The Determinants of Escalation of Commitment: National Culture and Experience Effects

This study extends previous findings relating to agency (adverse selection) and framing effects on the escalation of commitment to failing projects in which significant funds have already been sunk. We explore the effects of experience and small differences in national culture on managers' willingness to escalate commitment. Using samples of experienced managers in the USA and Canada, we confirmed previous findings that agency and framing effects were significant in explaining escalation of commitment. We further found that the effect of adverse selection interacts with small differences in national culture. Managers from the more individualistic USA were significantly more likely than Canadians to escalate in the presence of adverse selection conditions. Finally, we found that more experienced managers were less likely to escalate commitment.

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