Do Social Entrepreneurs Think Differently? Ethical Anchoring, Risk Propensity, and Framing Effects

A guiding question in entrepreneurship research is whether entrepreneurs think differently compared to non-entrepreneurs. Are they less risk-averse? Are they more optimistic? Do they have less status quo bias? Do they have more self-efficacy? Findings from the field of entrepreneurial decision-making suggest that the answer is yes – entrepreneurs do think differently. They are more open to risk and change and have less status quo bias. However, much less is known about social entrepreneurs. Are they different from economic entrepreneurs? And if so, is this difference one of degree or kind? This study seeks to answer this question by examining differences between economic and social entrepreneurs in relationship to risk aversion and framing effects via a hypothetical labor-market-entry choice task administered to a sample of 649 business school students in Lima, Peru. While it was hypothesized that social entrepreneurs would be distinct from economic entrepreneurs in that they are less susceptible to risk and gain/loss frames, thus demonstrating what we consider “ethical anchoring” or “unbounded ethicality, we also discovered surprising heterogeneous gender effects, which moderated entrepreneurial decisions depending upon the risk and frame. Findings may have implications for where and how to focus entrepreneurial policy and education.