahmed I, Zeeshan Shaukat M, Islam T (2013) Mission statements readability: an insight into Islamic banks. Journal of Islamic Accounting and Business Research 4 (2): 132-150. https://doi.org/10.1108/JIABR-04-2012-0019
América Economía (2014) Las 500 mayores empresas de América Latina https://goo.gl/rfkmJk
América Economía (n.d.) Metodología https://goo.gl/WBSXBx
América Economía (n.d.) Qué hacemos https://corporativo.americaeconomia.com/
Analoui F, Karami A (2002) CEOs and development of the meaningful mission statement. Corporate Governance: The International Journal of Business in Society 2 (3): 13-20. https://doi.org/10.1108/14720700210440044
Babnik K, Breznik K, Dermol V, Širca NT (2014) The mission statement: Organisational culture perspective. Industrial Management and Data Systems 114 (4): 612-627. https://doi.org/10.1108/IMDS-10-2013-0455
Baetz MC, Bart, CK (1996) Developing mission statements which work. Long Range Planning 29 (4): 526-533. https://doi.org/10.1016/0024-6301(96)00044-1
Baker GA (2003) Strategic planning and financial performance in the food processing sector. Review of Agricultural Economics 25 (2): 470-482. https://doi.org/10.1111/1467-9353.00150
Bart CK (1996) The impact of mission on firm innovativeness. International Journal of Technology Management 11 (3-4): 479-493.
Bart CK (1997a) Industrial firms and the power of mission. Industrial Marketing Management 26 (4): 371-383. https://doi.org/10.1016/S0019-8501(96)00146-0
Bart CK (1997b) Sex, lies, and mission statements. Business Horizons 40 (6): 9-18. https://doi.org/10.1016/S0007-6813(97)90062-8
Bart CK (2001) Exploring the application of mission statements on the World Wide Web. Internet Research 11 (4): 360-368. https://doi.org/10.1108/10662240110402812
Bart CK, Bontis N, Taggar S (2001) A model of the impact of mission statements on firm performance. Management Decision 39 (1): 19-35. https://doi.org/10.1108/EUM0000000005404
Bartkus B, Glassman M, Mcafee B (2006) Mission statement quality and financial performance. European Management Journal 24 (1): 86-94. https://doi.org/10.1016/j.emj.2005.12.010
Bartkus B, Glassman M, Mcafee RB (2000) Mission statements: are they smoke and mirrors? Business Horizons 43 (6): 24-28. https://doi.org/10.1016/S0007-6813(00)80018-X
Berk J, DeMarzo P (2017) Corporate finance. London: Pearson.
Burt DN (1978) Planning and performance in Australian retailing. Long Range Planning 11 (3): 62-66. https://doi.org/10.1016/S0024-6301(78)80010-7
Campbell A (1989) Does your organisation need a mission? Leadership & Organization Development Journal 10 (3): 3-9. https://doi.org/10.1108/EUM0000000001134
Clark GL, Kaminski PF, Brown G (1990) The readability of advertisements and articles in trade journals. Industrial Marketing Management 19 (3): 251-260. https://doi.org/10.1016/0019-8501(90)90017-P
Coleman M, Liau T (1975) A computer readability formula designed for machine scoring. Journal of Applied Psychology 60: 283-284. https://doi.org/10.1037/h0076540
Contreras A, García-Alonso R, Echenique M, Daye-Contreras F (1999) The SOL formulas for converting SMOG readability scores between health education materials written in Spanish, English, and French. Journal of Health Communication 4 (1): 21-29. https://doi.org/10.1080/108107399127066
DAIMLER (2016) Nuestra misión https://www.daimler.com.co/compania.php
Damodaran A (2002) Investment valuation. New York: John Wiley & Sons.
Daniel SC (1986) Communication effectiveness of organizational mission statements. Journal of Applied Communication Research 14 (2): 108-118. https://doi.org/10.1080/00909888609360308
Desmidt S (2016) The relevance of mission statements: analysing the antecedents of perceived message quality and its relationship to employee mission engagement MISSION Analysing the antecedents of. Public Management Review 18 (6): 894-917. https://doi.org/10.1080/14719037.2015.1051573
Desmidt S, Prinzie A, Decramer A (2011) Looking for the value of mission statements: A meta-analysis of 20 years of research. Management Decision 49 (3): 468-483. https://doi.org/10.1108/00251741111120806
Drucker P (1973) Management: task, responsibilities, practices. New York: Harper & Row.
Duygulu E, Ozeren E, Işildar P, Appolloni, A (2016) The Sustainable strategy for small and medium sized enterprises: The relationship between mission statements and performance. Sustainability (Switzerland) 8 (7). https://doi.org/10.3390/su8070698
Fabozzi F, Peterson P, Polimeni R (2008) The complete CFO handbook: from accounting to accountability. New Jersey: John Wiley & Sons.
Robinson RB JR, Pearce JA II (1983) The impact of formalized strategic planning on financial performance in small organizations. Strategic Management Journal 4 (3): 197-207. https://doi.org/10.1002/smj.4250040302
Sattari S, Pitt LF, Caruana A (2011) How readable are mission statements? An exploratory study. Corporate Communications: An International Journal 16 (4): 282-292. https://doi.org/10.1108/13563281111186931
Senter R, Smith E (1967) Automated readability index. Wright-Patterson Air Force Base, Ohio: Aerospace Medical Research Laboratories.
Sidhu J (2003) Mission statements: Is it time to shelve them? European Management Journal 21 (4): 439-446. https://doi.org/10.1016/S0263-2373(03)00072-0
Sinclair S, Rockwell G (2015) Text analysis and visualization: making meaning count. In: A New Companion to Digital Humanities. https://doi.org/10.1002/9781118680605.ch19
Subramanian R, Insley RG, Blackwell, RD (1993) Performance and readability: a comparison of annual reports of profitable and unprofitable corporations. Journal of Business Communication 30 (1): 49-61. https://doi.org/10.1177/002194369303000103
Sydserff R, Weetman P (1999) A texture index for evaluating accounting narratives: An alternative to readability formulas. Accounting, Auditing & Accountability Journal 12 (4): 459-488. https://doi.org/10.1108/09513579910283503
Tabachnick B, Fidell L (2001) Using multivariate statistics. New York: Harper Collins.
Webpagefx (2018) Readability test tool https://www.webpagefx.com/tools/read-able
Williams LS (2008) The mission statement: a corporate reporting tool with a past, present, and future. Journal of Business Communication 45 (2): 94-119. https://doi.org/10.1177/0021943607313989