Final answer:
Mission statements that are inwardly focused and defined solely by the personal values and priorities of founders and top managers can hurt a firm's performance. They may not align with external stakeholders' needs and expectations, leading to a lack of clarity and limited growth opportunities.
Step-by-step explanation:
Mission statements that are very inwardly focused and defined only with reference to the personal values and priorities of its founders and top managers can indeed hurt a firm's performance. When a mission statement is solely based on personal values and priorities, it may not align with the needs and expectations of the external stakeholders such as customers, investors, and employees. This can result in a lack of clarity, limited growth opportunities, and difficulties in attracting financial capital.
For example, if a firm's mission statement focuses solely on the founders' personal preferences and values, it may neglect the importance of customer satisfaction or fail to adapt to changing market demands. This can lead to a decline in customer loyalty and market share, ultimately affecting the firm's financial performance.
On the other hand, mission statements that consider the broader perspective of external stakeholders and incorporate their expectations can inspire employee engagement, attract investors, and drive strategic decision-making. By aligning the firm's values and goals with those of its stakeholders, firms can enhance their performance and create a competitive advantage.