Purpose-Driven Profit: Evaluating The Relationship Between Conscious Capitalist Efforts And Financial Performance In Purpose-Driven Organizations




Borrego, Bentley

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In 2014, Harvard Business Review published an article entitled “Companies that Practice Conscious Capitalism Perform 10x Better”, which outlined a study conducted by Raj Sisodia in which he pinned 28 Conscious Capitalist “firms of endearment” (FoEs) and pitted them against the market. He found that “the 18 publicly traded companies out of the 28 [Conscious Capitalist firms] outperformed the S&P 500 index by a factor of 14 over the years 1998-2013”. Specifically, he reported that the 15-year (1998-2013) investment performance (stock price, adjusted for splits and dividends) of the 28 FoEs was a whopping 1,681% compared to a gain of the S&P 500 of 118% over the same period (Mackey and Sisodia, 2014).

The conclusions drawn from the research available regarding the success of Conscious Capitalist companies leave many questions unanswered. Current findings would lead an uninformed observer to credit the outperformance of Conscious Capitalist firms to the innate fact that they are Conscious Capitalists and thus determine that if a “conscious” individual chose to invest in Conscious Capitalist firms, he or she would receive a “conscious” return above the average market return. While multiple studies do showcase the financial success of public Conscious Capitalist companies, they do not explicitly examine the Conscious Capitalist efforts and actions of individual firms as a means of determining their relationship to the companies’ financial performance. In the subsequent pages, I shed light on this gap in understanding, attempting to uncover whether or not financial performance is correlated or related to individual Conscious Capitalist company performance. My goal is to determine whether or not the Conscious Capitalist efforts of individual companies align with their financial performance.



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