Introduction

Contemporary global economic challenges, worsened by climate change, and the rapid growth in population reliant on finite natural resources, have negatively impacted socio-environmental systems (O’Neill et al. 2018; Steffen et al. 2015). These complex issues have grown bigger and more interconnected than ever before, and so too has the world of business (Wilmot et al. 2022), prompting the heightened demand for global businesses to rise to these challenges (British Academy 2019). For many decades, the dominant business model has been primarily driven by maximising profits for stakeholders, with little attention paid to the implications of a business’s impact on socio-environmental systems (Friedman 2007). Today, there is a prevalent acceptance that this once dominant shareholder-centric business model is obsolete (Wilmot et al. 2022), necessitating businesses to foster a sustainability shift towards growth patterns that protect planetary life support systems, thus enhancing human well-being (Gyori et al. 2020; Hurth and Vrettos 2021).

Purpose-led businesses (PLBs) have consequently become a prevalent sustainability business movement, characterising a shift to attention on the impact of a business on the environment and well-being of stakeholders beyond returning profit to shareholders (British Academy 2019; George et al. 2023; Wilmot et al. 2022). Essentially, PLBs are driven by a core mission or set of values that go beyond traditional business objectives and focus on positively impacting society, the environment, or specific stakeholders (Hajdas and Kłeczek 2021). The concept of a PLB is not entirely new; numerous businesses have operated for many years to address societal problems (Gyori et al. 2020). It has been reported that PLBs outperformed competitors based on profitability benchmarks, financial performance, and improved reputation (Gyori et al. 2020; Henderson and Van den Steen 2015; von Ahsen and Gauch 2021). Indeed, PLBs are increasing even within the confines of current laws and capital markets (Barby et al. 2021; Zu 2019).

The purpose of business alongside the expectations of leaders is evolving (Wilmot et al. 2022), given the importance of leadership in driving successful change process in any organisation (van Knippenberg 2020). Consequently, an increasing number of businesses are seeking to become PLBs, but there are challenges to overcome (von Ahsen and Gauch 2021). Despite the significant growth in PLB literature since the turn of the millennium, attention has mainly focussed on large companies (Wang and Poutziouris 2010), although small- and medium-sized businesses (MSBs) significantly impact any economy (Erdin and Ozkaya 2020; Madanchian and Taherdoost 2019; Ndubisi et al. 2021; Woźniak et al. 2019). As expanded upon in section “Literature Review”, leaders of MSBs face unique challenges in aligning their organisations with purpose and navigating the complexities of the PLB landscape. There is a dearth of research on developing a better understanding of how leadership in PLBs work within MSBs. A profound understanding of how to overcome the related challenges is therefore required to facilitate purpose-led MSB transitioning. By gaining insights from leaders of purpose-led MSBs, this research aims to provide current leaders of MSBs with a practical guide and relevant knowledge to navigating their challenges and developing leadership practice to enable purpose-led transformation. As discussed later, what emerged in overcoming the challenges faced by these business leaders was the central role played by corporate communication and its interaction with reputation and organisational identity.

The remainder of the paper is structured as follows. Section “Literature Review” presents a detailed literature review on the key themes investigated, constituting the lens through which the work is viewed. Data collection methods using semi-structured interviews with purpose-led MSBs leaders are outlined in section “Research Design And Methods”. Results and analysis are provided in section “Results, Analysis, and Discussion”, followed by a discussion in section “Corporate Communication and Its Interplay with Corporate Reputation and Organisational Identity”, leading to the conclusion and a summary of direction for future work in section “Conclusion and Limitations”.

Literature Review

This section presents literature review on PLBs and MSBs, emphasising the challenges faced by business leaders, leading to the research question underpinning this paper. This starts with the notion of organisational purpose itself.

Purpose

In basic terms, purpose refers to the underlying reason or fundamental mission that drives an organisation beyond financial profitability (Duell et al. 2022). It is the guiding principle that shapes an organisation’s goals, values, and actions, and goes beyond mere profit-making to positively impacting society, the environment, or specific stakeholders (Hurth et al. 2018; von Ahsen and Gauch 2021). Purpose transcends philanthropic initiatives (Jimenez et al. 2021) as it encapsulates an organisation’s larger aspirations, ideals, and the positive change it seeks to create in the world (Hurst 2016; Hurth, Ebert and Prabhu, 2018), going beyond economic considerations (Gyori et al. 2020) and becomes a central driver in decision-making processes (Eckert and Silten 2020; Mayer 2017, 2018). The purpose of an organisation may vary depending on its industry, sector, or the specific socio-environmental issues it aims to address (Hurst 2016). It could involve promoting sustainability, social justice, inclusivity, education, health, or any other cause that aligns with the organisation’s values and goals (British Academy 2019). Ultimately, purpose represents the higher calling that inspires and guides leaders, employees, and stakeholders to work towards a shared vision and make a positive impact through their business activities (Henderson and Steen 2015; Jimenez et al. 2021).

Indeed, the concept of purpose is not new, and companies have embraced the notion of purpose; it continues to gain traction as companies get benchmarked by different aspects of purpose alongside the promotion of its wider adoption by practitioners (Hurth et al. 2018). Despite this, there is no generally accepted definition of it (Gartenberg et al. 2019; George et al. 2023; Hajdas and Kłeczek 2021) and there remains a dearth of research to establish the conceptual uniqueness of purpose in comparison to existing concepts such as values, mission, vision, corporate social responsibility (CSR), and sustainability (Hurth et al. 2018). This lack of consensus regarding the definition of purpose has led to purpose-led myths such as misconstruing purpose as CSR, positioning purpose in direct opposition to commercial profit opportunities, and identifying purpose as an abstract concept whose overall impact is difficult to quantify, all of which inhibits progress (Wilmot et al. 2022).

Nonetheless, attempts to define purpose have been broadly categorised into two groups (von Ahsen and Gauch 2021): definitions that (i) focus mainly on the core values behind the products and brands of companies and (ii) encompass the entire environmental and social consequences of companies’ actions. Further attempts to define purpose within a corporate context have also been categorised into two: goal-based and duty-based purpose (George et al. 2023), akin to those articulated by von Ahsen and Gauch (2021). Goal-based purpose is relevant to the business and describes corporate intent through mission, vision, values, and ethics. Duty-based purpose is applicable beyond the company. It represents a broader set of societal values describing a higher order, and reflecting a moral and ethical duty to society, future generations, and the environment.

In recent decades, goal-based purpose has been predominant (Bhattacharya et al. 2023; Cady et al. 2011; Khalifa 2012), however, it is the rise and relevance of duty-based purpose that is the interest of this research. Dyllick and Muff (2016) acknowledged that a duty-bound business that view its purpose as proactively addressing socio-environmental concerns exemplifies a “truly sustainable business” (p. 165). This higher purpose in business informs decisions that may not lead to the greatest financial return (van Knippenberg 2020), but rather describe the reason a business exists, and why that is meaningful (Gartenberg 2022). Peshawaria (2021) concurred, noting that purpose relates to ethical standards and values in everything the business does, not just when it is convenient. A similar view is expressed by Henderson and Steen (2015) who identify purpose as “a concrete goal or objective for the firm that reaches beyond profit maximisation” (p. 327). Other definitions of duty-based purpose for business along similar lines appear in Craig and Snook (2014), EY (2015), Edmanset al. (2018), and O’Brien et al. (2021).

This paper adopts Hurth and Vrettos (2021)’s definition, as it ties together prevalent views to focus on well-being of society and the environment: An organisational purpose is a reason for a firm to exist (its primary value-generation goal) that is a specific and direct contribution to the meaningful ultimate ends of society—wellbeing. Profits, and all other types of capital, are then viewed by the firm as a means to that end (p. 26). Following this definition, a PLB deliberately enacts its purpose, placing this at the heart of its activities (von Ahsen and Gauch 2021), and profit is seen as an enabler of purpose and, ultimately, well-being. Simultaneously addressing purpose and profit is counter to the binary analysis of Runhaar et al. (2008) of SMEs considered to be “sustainable out of conviction” (p. 175) relative to those that are “profit-oriented” (p. 175). The emergent relevance of a business movement for PLBs is shown in pledges by large corporations (Harrison et al. 2020), think tanks promoting the approach (Edmans et al. 2018) and articles encouraging companies to be purpose-led (EY Ireland 2019; Polman and Winston 2021). The next section provides an overview of PLBs in terms of their features, drivers, and benefits, associated challenges, leadership traits, and characteristics.

Purpose-Led Businesses (PLBs)

As with purpose, there remains a somewhat vague understanding of the definition of a PLB (von Ahsen and Gauch 2021). However, several researchers have sought to characterise it. A PLB, also known as a mission-driven or values-driven or purpose-driven business, is an organisation that places a strong emphasis on its purpose beyond financial profitability (Gartenberg 2022). It is driven by a core mission or values that go beyond traditional business objectives to focus on positively impacting society, the environment, or specific stakeholders (Hajdas and Kłeczek 2021). Wilmot et al. (2022) further suggest that PLBs strive to align their activities, strategies, and operations with their purpose, aiming to create sustainable and meaningful value for multiple stakeholders.

The Blueprint Trust (2018), a charity that helps “businesses to be inspired and guided by a purpose that benefits society…” identified five principles of a PLB:

  1. (i)

    honesty and fairness with customers and suppliers (e.g. establishing long-lasting relationships with suppliers and customers, dealing with them fairly and honestly and encouraging knowledge-sharing capabilities);

  2. (ii)

    good citizenship at the individual, corporate, and community levels (e.g. seeking and providing access to opportunities for less privileged individuals and structuring the business to ensure fair contribution to society);

  3. (iii)

    a strong sense of purpose that delivers long-term sustainable performance (e.g. operating based on a purpose which serves society and is open to public scrutiny of the stated purpose and the actual performance delivered);

  4. (iv)

    a responsible and responsive employer (e.g. treating everyone with dignity and respect as well as encouraging constructive dialogue, thus fostering innovation, personal accountability, and leadership); and

  5. (v)

    a guardian for future generations (e.g. embracing the duty to protect the natural environment and conserve finite resources).

The British Academy (2019) also identified eight principles for PLBs covering law, regulation, ownership, governance, measurement, performance, finance, and investment (Fig. 1). The identified principles are interconnected within an ecosystem of pathways to change, powered by “engagement from stakeholders and public pressure on governments for legal reform, leadership from businesses, investors and governments, feedback loops, new partnerships between business and stakeholders, and refreshed skills and knowledge provision” (British Academy, p. 9). Overall, PLBs are characterised by a well-defined mission and core values guiding their decision making and actions, strongly emphasising socio-environmental impact alongside financial success (Wookey et al. 2018). They actively engage and collaborate with a wide range of stakeholders, including customers, employees, communities, and NGOs, ensuring their actions align with the needs and expectations of these groups (Jude and Smith 2021; White et al. 2017). PLBs also prioritise sustainable and ethical practices throughout their value chain, striving to minimise environmental footprint, promote fair labour practices, and uphold high ethical standards in all aspects of their operations (Stroehle et al. 2019; Wolff-Bye 2020).

Fig. 1
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Principles for purposeful business (British Academy 2019)

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Drivers and Benefits of PLBs

PLBs have gained traction due to the belief that being purposeful positively influences key performance drivers (Barby et al. 2021; Zu 2019) and constitutes a powerful lever for businesses (Williams 2019). Factors driving PLBs also include changing consumer/shareholder expectations (Dhanesh 2020; Rey et al. 2019), employee engagement and attraction, alongside regulatory and social pressures (Gyori et al. 2020; von Ahsen and Gauch 2021). Increasingly, consumers are seeking products and services that align with their values and contribute to social or environmental causes. PLBs respond to this demand by offering products or services positively impact and resonate with consumers’ values. Similarly, PLBs often attract and retain top talent by providing employees a sense of fulfilment and a higher purpose beyond a paycheck (Wilmot et al. 2022). Employees are motivated by working for organisations that prioritise making a positive impact (von Ahsen and Gauch 2021). Furthermore, the evolving regulatory landscape and societal expectations are pushing businesses to be more accountable and responsible (Gyori et al. 2020). PLBs address these pressures by integrating sustainability, social responsibility, and ethical practices into their core operations.

PLBs differentiate themselves in the marketplace by aligning with consumers’ values and preferences, thus attracting a loyal customer base to gain a competitive edge in an increasingly conscious consumer market (Izzo and Vanderwielen 2018). PLBs build a positive reputation for their commitment to socio-environmental impact, leading to increased trust, brand loyalty, and positive word-of-mouth recommendations (Jimenez et al. 2021; von Ahsen and Gauch 2021). Concerning employee satisfaction and productivity, PLBs foster a strong sense of purpose among their employees, leading to higher job satisfaction, engagement, and productivity (Gyori et al. 2020; Henderson and Van den Steen 2015). Consequently, employees are more motivated when they feel their work contributes to a larger societal or environmental goal.

Numerous other benefits of being purpose-led as highlighted by Stubblefield Loucks et al. (2010) and EY (2015) include (i) capturing customers through alignment with their personal values; (ii) improved attraction and retention of employees, who give increased discretional effort motivated from alignment with their personal values; (iii) product differentiation, for which customers may be prepared to pay more; (iv) less complicated change transformation within a business due to alignment; (v) a more resilient business long term; (vi) improved decision making and better relations with investors; (vii) attractiveness to financial investors aligned on values; (viii) improved financial outcomes; and many more. Nonetheless, von Ahsen and Gauch (2021) submitted that becoming a PLB in a manner that advances societal well-being and protects planetary life support systems is difficult due to numerous challenges to overcome, as highlighted in the next section.

Challenges of PLBs

PLB practices outperform their counterparts financially, suggesting that they are expected to be profitable. However, there are differences of opinion as to whether the increased financial success of the business can be anticipated due to the challenge of maintaining a balance between purpose and profit (von Ahsen and Gauch 2021), with Alexander (2007) noting that systemic constraints exist when deciding between environmental sustainability and profit maximisation. Kautonen et al. (2020) offer a more nuanced approach, stating that just as a business harms itself when it drifts from its mission to pursue profit egregiously, this can be taken too far, neglecting its financial obligations in pursuit of sustainability. The argument is that while a win–win scenario is possible, where profit and purpose support each other, limitations exist. This does not conflict with this paper’s definition of purpose, as profit is not viewed as the principal outcome of a successful PLB, but rather as an enabler to enact purpose. However, the continuing tension between profit and purpose requires further consideration.

Much like the nuanced view of profit and purpose, EY (2015), von Ahsen and Gauch (2021), and Wilmot et al. (2022) also identified potential challenges of being purpose-led, offering an alternate perspective to the previously identified benefits. These include (i) conflicts with financial goals; (ii) inadequate buy-in across the business enterprise and poor communication from leadership within the business; (iii) lack of clarity about what purpose really entails; (iv) misalignment between intended purpose and actual purpose; (v) deterrence of investors focussed on short-term financial returns; (vi) negative employee attitude to the purpose and resistance to change; (vii) increased production costs and inflexible ownership structure; (viii) short-term pressure from stakeholders, which impedes management’s ability to concentrate on long-term value creation; (ix) absence of significant metrics for tracking long-term value creation; (x) complexity surrounding the measurement and evaluation of the impact of purpose-led initiatives; (xi) complete mismatch between staff performance targets/incentives and purpose; (xii) the challenge of embedding purpose throughout the organisation; (xiii) the challenge of maintaining the organisation’s purpose and values as the business grow and scale; (xiv) the challenge of overcoming external pressures and scepticism when the authenticity or motives behind purpose-driven initiatives are questioned by external entities.

The above are challenges that all PLBs apparently face. While pursuing a higher purpose can be fulfilling and inspiring, it also requires strong leadership, effective communication, and a culture that embraces and supports the organisation’s purpose to navigate various complexities. Leaders who navigate these challenges successfully inspire their teams, cultivate stakeholder support, and create an enduring legacy based on purpose and values. Consequently, the focus is shifted to leadership qualities attributed to PLBs as outlined in the next section.

Leadership Characteristics of PLBs

PLBs require leaders who inspire, guide, and empower others to embrace and pursue the organisation’s mission and values. Leadership qualities that are commonly associated with PLBs include the following:

  1. a.

    Visionary (Almandoz and Lee 2022; Gyori et al. 2020): PLB leaders have a clear and compelling vision that articulates the organisation’s purpose and its desired impact on society or the environment. They communicate this vision effectively, inspiring and aligning employees and stakeholders around a shared sense of purpose.

  2. b.

    Authenticity (Almandoz and Lee 2022; Gyori et al. 2020): PLB leaders lead with authenticity, consistently demonstrating and embodying the organisation’s values and purpose. They act as role models by aligning their behaviours and decisions with the organisation’s mission, fostering trust and credibility.

  3. c.

    Empathy and inclusiveness (Brimhall and Palinkas 2020; Dhanesh 2020): an environment of empathy and inclusiveness, valuing diverse perspectives and experiences is cultivated by purpose-led leaders. They actively listen to stakeholders, including employees, customers, and communities, and integrate their input into decision-making processes, while understanding that a collective effort is essential to achieving the organisation’s purpose.

  4. d.

    Collaboration and partnership (Wookey et al. 2023): PLB leaders recognise the importance of collaboration and partnerships in driving positive change, seeking opportunities to collaborate with other organisations, stakeholders, and communities that share similar values and objectives. They build strong relationships based on trust, mutual respect, and a shared commitment to the organisation’s purpose.

  5. e.

    Resilience and perseverance (Gyori et al. 2020; von Ahsen and Gauch 2021): Purpose-led leaders understand that pursuing a higher purpose involves overcoming challenges and setbacks. They, therefore, exhibit resilience, adaptability, and perseverance in the face of obstacles, inspiring others to stay committed to the organisation’s mission.

  6. f.

    Ethical and responsible decision making (von Ahsen and Gauch 2021; Wilmot et al. 2022): PLB leaders prioritise ethical and responsible decision making, considering the impact of their choices on all stakeholders, ensuring that the organisation’s purpose is upheld while maintaining integrity and transparency in their actions.

  7. g.

    Continuous learning and growth (von Ahsen and Gauch 2021; Wilmot et al. 2022): Purpose-led leaders embrace a growth mindset and foster a culture of continuous learning and improvement, thus encouraging innovation, experimentation, and the willingness to adapt strategies to maximise the organisation’s positive impact.

  8. h.

    Long-term orientation (Kempster et al. 2011; von Ahsen and Gauch 2021): PLB leaders take a long-term view and consider the long-lasting impact of their decisions, prioritising the organisation’s purpose over short-term gains, while recognising that meaningful change often requires patience and persistence.

Essentially, PLB leaders embody and champion the organisation’s purpose, creating an environment where employees are motivated, engaged, and aligned with the organisation’s mission (Almandoz and Lee 2022). They nurture a culture of purpose, empowering individuals to contribute their skills, ideas, and passion towards achieving the organisation’s greater societal or environmental goals. It has been established that the leaders of businesses that meet the definition of purpose-led commonly display transformational leadership qualities (Smit 2021; van Luit 2018). Transformational leadership is distinguished by four factors (Brimhall and Palinkas 2020), namely: (i) individual consideration—appreciating an individual’s characteristics; (ii) intellectual stimulation—challenging people to innovate and create; (iii) inspirational motivation—a leader that is positive, encouraging, and inspiring for all staff; and (iv) idealised influence—the leader is a role model. This description fits well with Rey et al. (2019), who advance that the fundamentals of PLB leadership lie in (a) the leader discovering their purpose, (b) helping others to find personal purpose, and (c) connecting personal purpose to that of the organisation. While these descriptors draw a vivid picture of a successful leader as one who is focussed on people, little of it is explicitly directed to the challenges that leaders of MSBs face in enacting a PLB.

Medium-Sized Businesses (MSBs)

Global discourse on the role of business, and its responsibility to society and the environment, has often focussed on large companies (Burritt et al. 2020). However, small-to-medium enterprises (SMEs) are a significant part of any economy, for example, in Europe they constitute 99% of all businesses and employ 100 million people (Cicea et al. 2019; De Wit and De Kok 2014). SMEs commensurately contribute to approximately 64% of Europe’s industrial pollution (EU Commission 2010), so their combined environmental impact cannot be ignored. The European Union defines SMEs as having between 0 and 250 employees, which is categorised further into micro (< 10), small (> 10, < 50), and medium (> 50, < 250) (Berisha and Pula 2015); the latter being the focus of this research.

MSBs are characterised by six key attributes: size, organisational structure, market presence, growth potential, operational capability, and financial stability (Bassi and Dias 2020; Belás et al. 2014). In 2023, there were almost 200,000 businesses, which met the description of a MSB in Europe alone (Statista 2023). MSBs typically fall between small businesses and large corporations regarding employee count, annual revenue, and market presence. The specific parameters defining a MSB may vary by industry and region. Concerning sustainability impact, company size has been found to be important, with small companies found to be less sustainable (Bassi and Dias 2020) and likely be laggards in environmental leadership relative to MSBs (Triguero et al. 2016).

MSBs often have a more formalised organisational structure than small businesses, and are characterised by multiple departments or divisions with more structured decision-making processes (Belás et al. 2014). MSBs have established a certain level of market presence within their industry, boasting a solid customer base, regional or national recognition, and a competitive position within their market segment (Krajňáková et al. 2015). This positions MSBs in good stead for growth and expansion, as they seek to capture a larger market share, enter new markets, or diversify their product or service offerings (Fabrizio et al. 2022). Compared to SMEs, MSBs typically have more sophisticated operational capabilities (Preuss and Perschke 2010) due to having more advanced systems and processes in place to manage production, distribution, and customer relations (Parnell et al. 2015). MSBs often demonstrate financial stability and have access to greater resources than smaller businesses (Mbatha and Ngibe 2017; Preuss and Perschke 2010), which may be because of established relationships with financial institutions and a track record of generating consistent revenue.

Benefits of MSBs

MSBs enjoy a level of flexibility that allows them to respond quickly to market changes and customer demands (Varga 2021). They can adapt their strategies and operations more easily compared to larger, more bureaucratic organisations (Fabrizio et al. 2022). Accordingly, MSBs can identify and pursue niche market opportunities that may be overlooked by larger competitors (Parnell et al. 2015). This allows them to carve out a specific market segment and tailor their products or services to meet demand (Preuss and Perschke 2010). MSBs often foster a culture of innovation and entrepreneurship due to having the agility and resources to invest in research and development, explore new ideas, and drive innovation (Aksoy 2017; Al-Ansari et al. 2013). This helps them to build stronger customer relationships compared to larger corporations because of their capability of providing personalised attention, a more responsive customer service experience, and a closer connection to the local community (Krajňáková et al. 2015). Overall, MSBs occupy a unique position in the business landscape due to their tendency to achieve growth and market presence beyond small businesses while still retaining flexibility and entrepreneurial spirit. While they enjoy benefits such as flexibility, market opportunities, and customer relationships, they also face challenges, as described in the next section.

Challenges of MSBs

MSBs have a unique set of challenges, especially as they grow or expand. Starting, founders of small businesses face numerous challenges including lack of knowledge, financial resources, qualified people, and management time (McEwen 2013). As businesses transition from small to medium size, they are characterised by decentralisation, functionalisation, and formalisation (Preuss and Perschke 2010), which constitutes a risk of becoming more bureaucratic and slower to adapt. Building a cohesive structure that enables effective coordination and decision making when MSBs expand can thus be challenging.

As MSBs expand, maintaining and sustaining company culture and values becomes more challenging and requires consistent communication, fostering a positive work environment, and reinforcing the organisation’s core principles to combat this challenge (Chen 2022; Srisathan et al. 2020). Similarly, managing stakeholder relationships becomes very complex as MSBs grow (Girella et al. 2019), imposing the requirements of managing an expanding network of stakeholders, including customers, suppliers, investors, and regulatory authorities (Nguyen and Adomako 2022; Singh et al. 2022). For MSBs, maintaining strong relationships, managing expectations, and ensuring alignment with stakeholders’ interests can be demanding. With growth comes the need for improved operational efficiency (Preuss and Perschke 2010). MSBs must therefore identify bottlenecks, streamline processes, and implement efficient systems to maximise productivity. This may involve investing in technology, automating tasks, and adopting best practices.

MSBs require more resources, including capital, skilled workforce, and technological infrastructure, hampering growth and competitiveness (Bartolacci et al. 2020). They often operate in highly competitive markets, facing competition from smaller, agile start-ups and larger, well-established corporations. MSBs must navigate the competitive landscape, differentiate their offerings, and identify unique value propositions. As MSBs strive for growth, scaling operations while maintaining quality and efficiency can be challenging (McEwen 2013), necessitating the need to carefully manage any expansion process, ensure effective delegation of responsibilities, and maintain organisational cohesion (Caldera et al. 2019). Compared to larger corporations, MSBs may encounter difficulties in accessing financing and must therefore demonstrate their creditworthiness, develop strong relationships with financial institutions, and explore alternative funding sources (McEwen 2013). MSBs may need help attracting and retaining top talent as they often compete with larger companies that can offer more attractive compensation packages and career advancement opportunities (Bilan et al. 2020; Kravariti et al. 2021). Consequently, MSBs are exposed to the additional pressure of building a compelling employer brand and providing opportunities for professional growth.

Type of Leadership Characterising MSBs

Successful leadership in MSBs involves addressing the above identified challenges proactively, adapting to evolving circumstances, fostering innovation, and empowering employees (Le and Nham 2022). This requires strategic thinking, effective communication, and the ability to balance short-term priorities with long-term goals (Thomas 2020; Wang and Poutziouris 2010). Leadership qualities of MSBs are often characterised by a combination of entrepreneurial spirit (Franco and Haase 2017), adaptability, and a hands-on approach (Felício et al. 2019). MSBs require leaders who can navigate the growth challenges while maintaining a close connection with their teams and a clear vision for the organisation (Thomas 2020). To address challenges faced by MSBs, leaders must exhibit certain traits and attributes, including the following:

  1. a.

    Entrepreneurial Mindset (Franco and Haase 2017; Malik et al. 2020): Leaders of MSBs often possess an entrepreneurial mindset, willing to take calculated risks, explore new opportunities, and drive innovation within their industry. They have a strong sense of ownership and are proactive in identifying and pursuing growth prospects.

  2. b.

    Adaptability (Felício et al. 2019): MSBs leaders must be adaptable and responsive to changes in the business environment. They navigate shifting market conditions, customer demands, and industry trends, and are usually open to new ideas, willing to adjust strategies, and quick to seize emerging opportunities.

  3. c.

    Hands-on approach (Huynh and Hua 2020): MSBs often benefit from leaders who maintain a hands-on approach to management. They are actively involved in the business’s day-to-day operations, working closely with employees, and understanding the nuances of different functions. This hands-on approach allows leaders to have a direct impact on decision making, fostering a sense of teamwork and collaboration.

  4. d.

    Relationship building (Franco and Matos 2015; Le and Nham 2022): Effective leaders of MSBs prioritise relationship building, establishing strong connections with employees, customers, suppliers, and other stakeholders. Such leaders create a supportive and inclusive work environment, promoting open communication and collaboration across all organisation levels

  5. e.

    Strategic vision and operational excellence (Antony et al. 2022; Caldera et al. 2018): MSB leaders have a clear strategic vision for the organisation’s growth and success, defining the direction and goals of the business, while aligning all efforts towards a common purpose. They communicate the vision effectively to inspire and engage employees, creating a shared sense of mission. Leaders in MSBs emphasise operational excellence, focussing on optimising processes, improving efficiency, and managing costs effectively.

  6. f.

    Empowerment and development (Franco and Matos 2015; Le and Nham 2022): MSBs thrive when leaders empower and develop their teams. They delegate authority, provide autonomy, and encourage employees to take ownership of their work. They invest in employee development, providing training and growth opportunities to foster talent retention and succession planning.

  7. g.

    Customer-centric approach (Hampton et al. 2022; Hassan et al. 2019): MSBs often differentiate themselves by offering personalised and attentive customer service, through customer-centric approach prioritisation, understanding customer needs, and ensuring the organisation delivers value and exceeds expectations.

  8. h.

    Decision-making agility (Ekionea et al. 2021; Jafari-Sadeghi et al. 2022): Leaders in MSBs must make timely and informed decisions, by analysing complex information, considering different perspectives, and making sound judgments. They are decisive, balancing intuition with data-driven insights.

Many, if not all of these leadership qualities align or resonate with those of PLBs discussed previously.

Framing the Research Question

Leadership is critical to any change process in any organisation (van Knippenberg 2020). Sawe et al. (2021) described leadership as “one of the most critical key factors” (p. 2954) in their list of people-driven factors influencing sustainability practices for SMEs. Similarly, a survey by EY (2015), on what hinders businesses becoming purpose-led and where to direct efforts for purpose integration across a business enterprise, a lack of improved leadership development and training were also identified as the most important factors. Notwithstanding well-established literature on leadership alongside PLBs and MSBs, little attention has been given to the intersection of these three phenomena. For instance, von Ahsen and Gauch (2021) presented a detailed overview of 20 empirical studies on the challenges confronting PLBs, but none considered the intersection with leadership within MSBs.

As highlighted in section “Challenges of MSBs”, leaders of MSBs face unique challenges in aligning their organisations with purpose and navigating the complexities of the PLB landscape. A deeper understanding of strategies for overcoming the associated challenges is required, facilitating purpose-led MSB transitioning. By gaining insights from leaders of purpose-led MSBs, the aim is to provide leaders of MSBs with a practical guide on navigating their challenges and developing their leadership practice to enable purpose-led transformation. Consequently, the research question is framed as follows: how can the challenges faced by leaders of purpose-led MSBs be overcome to allow for successful transformation?

Research Design and Methods

To address the research question, the research design is informed by the contextual construct model (Knight and Cross 2012), where the researcher’s point of view, the guiding philosophical stance, the overall research methodology, and the design are embedded within a holistic framework. Given the aim of ascertaining the views of leaders of MSBs who have transitioned to become PLBs, on the kinds of challenges they face, and how they overcome these, the interpretivist philosophical stance was adopted. This is because it encompasses the subjectivity associated with the research question and in understanding overall social dynamics, key stakeholders, internal mechanisms, and the general environment (Brooks et al. 2018), facilitating an in-depth exploration of the research problem (Creswell and Poth 2016; Ibn-Mohammed 2017).

A qualitative research design utilising semi-structured interviews was adopted, being an effective tool in interpretative research (Adu 2019; Flick 2022) as the approach is flexible, interactive, and reflects the conversational exchange found in a real-world setting (Irvine et al. 2013; Kallio et al. 2016), whilst keeping the interviews on track (Wilson 2012). An interview guide, adapted from Kallio et al. (2016), was developed to enhance credibility, conformity, dependability, and ultimately trustworthiness of the study (Fig. 2). A series of three key questions were posed (Box 1) directly aligned with the research aim, with follow-up and probe questions to draw out concepts brought to light by the leading questions (Rubin and Rubin 2011). This approach provides an opportunity to derive meaning and understanding from the responses while facilitating direct experience and interaction between the researchers, the interviewees, and the phenomenon under investigation (Adu 2019; Flick 2022). As recommended by Kallio et al. (2016), a pilot interview was initially performed to verify the utility of the design before proceeding further.

Fig. 2
figure 2

(Source Adapted from Kallio et al. 2016)

The interview guide framework

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Box 1 Interview questions and prompts
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After researching objective means of identifying purpose-led MSBs, B-Corp-certified businesses were judged to align with Hurth and Vrettos (2021)’s definition as they are compelled to develop their business by balancing people and profit while building an inclusive and sustainable economy for everyone. The certification measures businesses against five areas to assess their impact on stakeholders, governance, workers, community, environment, and customers (Villela et al. 2021). This rounded assessment also aligns with the Hurth and Vrettos (2021) definition (notwithstanding that other non-B-Corp organisations could also satisfy the criteria). This approach is consistent with Smit (2021), who similarly used B-Corp certification, assessing its validity for purpose as it “requires a reasonable investment of money and time of organisations into green and inclusive business operations”. Following this, interviewees needed to meet two additional criteria namely: (i) the business is an MSB, with > 50 < 250 employees (see section “Medium-Sized Businesses (MSBs)”); and (ii) were either the CEO, or founder-leader.

Recruitment of participants, interviewing, and data analysis were conducted in accordance with the ethics approval obtained for the research. An initial list of eligible businesses to sample for interviewing was derived from the online B-Corp directory, which lists all registered B-Corp businesses. These businesses were then cross-referenced with the number of employees listed on LinkedIn. A clear sense of being a PLB from the account provided in the B-Corp directory (and this was further the initial topic of discussion in the interviews) was also checked. When a business met the first two criteria, the CEO or founder-leader were contacted through LinkedIn or the website. Of the 67 businesses contacted, 18 agreed to be interviewed, a 27% response rate. Potential interviewees were then asked to confirm they met the requirements of being an MSB and were the CEO or founder-leader. Four who responded did not meet these criteria, leaving 14 interviews conducted on subjects that met all the selection criteria. This sample size of 14 is acknowledged to be considerably small for a qualitative research. However, Denzin and Lincoln (2011) submitted that this sample size may be considered satisfactory for robust qualitative analysis when large data sample size is unavailable. This is like other research also involving interviews with the leaders of SMEs or PLBs (Stubbs 2017; von Ahsen and Gauch 2021; Wilmot et al. 2022).

Interviews were 30–60 min long and conducted in Spanish or English. All interviews were recorded, verbatim transcribed, and, where necessary, translated to English. DeJonckheere and Vaughn (2019) observe that the semi-structured interview process provides a balance of relationship and rigour, where the conversational style of the interview is relational, and the following analysis, which requires a transcript, brings the rigour. The business leaders interviewed were geographically spread, with three headquartered in the Pacific, one from Asia, three in Latin America, three in North America, and four in Europe. A range of industries were represented, with no one product or service given disproportionate attention. Table 1 shows the characteristics of the businesses interviewed. To maintain the businesses’ confidentiality, they are given an identification number, instead of their business name. A mix of businesses were chosen to reduce the skew of the results to a sector or region. Therefore, the sample was intended to represent organisations satisfying the selection criteria, and collectively, they cover a large geographical area. It is conceived that the leaders of MSBs grappling with the challenges of leading a PLB can benefit from the augmented findings from the literature review and the interview data.

Table 1 Interviewee and business characteristics
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In evaluating the interview data, an inductive approach (Thomas 2006) was utilised to derive categories or themes based on frequency, dominance, or significance determined from close reading of the transcriptions. Previous literature review also influenced the determination of themes. To ensure coding consistency, all authors participated in the derivation of themes independently, followed by group discussion to reach consensus on these and re-examine the interview transcript text to verify classifications to support convergence to a working analytical framework as outlined in Fig. 3. The following section presents a detailed analysis and interpretation of the interview data collected.

Fig. 3
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(Source Adapted from Thomas 2006)

Analysis of interview transcripts

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Results, Analysis, and Discussion

To analyse how interviewees approach the challenges arising from being purpose-led, it was first necessary to understand what purpose meant in the context of their business, as Muñoz et al. (2018) have shown purpose to be a subjective phenomenon related to the leader’s personal experience. Thus, the initial interview question sought to understand the purpose of each business represented in the study from the perspective of each interviewee. The explanations of purpose received varied, but the unifying position was that of a sustainable business serving society and the environment. According to some of the interviewees:

  • “Business should not just be about profit, but about making the world a better place” (ID2),

  • “…our business model intends to solve a specific social problem” (ID10),

  • “… [our purpose] is for a better world, for a better future” (ID1), and

  • “… doing good is good business. We live by that. For us the social impact dimension is the principal part of the business” (ID14).

These perspectives align with the definition of a PLB in the context of contributing to well-being, adopted for this research (Hurth and Vrettos 2021). They also resonate with the findings of Stubbs (2017) regarding the role of sustainable entrepreneurship in B-Corp-certified companies who found that these businesses pursue profits to create positive social and environmental impacts and outcomes for stakeholders, described as “profit with a purpose” (p. 342). Through this personal understanding of purpose, the interviewees framed and set about overcoming the challenges needed to be a PLB. The leaders placed this purpose at the heart of their business activities, with, for example, ID8 commenting: “if you call yourself purposeful, stop faking and walk the talk”. Viewed another way, purpose becomes the raison d’être of each business, central to organisational identity and informing the challenges they chose to focus on, and how they overcame them.

Subsequent thematic analysis of the interview data identified six critical challenges faced by the leaders of purpose-led MSBs, all of which are consistent with literature findings but also providing unique insights from the perspectives of the leaders interviewed. Summarily, these are the challenge of: (i) aligning purpose across the value chain; (ii) maintaining purpose as the business grows; (iii) managing the tension between profit and purpose; (iv) aligning purpose within the business; (v) aligning business governance with purpose; and (vi) aligning the business purpose with customer needs.

Explanation and analysis of the results for each challenge are provided in the following sections, along with the business strategies initiated by business leaders to overcome them. As will become apparent, corporate communication by leaders both within and external to their business and its interplay with corporate reputation and organisational identity, proved vital in overcoming the six challenges.

Challenge 1: Alignment of Purpose Across the Value Chain

Value chains encompass all the individual steps taken to create a product, driving climate change, and climate action, responsible for over 90% of emissions generated globally (WEF 2021). Accordingly, aligning purpose across the value chain can be a complex and challenging endeavour for companies, as confirmed by many interviewees (ID2–7, 9, 12, 13), judging this as critical to enacting their own company purpose. The interviewees identified six value-chain-related challenges. Diverse stakeholder priorities are a key challenge (ID2, 3) as different organisations within the value chain have distinct priorities, goals, and stakeholder expectations (von Ahsen and Gauch 2021). Interviewees (ID3–5) confirmed that aligning purpose requires understanding and reconciling these diverse perspectives, which can be challenging due to varying interests and levels of commitment to a shared purpose. Varying organisational cultures is another challenge (ID7, 12, 13), as organisations within the value chain may have different corporate cultures, values, and working methods. Harmonising these cultural differences and ensuring alignment with the overarching purpose constitute a challenge and require finding common ground and promoting a shared set of values.

Another key challenge as identified by interviewees (ID7, 9, 12, 13) is power dynamics across the value chain. Interviewees observed that power imbalances within the value chain hinders purpose alignment efforts because larger companies may exert more influence and control over smaller partners (ID 12&13), rendering it challenging to ensure that the purpose is equally embraced and integrated throughout the value chain (ID 7&9). For instance, ID12 operates in a value chain that sells its products to the end consumer through supermarkets. In this instance, their company’s communication with the supermarket on the sustainable attributes of their products required more efforts due to larger competitors exerting greater influence through their product variety and team sizes. Consequently, navigating these power dynamics and fostering equitable collaboration is crucial for successful purpose alignment. Operational complexity is another challenge identified by interviewees (ID7, 9, 12, 13), as the value chain often involves multiple interconnected processes, systems, and stakeholders. Thus, aligning purpose across these complexities is particularly challenging, requiring mapping and understanding the interdependencies and ensuring that purpose-related initiatives are effectively communicated and integrated into various operations (ID9&12).

Supply chain transparency and traceability are another key challenges identified by interviewees (ID2–7). Achieving purpose alignment requires transparency and traceability throughout the value chain. However, ensuring that partner businesses uphold similar standards and values, particularly when dealing with complex supply chains involving multiple suppliers is challenging (ID2&5). As noted by ID7, implementing systems and processes for monitoring, and verifying compliance with purpose-related criteria is demanding. These five value-chain-related challenges discussed so far are further compounded by the challenge of performance measurement and incentives as identified by interviewees (ID3, 5, 7, 9, 13) due to the difficulty in measuring and aligning both throughout the value chain, as different organisations may have diverse measurement systems, targets, and reward structures.

Maintaining purpose alignment across the value chain requires a long-term commitment from all stakeholders involved (von Ahsen and Gauch 2021). It requires effective leadership, clear and consistent messaging, and a collaborative environment where all stakeholders can contribute to and support the shared purpose (Wilmot et al. 2022). It also requires establishing strong relationships with partner businesses, continuous communication, collaboration, and monitoring, prioritising open dialogue, and working collectively to integrate the purpose into every stage of the value chain. This highlights the need for a leader with patience, the ability to deal with ambiguity (Gyori et al. 2020), and long-term strategic thinking (Ates and Bititci 2011). Silva et al. (2021) highlighted the important role of competitive advantage in tackling value-chain challenges, subsequently drawing attention to the importance of being able to “promote synergies among supply-chain partners” (p. 3806). For ID12, one of the company’s products was favoured by customers due to its sustainable attributes and dietary benefits. The business, in turn, used the influence of the final consumer to demonstrate benefits in a commercial paradigm to the supermarkets and overcome the challenge. Interestingly, although reliance on stakeholders for growth is identified as a challenge for MSBs (Preuss and Perschke 2010), in this instance, communicating the benefit of being a PLB from one stakeholder to another was used to align on purpose.

The analysis highlights the need for clarity of purpose to drive alignment, even with the choice of external suppliers. It also highlights that clear communication of the purpose, even indirectly, is a powerful means to overcome the challenges of alignment of the value chain (ID9). As submitted by Fitzsimmons et al. (2022), integrating purpose messaging as part of a company’s corporate communication channels to stakeholders across the value chain, including customers, suppliers, investors, and the media enhances corporate purpose. This “multi-stakeholder social construction” (Fombrun 1996), driven by a company’s corporate communication strategy, is termed corporate reputation (Abimbola and Vallaster 2007) and constitute stakeholders’ perception of an organisation’s ability to meet their expectations regarding purchasing decisions, employment opportunities, or investments (Van Riel and Fombrun 2007). As noted by Poiesz (1988), the reputation of a company becomes especially helpful when stakeholders are pressured by external conditions to make informed decisions (e.g. deciding which product to purchase), underscoring its importance in overcoming value-chain-related challenges.

Challenge 2: Maintaining Purpose as the Business Grows

Maintaining a sense of purpose can become challenging as a business grows and expands (ID9, 11). Common themes of challenges identified by the interviewees are broadly categorised as (i) loss of focus; (ii) dilution of culture; (iii) decentralisation and loss of control; (iv) scaling processes and systems; and (v) influence of external pressures. Loss of focus occurs because, with growth comes the temptation to explore new opportunities and diversify into different markets or product lines (ID 11). While growth and expansion can be beneficial, it is important not to lose focus of the original purpose and core values that drove the business’s success (ID9). To tackle this challenge, business leaders must continually assess new opportunities against the company’s purpose to ensure they align with its long-term vision (ID9). As a business expands, it often hires new employees and opens additional locations, which can dilute the company culture (ID9). Preserving the values and culture that contributed to the business’s early success becomes more complicated when the workforce becomes larger and more diverse. Essentially, the leaders interviewed confronted the unique challenge of maintaining their purpose during periods of change. ID9 described the challenge as “spreading purpose dust”. While the business was small, ID9 could sprinkle the dust easily across the business, but as the number of staff grew, so did the realisation that ID9 could not be everywhere at once and needed to find new means to “send the dust widely”.

Decentralisation and loss of control constitute a challenge that leaders of PLBs are confronted with (ID 2, 4, 5, 9). With growth, businesses often need to decentralise decision making and delegate authority to different departments or teams. While this is a necessary step for scaling, it can lead to a loss of control and a potential deviation from the original purpose (ID5). To address this, businesses must establish clear strategic goals and guidelines, empowering employees while providing them with a framework to make decisions that align with the company’s purpose. This requires strategic leadership of an MSB (Ates and Bititci 2011) to establish functional business units, which increase specialisation and decentralised responsibility. There was a high frequency of recognition of the B-Corp framework by interviewees as a solution to overcome the challenge of maintaining purpose as the business grows (ID 2, 4, 5, 9, 10, 12, 14). This is because the B-Corp framework helped meet many of the leadership challenges associated with MSB development while allowing the business to focus on purpose. This suggests a structured framework approach to operationalising purpose, which supported the leaders in navigating these challenges. ID4 commented, “B-Corp gave us a lot of tools to operationalise what we were doing”. ID2 described B-Corp as the hardware for their business, commenting that:

I think that’s where B-Corp certification really helps because it is so thorough across so many different areas of your business. And the point system helps to guide you on the areas that they can have the biggest impact.

ID9 went so far as to suggest that “B-Corp should just be a fundamental framework to be in business”. ID10 believed “the most important instrument is the B-Corp certification”. These views mesh with Stubbs (2017), which underscore the goals espoused in the B-Corp model and the very nature of B-Corp businesses as being “companies that manage to balance profit and purpose” (Liute and De Giacomo 2022).

As a business grows, it must implement scalable processes and systems to handle increased demands and complexities. However, rapid growth can sometimes outpace the development of these systems, leading to inefficiencies and loss of focus. Business leaders must therefore invest in robust infrastructure, streamline operations, and ensure that processes align with the business’s purpose, so that “growth does not compromise the core values” (ID9). As an MSB expands, it becomes subject to increased scrutiny and expectations from various stakeholders, such as investors, shareholders, and customers. These external pressures can sometimes push the company to prioritise short-term gains over long-term purposes. Maintaining open lines of communication with stakeholders and consistently reinforcing company purpose (ID 2, 4, 5, 9), can help mitigate these pressures, ensuring alignment with the business’s core values.

The preceding discussion emphasises the importance of reinforcing organisational identity to maintain purpose as the business grows. Van Riel and Fombrun (2007) described organisational identity as follows: who we are, what we stand for, what is our core purpose?, and what does it mean to be involved in this company? (p. 61). The answers to these questions are core to corporate communication and reputation management (Fombrun and Van Riel 2004). This identity, therefore, shapes an organisation’s business practices (Fombrun 2005) alongside the kind of relationship its leaders create with key stakeholders (Dowling 2016). A detailed understanding of an organisation’s identity by its stakeholders can, therefore, aid the implementation of strategic change, thus helping in overcoming the challenge of maintaining purpose as the business grows. To navigate the identified challenges, businesses must regularly reflect on their purpose and ensure that growth and expansion efforts align with their core values. Strong leadership, effective communication, a commitment to continuous evaluation and adaptation and leveraging the robust B-Corp framework for operationalisation are vital in maintaining purpose throughout the growth journey.

Challenge 3: Managing Purpose and Profit

The difficulty in balancing financial concerns against purpose is an issue that is well articulated in the literature and was acknowledged as a challenge by all interviewees. Prioritising purpose over profit or vice versa depends on various factors including the organisation’s values and cultures, leadership philosophy, industry dynamics, and the context in which decisions are made (von Ahsen and Gauch 2021). Specific challenges that arise when managing purpose and profit as identified by the interviewees are discussed as follows. Short-term vs. long-term focus—while profit often demands a short-term focus, aiming for immediate financial gain, purpose often requires a long-term perspective, focussing on sustainable growth, social impact, and customer satisfaction. Leaders interviewed (ID5–9, 12) acknowledged that balancing these perspectives can be challenging, as they must weigh the immediate financial needs against the long-term goals and societal impact of the business. ID12’s view summed the challenge that pursuing purpose as a worthwhile endeavour by a business is disproved if the business is not financially viable. Most interviewees recognised profit as a stimulus to advance the business (ID1, 4–11, 14). It was also noted that leading with purpose often needed to be balanced with financial viability, with ID14 describing the activity of a PLB as “making money, while at the same time we are having an impact”. This perspective contrasts with the findings of Stubbs (2017) that “suggest that B-Corps pursue profits to enable them to create positive social and/or environmental outcomes” (p. 332).

Businesses have various stakeholders including shareholders, customers, employees, communities, and the environment. Each stakeholder group has different expectations and priorities, some emphasising profit maximisation while others prioritise purpose-driven initiatives. Managing these diverse expectations and finding a middle ground is complex (ID4–11). Furthermore, pursuing purpose-driven initiatives may require allocating resources to projects without immediate profits or have a longer payback period, posing challenges when making investment decisions and allocating budgets. Leaders must strike a balance between investing in purposeful endeavours while ensuring the business’s financial viability and sustainability (Wilmot et al. 2022). Also, businesses operate within a broader economic and competitive landscape, which can exert pressure to prioritise profit over purpose. Market forces, investor expectations, and industry dynamics can sometimes create conflicts between financial considerations and purpose-driven goals. Leaders must navigate these pressures while staying true to the organisation’s core values and purpose.

Some leaders prioritise purpose and see profit as a means to achieve long-term goals, recognising that a strong purpose can drive customer loyalty, employee engagement, and ultimately financial success. Other leaders prioritise profit as their primary focus, considering purpose as secondary or a by-product of profitability. Nonetheless, all interviewees expressed an acute awareness of the need to not betray the purpose of their business in pursuit of profit. Such a compromise was unanimously seen as having the potential to erode, or destroy, the raison d’être of the business. Then, the identity and reputation of the company with external stakeholders matters to business leaders, which McDonald et al. (2022) identify both as a major motivator of company behaviour and a means for engaging stakeholders and ultimately strengthening the attractiveness of an organisation (Fombrun and Van Riel 2004). However, it was acknowledged this was not always easy and highlighted the importance of the leaders “making the right compromise” (ID8). A similar perspective was expressed by ID10, explaining that while there were instances when they had to compromise on their principles, they were committed to rectifying or reversing the compromise as soon as finances allowed. As noted by Van Riel and Fombrun (2007), an integral component of a company’s communication agenda is to “build a strong corporate brand, and develop reputation capital” (p. 36), ensuring uncompromised integrity. Achieving this requires that all forms of communication are organised into a consistent whole, and success criteria that facilitate the measurement of the effects of the company’s communications on its reputation and identity are developed.

The challenge of balancing profit and purpose was overcome in two main ways. First, business leaders carefully consider the outcome of situations when compromising purpose for profits. Three interviewees described situations where they had made decisions to sacrifice profits to remain true to purpose (ID6, 8, 11). First, these leaders relied on using consistency of purpose to guide decision making, maintaining company’s reputation. Given that reputation emanate from an organisation’s image around its product, financial, social, and employment domains (Van Riel and Fombrun 2007), it plays vital role in maintaining the consistency of purpose of the company when confronted with conflicting choices. Second, interviewees universally relied on a strong alignment of purpose, internally and externally, through clear and consistent communication to explain why decisions were made about profit and purpose. This further emphasises the importance of purpose messaging as part of a company’s corporate communication strategy (Fitzsimmons et al. 2022), both externally and internally (He and Brown 2013; Karaosmanoglu and Melewar 2006), to protect and nurture all stakeholders while ensuring they learn, contribute, and thrive within a company’s ecosystem (Blueprint Trust 2018). Ultimately, the balance between purpose and profit will vary across organisations and leaders. Some leaders may prioritise purpose over short-term profits, while others may take a more balanced approach. The key lies in aligning purpose and profit in a way that creates shared value for all stakeholders and sustains the organisation’s long-term success.

Challenge 4: Aligning Purpose Within the Business

Aligning purpose within a business, ensuring buy-in from everyone, and building the culture can be a complex task as identified by many interviewees (ID1, 4, 5, 7, 9). ID5 reiterated: “Like, culture is so critical, so critical… to being purpose-led”. Culture and identity are related (Hernes and Schultz 2017). Organisations endowed with viable and consistent cultures and identities have higher tendencies to engage in concerted efforts towards influencing stakeholders’ perceptions, and their leadership are more likely to respond to such perceptions (Vella and Melewar 2008), helping to reinforce organisational purpose into the business. A primary challenge identified by interviewees (ID9, 13) is defining and communicating a clear and compelling purpose that resonates with employees at all levels. Employee retention and engagement also emerged as central themes around internal communication. ID13 remarked on this, stating, “Once we established those guiding principles in 2014 and tried to act… consistent with our values, we’ve seen a reduction in voluntary employee turnover”. This suggests the power of aligning corporate communications with foundational principles of organisational identity.

ID12 emphasised the evolution in their organisation’s communication approach, echoing similar sentiment, highlighting the importance of “really, really, honest and transparent conversations”. Such an approach, they note, ensures “everyone feels like they’re heard, and they felt like they have bought into the journey”. Conversely, ID1 raised a candid observation about the replication of purpose in communication, suggesting uncertainty: “I am not sure that we replicate and chime and repeat and repeat the purpose in all our communication… The organisational culture for us is very important”. This is particularly important as the authenticity of an organisation is rendered questionable if its employees do not resonate with and express the shared values in their routine interactions with key stakeholders including suppliers, customers, investors, and the wider public (Van Riel and Fombrun 2007). ID2 mentioned that no internal meeting, be it a Board Meeting or a weekly team meeting, would start without an initial conversation on people and planet. Some company leaders reflected on the importance of having open dialogues and debates when making socio-environmental decisions (ID3, 11, 12).

Overall, if the purpose is ambiguous or not well communicated, it becomes difficult for employees to understand and rally behind it, leading to confusion and disengagement. This aligns with the findings by Stubblefield Loucks et al. (2010) and EY (2015) that poor communication from leadership inside the business impedes enacting purpose, not to mention organisational identity more broadly (Hatch and Schultz 2002; He and Brown 2013; Karaosmanoglu and Melewar 2006). Focussing on communicating the company’s purpose when hiring people was cited as very important to find long-term alignment of people towards company ambitions (ID13). This helps in constructing a positive reputation for companies, strengthening their attractiveness (Alniacik et al. 2012). It has been established that companies with a positive reputation have a higher chance of attracting and retaining employees and drawing in new sources of financial revenue, with reduced exposure to risk (von Ahsen and Gauch 2021).

Instilling purpose often requires a mindset shift, values, and behaviours (British Academy 2019). Resistance to change is a common challenge, as employees may be accustomed to existing practices or sceptical about the benefits of purpose-driven initiatives. Overcoming resistance requires effective change management strategies, transparent communication, and fostering a culture that embraces continuous improvement. Also, embedding purpose requires cascading it throughout the entire organisation, from top leadership to front-line employees. Regular communication, training programs, and engaging middle managers as purpose champions can help overcome this challenge. Specifically, the means used by the interviewees to overcome challenges related to aligning staff within the business included the use of ritual and symbolism to reinforce messaging. Examples included, starting meetings with a silent minute and prioritising purpose before finances (ID2), or a day-theme such as, Positive Monday, Eco Tuesday, or Thankful Friday (ID4), and describing purpose-led initiatives as the ‘pillars’ of the ‘purpose temple’ (ID12).

Other leaders (ID1, 3, 11, 12) emphasised the importance of being transparent with staff about the challenges and direction of the business. For example, ID12 noted that generating trust and open communication is paramount to allow staff to align their purpose with the business. Three interviewees (ID1, 5, 11) involved employees in designing the purpose of their business; ID1 recalled: “Purpose was built together with the 50 employees, in a few work sessions. When you build it together with people then everyone shares it”. Employee involvement was considered to be critical (ID11) as it is a source of creativity, helps propagate the culture, and generates loyalty (ID5). Three businesses relied on staff to act as culture and identity propagation agents (ID5, 8, 11), with ID5 noting that: “But I cannot be everywhere now, as we have grown … I am not in every day of the week, or high-fiving, it is actually key people in a leadership capacity get that, and they take it through other areas”. Employee involvement was seen to help overcome the challenge of disseminating the culture when the business is growing, allowing for alignment on purpose that is not reliant on direct communication from the leader (ID1–3, 5, 11). Preuss and Perschke (2010) recognised this effect in MSB transitional processes, confirming that alignment inside the business to being purpose-led can be beneficial to overcoming the challenges associated with developing as an MSB.

Of the 14 MSB leaders interviewed, 11 declared being highly sought after by job seekers due to alignment of the business’ values appealing to the applicant. Three interviewees reported being appealing to younger generations (ID2, 11, 12), for example: “We have a young workforce and young people, we find, are motivated to work in fulfilling and meaningful work” (ID11). McDonald et al. (2022) reported that employees may “weave their individual identities within the identity of the organisation” (p. 3). All of our interviewees addressing this topic acknowledged that hiring for alignment on purpose further drove the company culture and identity. Overall, the main ways that interviewees overcame the challenge of aligning the staff on purpose was to use transparent and clear communication to consistently describe purpose and build a purpose-led culture through ritual, staff involvement, and hiring for purpose fit.

Challenge 5: Aligning Business Governance with Purpose

Aligning business purpose with the Board of Directors was identified as a key challenge by more than half of the interviewees (ID1-3, 5, 8–10, 12), given their diverse backgrounds, interests, and priorities. For instance, some Board members, particularly those representing investor interests may prioritise profit maximisation, short-term gains, or financial returns, creating conflicts with the broader organisation’s purpose that prioritises long-term sustainability, social impact, or ethical considerations. Powerful Board members can exert significant influence over governance and decision-making processes. If such Board members prioritise profit over purpose, it can overshadow the voices of other Board members and even management who advocate for purpose-driven initiatives. This power dynamic can make aligning governance practices with the organisation’s purpose challenging.

ID12 described this situation around the business’s decision to pursue B-Corp certification: “…that was a pushback from the board around where we are going to… and how we are going to deploy that investment to get there”. ID12 saw the possible lack of alignment as an impediment to enacting purpose, noting: “for me it is about having all stakeholders aligned to your vision, your purpose… and the journey you’re going to go on, because that will become very hard if you don’t have Board level support”. Building trust and ensuring transparency with Board members and shareholders was considered necessary, with ID12 advocating for the narrative of a strong employer brand and reputation, especially as a B-Corp business. ID11 stated that “When we’re honest with our investors and things are going poorly, they believe us when things are going well”. This underlines the reciprocal nature of trust in corporate relationships. It also stresses the importance of a positive corporate reputation, providing stakeholders with the company’s perception based on the overall global assessment of its level (strong/weak, good/bad, high/low) of effectiveness (Van Riel and Fombrun 2007), thus strengthening organisational purpose. The essence of being “absolutely transparent with the shareholders” was further accentuated by ID1, who reflected on the importance of clarity, especially during difficult times. This further builds on the notion by Van Riel and Fombrun (2007) that corporate communication affects stakeholders’ perception regarding the organisation’s prospects, influencing the resources made available to the organisation. These stakeholders’ perceptions are based around the constructs of “reputation”, “image”, and “brand”, with each representing different points of view with varying pragmatic implications (Abimbola and Vallaster 2007).

Some interviewees shared concerns around communication of business purpose at the Board level, with ID8 commenting: “The operations people did not do a good job in explaining what the purpose for the business is”. ID1 mentioned the need for “PR at the board level”, which is necessary to raise awareness of the purpose their business is pursuing. These comments highlight the perceived need for clear and transparent purpose that is consistently communicated to align purpose with business governance [one of the principles for PLBs advanced by the British Academy (2019)]. Interviewees acknowledged how important frank discussion and clear communications on the topic at the Board level enabled deep reflections on what constituted a PLB, leading to greater clarity on purpose. ID10 stated: “We had to fight a small internal fight in the Board of Directors… because of the electric fleet… But if the company has a purpose, well, even so, the decision had to be discussed a lot, and we had to be willing to increase costs”.

One initiative ID10 implemented to help ensure the alignment with purpose was to invite its directors onto the Board as voluntary ad honorem positions to ensure they put purpose before profit, only telling the directors they would be reimbursed after accepting the position. ID12 used a more symbolic approach with the Board: “…we all held hands, sat around the table and said we’re going to sign up to B-Corp, which holds them to account too”. The role of external frameworks, such as B-Corp, was identified by ID9 as a catalyst for value communication, noting how B-Corp “has helped celebrate the fact we can communicate it, and people can identify with it”. Diving deeper into the intricacies of communication, ID3 offered a reflective analysis, emphasising a two-pronged approach: an external focus on improving the company’s image and reputation, and an internal motivation to foster alignment with academic professionals. They stated: “Not only a communication issue towards society, towards our clients but also towards the engineering professors… we also modernised the language so that it would be more attractive for them to do projects for us”.

Overall, aligning business governance with purpose requires ongoing effort, clear communication, diverse board composition, engagement, and education. By fostering a culture of purpose and embedding purpose-related considerations into governance structures, organisations can overcome challenges and ensure that governance practices reflect and support the organisation’s purpose.

Challenge 6: Aligning Business Purpose with Customer Needs

Aligning business purpose with customer needs presents several challenges, especially maintaining honesty, fairness, and integrity (ID 3, 10, 13, 14). While aligning with customer needs is crucial, businesses also need to maintain profitability to sustain their operations. The challenge lies in finding the right balance between meeting customer expectations and maintaining a viable business model. This may involve managing costs, optimising pricing strategies, and ensuring that the value provided to customers aligns with their willingness to pay. One interviewee explained that having a clear purpose created a competitive advantage, with customers willing to pay more for goods and services over a longer period “understanding that even if they are paying a little more, there is a concrete social project behind it” (ID10). Van Riel and Fombrun (2007) echoed similar view, noting that organisations with a positive reputation can demand higher product prices. It has been long established that for 90% of consumers, a company’s reputation plays a vital role when purchasing products similar in price and quality (Mackiewicz 1993). Similarly, ID11 noted that “by expressing our values, through businesses…. [we have] benefited tremendously in attracting customers who care”. This accords with EY (2015) who identified capturing customers through alignment with their personal values as a positive outcome of PLBs. Consequently, understanding of organisational identity by customers is a key component of business success.

Customers have diverse needs, preferences, and expectations. Trying to cater to everyone can be challenging, especially when different customer segments have conflicting desires. Businesses must carefully segment their target audience, conduct market research, and tailor their products, services, and experiences to meet the specific needs of different customer segments without compromising their overall purpose. Honesty and transparency are vital for building trust with customers. However, challenges can arise when communicating limitations, potential risks, or unexpected changes in products or services. Product presentation and value proposition dynamics play a pivotal role in this domain. A perspective of ID5 illustrates the challenges and adaptabilities, noting a particular instance where a decision was not “well communicated to customers”, leading to necessary adjustments. Open communication and clear expectations can help mitigate these challenges. Four business leaders (ID 3, 10, 13, 14) emphasised the difficulty of both developing a process to communicate purpose to customers regularly and convincing them about the importance of supporting purpose. However, regarding this, ID2 argued that the B-Corp movement helped them better communicate purpose to customers. ID5 described communication with customers regarding an evolving landscape: “The landscape is changing, however. We now need to have an annual report! People are asking—we don’t care what you did five years ago. Tell us what you are doing now”.

Maintaining fairness with suppliers and ensuring ethical sourcing practices is challenging. Four leaders (ID 3, 10, 13, 14) recognise the need to align their purpose with responsible supply chain management, ensuring that their suppliers adhere to ethical labour practices, environmental sustainability, and fair-trade principles. Balancing the desire to provide affordable products with the responsibility to source ethically can require careful vetting of suppliers and ongoing monitoring of their practices. In a competitive marketplace, businesses may face pressures to compromise on their purpose-driven principles to stay ahead or attract customers. This can lead to ethical dilemmas or short-term decision making that may not align with the long-term purpose. Overcoming this dilemma requires strong leadership and a steadfast commitment to purpose to resist these pressures and make choices that prioritise fairness and integrity.

Addressing the challenge of aligning purpose with customer needs was multifaceted. One interviewee (ID2) felt the need to express their purpose to customers, and articulating how the business was able to influence environmental and/or social issues. Two leaders (ID5,9) also mentioned the necessity of working closely with customers to educate them on the value of supporting PLBs. ID7 suggested the need for a clear, customer-facing purpose as a mechanism to gain attention, while ID5 when informing customers about the purpose of their business, “education is key”. For five interviewees (ID1, 9, 11–13), the means of overcoming this could be seen as the sum of everything the business does, meaning that the way purpose was expressed to customers comes through all the actions of the business, and anything opposing that might be harmful to their customers’ understanding of the purpose. Christensen and Cornelissen (2013) highlighted the importance of purpose messaging as part of a company’s corporate communication strategy to ensure transparency and trustworthiness with external stakeholders.

As one of them said:

I am not so sure that there is any one thing you decide, so long as it is consistent across everything that you touch. That means that every decision you make you come back to… is it suitably influencing people, planet, profit? Is it giving people a sense of purpose around that connectivity? So… I do not think we fundamentally go—we will just do this because it is contributing to that, it just becomes a part of an awareness across everything you do [ID9].

Overall, having a clear purpose, defined through consistency of action to that purpose, which was well communicated were the most favoured means of realising the benefits of alignment with customers on purpose. Indeed, aligning business purpose with customer needs requires ongoing effort and a commitment to maintaining honesty, fairness, and integrity. By prioritising customer satisfaction, investing in responsible practices, and ensuring transparent communication, businesses can strengthen their alignment with customer needs.

From the preceding analysis of interview data, the theme that constantly revolve around all the challenges of purpose-led MSBs and their corresponding solutions is corporate communication, and its interplay with corporate reputation, and organisational identity, all of which are expanded upon in section “Corporate Communication and Its Interplay with Corporate Reputation and Organisational Identity”.

Corporate Communication and Its Interplay with Corporate Reputation and Organisational Identity

Based on the discussion and analysis in section “Results, Analysis, and Discussion”, it has become apparent that communications in different forms, including management, marketing, organisational, interpersonal, stakeholder, and customer, are paramount to overcoming the six challenges identified. Returning to the literature, these different forms of communication, which are created and distributed regarding the business goals, values, and policies of a company, fall under the umbrella term corporate communication (Karaosmanoglu and Melewar 2006; Van Riel and Fombrun 2007). Corporate communication entails a coherent approach informed by a centrally coordinated strategic framework, which organisations adopt to communicate with various external and internal audiences including employees, customers, stakeholders, general public, media, and regulatory bodies. This is captured in the definition of corporate communication derived by Van Riel and Fombrun (2007) as “the set of activities involved in managing and orchestrating all internal and external communications aimed at creating favourable starting points with stakeholders on which the company depends” (p. 25). Corporate communication helps to (i) promote company brand, image, and reputation; (ii) generate internal and external support for corporate objectives; (iii) develop initiatives that reduce discrepancies between an organisation’s desired identity and brand characteristics; (iv) coordinate efficiently with stakeholders; and (v) facilitate the fulfilment of organisational objectives (Forman and Argenti 2005; Van Riel and Fombrun 2007).

Importantly, corporate communication is integral to building an organisation’s reputation by creating unique and appealing images for its stakeholders (Abimbola and Vallaster 2007). Van Riel and Fombrun (2007) concluded that reputation is the most tangible outcome through which the successful development of a corporate communication system can be evaluated. Consequently, at the zenith of the corporate communication agenda is reputation because it affects the perception of stakeholders about an organisation’s prospect. Reputation emanates from an organisation’s image around its product, financial, social, and employment domains (Van Riel and Fombrun 2007). Reputation is vital for both PLBs and their stakeholders because the more stakeholders depend on a company’s reputation to make investment or purchasing decisions, the more crucial it is for the company to exhibit a strong reputation. A positive reputation assists companies in attracting the people necessary to drive their organisation’s purpose into reality (von Ahsen and Gauch 2021), enabling positive relationship with stakeholders.

Corporate communication also plays a vital role in shaping organisational identity, with Forman and Argenti (2005) seeing the function of corporate communication as implementing “an organisation’s strategy through communication” (p. 246), and ultimately delivering “the overarching identity and direction of the firm” (p. 246). Organisational identity, which can manifest internally and externally, and is managed through corporate communication, exemplifies the distinct features of a company’s reality, which are core to their overall mission and existence (Albert and Whetten 1985) and thus business purpose (von Ahsen and Gauch 2021). As highlighted by Fombrun and Van Riel (2004), when the core components of the identities of a company are thoroughly explored through a clear understanding of what it stands for, the perception of authenticity emerges. An organisation’s culture and identity shapes its business dealings and practices, alongside the relationships its leaders establish with key stakeholders, helping them not only in outlining what their company stand for but also as strategy justification for stakeholders’ interactions (Van Riel and Fombrun 2007). By establishing the foundational principles of how a company operates, organisational identity contributes to the consistency of company’s reputation with stakeholders.

Organisational identity depicts an organisation’s reality and uniqueness and is fundamentally linked to its internal and external image and reputation through corporate communication (Gray and Balmer 1998). It was, therefore, palpable from the interviews with leaders of purpose-led MSBs that the nexus of corporate communications and its fundamental inter-relationship with corporate reputation and organisational identity lies at the intersection of transparency, value alignment, stakeholder engagement, and adaptability. Whether ensuring that actions are in tune with foundational principles, navigating the complexities of stakeholder interactions, or facing challenges head-on with openness, effective corporate communication remains a cornerstone in driving organisational cohesion and external trust. If effective, corporate communication strategies can facilitate increased organisational profit, consumer engagement, and longevity within the industry in which a company operates (Cornelissen 2020; Mihai 2017).

Essentially, then, the lifeblood of all organisations is corporate communication (Van Riel and Fombrun 2007), which is fundamental to multiple management activities (Christensen and Cornelissen 2013) and constituting the medium through which they access the key resources required for effective operations (Karaosmanoglu and Melewar 2006). Corporate communication is the vehicle through which businesses acquire primary resources (e.g. capital, labour, and raw materials) they need and generate invaluable stocks of secondary resources (e.g. legitimacy and reputation) that facilitate their operations, thus demonstrating social responsibility and good citizenship (Van Riel and Fombrun 2007). Given that reputation constitutes the set of meanings by which a company is known (Dowling 1986) and, by extension, the consumers expectations, feelings, and attitude about the company (Topalian 1984), corporate communications remain the vehicle that strategically drives corporate reputation, and ultimately organisational identity (Van Riel and Fombrun 2007).

Corporate reputation and organisational identity driven strategically by corporate communication, therefore play vital roles in overcoming the challenges of being a PLB through (i) clarifying purpose; (ii) engaging stakeholders; (iii) building organisational culture; (iv) internal alignment; (v) external reputation and differentiation; and (vi) crisis management; schematically illustrated in Fig. 4. Effective corporate communication is pivotal in clarifying and articulating the organisation’s purpose internally (Challenge 4 & 5) and externally (Challenges 1, 2, 3 & 6). It helps engage stakeholders, including employees, customers, and investors, by fostering a shared understanding of the organisation’s mission, values, and societal impact (Challenge 6). Through transparent and consistent messaging, leaders can build trust and garner support, strengthening the organisation’s purpose-driven identity and creating a shared understanding of the organisation’s direction (Fitzsimmons et al. 2022). Corporate communication is a powerful tool to engage stakeholders and foster their support for the purpose-led initiatives (Challenge 1 & 6). By communicating purpose-driven initiatives, progress, and impact, organisations can demonstrate their commitment to creating value beyond profits (Challenge 3). Engaging stakeholders through various communication channels, such as social media, corporate websites, annual reports, and events, builds trust, encourages participation, and garners support for the organisation’s purpose (Challenge 4).

Fig. 4
figure 4

Framework for overcoming the challenges of being a PLB

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Effective communication is crucial for shaping and reinforcing the organisational culture aligned with the purpose (von Ahsen and Gauch 2021) by establishing a sense of shared identity, values, and behaviours among employees (Challenge 4). Regularly communicating purpose-related stories, successes, and role models inspires employees and strengthens their emotional connection to the organisation’s purpose. This, in turn, encourages them to live the purpose in their daily work. Regular and open communication channels enable dialogue, collaboration, and the integration of purpose into daily operations, enhancing employee engagement and driving purpose-driven actions (Challenges 1, 4, & 5). Corporate communication plays a significant role in aligning employees’ understanding and commitment to the purpose (Challenge 4). Regularly sharing updates, providing context, and linking individual roles to the broader purpose help employees see the significance of their contributions. Transparent communication channels, such as town hall meetings, newsletters, and internal social platforms, facilitate dialogue and collaboration, reinforcing a sense of shared purpose across the organisation (Challenges 1, 5, & 6).

Furthermore, corporate communication serves as a strategic tool (Karaosmanoglu and Melewar 2006) for differentiating purpose-led MSBs in the marketplace (Van Riel and Fombrun 2007) by effectively communicating their purpose to external audiences (Challenges 1, 2, 3, & 6). This helps to shape the organisation’s external reputation, positioning it as a responsible and purpose-driven entity, thus attracting customers, investors, and talent who align with the organisation’s values and purpose, enhancing the organisation’s competitive advantage (Wilmot et al. 2022). This competitive advantage not only enhances their market positioning but also contributes to the sustainability and long-term success of the organisation (Challenge 4). In times of crisis, corporate communication becomes even more critical for PLBs because transparent and proactive communication helps address financial concerns, maintain trust, and demonstrate a commitment to integrity and purpose (Challenge 1 & 3). By effectively communicating the steps taken to address the crisis while staying true to the purpose, organisations can navigate challenging situations while preserving their purpose-led identity.

Arguably, there is always a communication element to successful relations between an organisation and its stakeholders that result in acquired resources. However, as observed in the interviewees’ responses, interpersonal communication, as part of corporate communication can be the glue that connects every employee to the business purpose. To fully leverage corporate communication and its interplay with reputation and organisational identity, a comprehensive communication strategy that integrates purpose into all messaging channels is essential (Fitzsimmons et al. 2022). Leaders must foster a culture of purpose within their organisations, empower employees to become purpose ambassadors, and ensure authenticity and consistency in their communication efforts to build credibility and trust. Regular assessment and evaluation of the impact of corporate communication on stakeholder engagement and perception are crucial for continuous improvement. Continuous refinement and adaptation of communication strategies helps to address evolving stakeholder needs and market dynamics.

Conclusion and Limitations

PLBs are increasingly recognised for their ability to create meaningful impact while achieving financial success. However, leaders of MSBs face unique challenges in aligning their organisations with purpose and navigating the complexities of the business landscape. Through literature review and semi-structured interviews, this research sought to understand the challenges leaders face in purpose-led MSBs and their strategies to overcome these. While there is an apparent growing trend towards becoming a PLB, the leaders of MSBs face different forms of challenges to other organisations, requiring a different mindset for success. Six key challenges were identified:

  1. i.

    aligning purpose across the value chain,

  2. ii.

    maintaining purpose as a business grows,

  3. iii.

    managing the tension of purpose versus profit,

  4. iv.

    aligning purpose within the business,

  5. v.

    aligning business governance with purpose, and

  6. vi.

    aligning business purpose with customer needs.

Central to leaders’ success in navigating all of these challenges is the role of corporate communication and its interplay with corporate reputation, and organisational identity. Corporate communications, both internally with employees and Board members, and externally with stakeholders including the supply chain, customers, and broader community, were integral to the business leaders’ work. Corporate communication not only synergistically links the challenges and solutions identified, but further is key to corporate reputation and organisational identity. Thus, developing a comprehensive communication strategy with consistent and strong messaging that becomes embedded into all business activities (internally and externally) is a key undertaking for leaders of purpose-led MSBs. Leaders who enable and empower other employees to uphold the business purpose must foster a culture of purpose, especially in the critical period of growth from a small- to a medium-sized business. This culture must similarly extend outside the business to engage stakeholders and cement the purpose-driven commitment throughout value chains.

In closing, the research’s limitations is acknowledged. It would be interesting to view the challenges faced by purpose-led MSBs from the perspective of employees other than their leader, believing that the interpretation of different stakeholders regarding purpose can impact how they enact and realise this purpose. The sole consideration of CEO/founders is a top-down view of leadership. Another interesting angle to pursue with these leaders would be determining how ambition is translated into action (Wilmot et al. 2022). It would also be useful to consider companies outside the B-Corps framework that identify as sustainability oriented. The B-Corp evaluation process—known as the “B impact assessment”—prescribes and necessitates a level of structure within a business to meet the needs of the certification, meaning that it was impossible to disentangle the impact the B-Corp certification process, or any third-party process, has, in overcoming the challenges of being a PLB.

While efforts were made to draw a wide geographic sample and diverse range of industries, the small sample size means the findings may only be broadly generalisable with further investigation using a larger sample. Finally, this study reflects the interactions between the identified challenges faced by purpose-led MSBs, but a further understanding of such interactions and interdependence is needed. As part of future work, this would require adopting interpretive structural modelling (Akenroye et al. 2022) to establish the causal relationships or the degree of influence of the challenges on one another. This helps to establish the dominant challenge(s) for prioritisation for targeted interventions/solutions in the interplay between MSBs and PLBs, providing unique insights and guidelines for leaders of purpose-led MSBs.