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What Situations Cause Crucial Financial Decisions within Social Businesses?

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  • Jarmila Duháček Šebestová
  • Petra Krejčí
  • Žaneta Rylková

Abstract

The growing uncertainty in today's business environment has a significant influence on social business's behaviour. Those enterprises could rely on public support in the past, but nowadays, they have to find a way to be more responsible about their social activity and be financially independent on public resources. Based on this theoretical background, the paper's main goal was to find a set of factors that influence crucial financial decisions within a crisis. When social businesses create an optimal financial portfolio to be financially sustainable, primary research was conducted. A sample of 57 social businesses was asked about their financial strategy. The main research goal was to compare a change before and after the first wave of the Covid-19 pandemic situation in 2020. This case has shown current financial thinking and preparedness for unusual or crises. A mixed research approach was chosen due to a limited number of respondents. The overall results found that those businesses prefer to use the current strategy (42%) in crisis, and they limit investments to survive in that situation, except marketing investments (16%). Implications for Central European audience: At the theoretical level, our study shows social enterprise concepts in the Central European context, which differs somewhat from the already established definition of mainly Anglo-Saxon and American authors. At the same time, it combines knowledge about the use of financial planning in this segment. The study results show that financial planning is essential in these companies because it can achieve social goals. A discussion would be opened on how to raise awareness of the preparation of the strategy. Alternatively, how to strengthen the financial literacy of managers or representatives of these entities.

Suggested Citation

  • Jarmila Duháček Šebestová & Petra Krejčí & Žaneta Rylková, 2022. "What Situations Cause Crucial Financial Decisions within Social Businesses?," Central European Business Review, Prague University of Economics and Business, vol. 2022(3), pages 39-54.
    • Handle: RePEc:prg:jnlcbr:v:2022:y:2022:i:3:id:294:p:39-54
    DOI: 10.18267/j.cebr.294
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    References listed on IDEAS

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    More about this item

    Keywords

    financial decision; investments; profit; social business;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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