When an important venture seems to unravel, decision makers may face a dilemma. Do they persist and risk becoming caught up in a spiral of escalating commitment, or "apply the brakes" when they may be within an ace of success? Escalation of commitment is thought to be a ubiquitous and costly mistake. Yet sometimes organizations should "press on the accelerator" and stay the course despite adversity. This paper explores what might drive organizations to erroneously abandon a potentially successful venture.
Decisions to persist with losing courses of action known as escalation have been widely studied, albeit mainly in an experimental context. Comparatively little is known about the conditions under which de-escalation occurs. Utilizing a model of de-escalation derived from the literature the present study examines, by means of a case study, a decision to withdraw from a losing predicament. It is concluded that while de-escalation is likely to occur where the opposite conditions thought to be conducive to persistence apply, existing models under-emphasize the importance of power. Accordingly a modified version of Bowen's two-factor model is proposed.
The escalation literature focuses upon unwarranted persistence with failing ventures. Escalation theory suggests that persistence may be prompted by individuals attempting to conceal their mistakes. In other words, the assumption is that a breakdown in rationality stems from irrational risk taking. This paper is less concerned with what such theories reveal about escalation, and more with what they obscure. More specifically, the present study seeks to demonstrate that decision fiascoes may partly stem from rationality itself. The demonstration utilizes a case study of project Taurus, 500 million IT venture which collapsed. Whereas the literature highlights the role of individual cognition in explaining escalation and failure, the present study focuses upon the contradictions surrounding the venture. Escalation is seen in the unfolding of the destructive logic of the situation, and, in what Ritzer calls, 'the irrationality of rationality'.
This paper examines a city council's persistence with a failing department over a five-year period. The case is an example of escalation of commitment where decision-makers inherit a previously unsuccessful and long established decision as distinct from involvement in an ad hoc venture. It is concluded that the pres sures to escalate in established decisions are different from those previously observed in ad hoc ventures. Escalation in established decisions is cyclical, altern ating between structural and social pressures. Project and psychological factors are secondary. Powerlessness is identified as a new structural variable. It is specu lated that escalation in established decisions may be basically structural. Decision- makers' actions are reminiscent of behaviours observed in previous studies of strategic decision-making.
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