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Risky business: Comparing the opportunity evaluation decisions of social and commercial entrepreneurs

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  • Bird, Matthew D.
  • Reichert, Patrick
  • Farber, Vanina

Abstract

Via a choice-based conjoint experiment and Hierarchical Bayesian Analysis (HBA) of 2538 decisions from 141 entrepreneurs, we model opportunity evaluations as a utility maximizing response to identify and compare part-worth utilities for distinct levels of value capture and risk/uncertainty. Contrary to predictions from existing theories of the social entrepreneur, we find that social entrepreneurs are more risk averse and have less utility for uncertainty. Exploratory post-hoc analysis indicates that the risk aversion of social entrepreneurs is partly driven by lower collective efficacy, suggesting that social entrepreneurs conceptualize risk and uncertainty as an “other-regarding” construct that considers and affects additional stakeholders. Just as social entrepreneurs seek to maximize social value, they likewise construe the risk of loss through a social lens.

Suggested Citation

  • Bird, Matthew D. & Reichert, Patrick & Farber, Vanina, 2025. "Risky business: Comparing the opportunity evaluation decisions of social and commercial entrepreneurs," Economics Letters, Elsevier, vol. 256(C).
    • Handle: RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004719
    DOI: 10.1016/j.econlet.2025.112634
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    Keywords

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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