Managing mission and money in social enterprises: a prospect theory perspective
By Nick Milner
Edited by: Dr Michelle Fava; Research supervised by: Professor Paul Tracey
This research sought to test the generalisability of ‘prospect theory’, a seminal theory of cognitive bias in behavioural economics, to decision making for social enterprises. We found that business leaders were more cautious when making financial decisions on behalf of social, rather than conventional for-profit, enterprises. This held true for individuals with backgrounds in both sectors, indicating that situation, rather than personal background is a bigger predictor of choices regarding financial risk-taking.