Information Technology Project Escalation: Effects of Decision Unit and Guidance

Abstract

This study investigates the escalation of commitment of IT project development. A two-phase 2×2×2×2 laboratory experiment was conducted to examine the impact of sunk cost (low vs. high), percentage of project completion (low vs. high), de-escalation strategy (presence vs. absence), and decision unit (individual vs. group) on the escalation behavior. The results indicated that both project factors, e.g., sunk cost and percentage of project completion, have significant influences on the escalation of commitment. Groups, in general, exhibited higher escalation behavior than individual decision makers. In addition, providing explicit decision guidance was able to attenuate the behavior, especially at the individual level. The study concludes with limitations and implications for future research.

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