Escalation of Commitment: When To Stay the Course?

Abstract

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.