Informational Determinants

Informational determinants are related to “any representation, such as characters or analogue quantities, to which meaning might be assigned” (Walter, 2004: 123).

Constantly some sort of information were presented in all escalation/de-escalation empirical studies when examining this phenomenon either through experimental settings (e.g. Boulding et al., 1997; Rutledge and Karim, 1999; He and Mittal, 2007) or case studies (e.g. Drummond, 1994; 1997; Mähring et al., 2008). Informational determinants in the escalation/de-escalation literature were either presented through digits and numbers of the failing project or through a description of specific condition related to the failing project.

167 Regarding the first group of informational determinants, an amount of exact numbers, several digits were presented in quantitative forms such as sunk costs (Keil et al., 1995;

Whyte et al., 1997), future investment (Heath, 1995; Whyte et al., 1997), expected return on investment (Ryan, 1995; Whyte et al., 1997), project's share of the annual market, and the risk-return trade-off (Shaubroeck and Davis, 1995). In addition to these, there is also the degree of project completion (Boehne and Pease, 2000), future returns on investment (Tan and Yates, 1995), opportunity costs (Boulding et al., 1997; Garland and Conlon, 1998), probability of total loss and potential net return on additional investment (Whyte et al., 1997), project IRR and NPV (Ruchala, 1999), the net remaining of an investment (after profits or losses) following each round (Kirby and Davis, 1998), and the need to add more funds to the estimated budget and the expected delay in launching the project (Pan et al., 2006).

The second group of informational determinants is related to a description of a specific condition such as: whether the information was private/public (Harrison and Harrell, 1993; 1995; Harrell and Harrison, 1994; Rutledge and Karim, 1999), the degree of information ambiguity (Boulding et al., 1997; Gosh, 1997), whether the information was framed negatively/positively (Whyte, 1993; Drummond, 1994; Chow et al., 1999), managers‟ poor performance (Bobocel and Meyer, 1994; Devaun et al., 1997), problems facing the implementation of the project (Ruchala, 1999), a competitor has developed the same project but with superior features (Tan and Yates, 2002), and the low quality of the product where the users were complaining from its low efficacy triggering a need to change the design in order to benefit from the product (Pan et al., 2006).

168 Both groups of informational determinants, whether in digits or a description, have persuaded managers to escalate/de-escalate commitment to a failing course of action (see Table 5.4). For example, information ambiguity was considered an escalation of commitment prompt (Boulding et al., 1997; Gosh, 1997; Hantula and Bragger, 1999;

Brecher and Hantula, 2005; Mähring and Keil, 2008). An ambiguous atmosphere regarding a project is explained in terms of the lack of information and the absence of clarity (Mähring and Keil, 2008).The influence of the ambiguity factor is more highlighted when joined with information bias because managers would focus on positive information and interpret negative information in a positive way which made them more and longer committed to the project (Boulding et al., 1997) or if managers experienced a high ambiguous environment prior to consistent losses, they would escalate commitment to their investments and persist with these allocations (Hantula and Bragger, 1999), or even worse, they would invest amounts well over the anticipated budget during the failure period (Brecher and Hantula, 2005).

Table 5.4: Approach-Avoidance Attributes for Informational Determinants

Approach attributes Avoid attributes

Information ambiguity More clear information

Information biased Public information with less personal gains Private information and personal gains High information source credibility Low information source credibility Time (early)

Time of information (late)

Another escalation force is the bias (error processing) of the information (Staw and Ross, 1978; Caldwell and O‟Reilly, 1981; Ross and Staw, 1993; Drummond, 1995; Newman et al., 1996; Schmidt and Calantone, 2002; Biyalogorsky et al., 2006; Keil, 2008; Pan et al., 2009). Managers emphasize the positive aspects of their decision and minimize the

169 negative aspects because they are more defensive in their choice of information to be committed to the project (Caldwell and O‟Reilly, 1981). They process the information in their favour if they experienced a previous failure and faced an exogenous setback (Staw and Ross, 1978), if they were personally responsible for project failure either through choice or assignment (Caldwell and O‟Reilly, 1981; Schmidt and Calantone, 2002), if managers were experts and they wanted to protect their image (Ross and Staw, 1993) or if they were involved in the project failure (Biyalogorsky et al., 2006).

The publicity of the information provided was considered an escalation/de-escalation of commitment force (Harrison and Harrell, 1993; Harrell and Harrison, 1994; Sharp and Salter, 1997; Harrison et al., 1999; Rutledge and Karim, 1999; Salter et al., 2004). If managers received private information they would be more likely to escalate commitment than if the information was privately provided (Sharp and Salter, 1997; Rutledge and Karim, 1999). This was more evident when managers in addition to the availability of private information had the potential for personal gains (Harrison et al, 1999), had low moral reasoning (Rutledge and Karim, 1999), or had their own beliefs based on their own culture (Salter et al., 2004).

Managers‟ de-escalation of commitment decision was influenced by informational determinants such as the timing of the clear and negative feedback, as the sooner negative back is received, the greater the likelihood of withdrawal (Drummond, 1995), or the credibility of information source, which not only directly influenced managerss decisions

170 affect but it also affected how managers viewed the relevance of the message to their decision (Cuellar et al., 2006).

Therefore, based on the literature evidence above, the link between managers' escalation/de-escalation decisions and informational determinants can be hypothesized as follows:

H3: Informational determinants influence managers' decisions to escalate/de-escalate commitment to a failing course of action.

5.2.2.2 Non-Project-Specific Determinants

Non-project-specific determinants are those that are not straightforwardly related to the project, yet they have a noticeable influence on managers‟ escalation/de-escalation decisions (Ross and Staw, 1993; Newman and Sabherwal, 1996; Greer and Stephens, 2001; Cheng et al., 2003; Wong et al., 2008). They are linked to psychological characteristics of the decision-maker, organisational surroundings and contextual characters in terms of social, cultural, and political influences. In this section each of the non-project-specific determinants will be treated as an approach/avoidance attribute of escalation and key findings from the relevant literature are summarised to pave the way for hypothesis generation.