What explains managers’ escalating behaviors in a failing NPD project? The impact of managerial perceptions of opportunities and threats in a stage-gate process

Miles M. Yang, Wansi Chen, Yue Wang

Research output: Contribution to journalArticlepeer-review

Abstract

Drawing on recent advancement in behavioral decision-making theory and the escalation-of-commitment literature, we examine how managers’ perceptions of threats and opportunities in the external environment may shape their decision to escalate investment in a failing new product development (NPD) project. We test our theoretical model with two studies: first, a behavioral decision-making experimental study with a sample of 128 managers; and, second, an interview study with 12 managers. Our results show that managers’ perceptions of environmental opportunities and business threats significantly shape their decision to escalate commitment and that the impact of such managerial perceptions on escalating tendency is contingent on the stage of the innovation process.
Original languageEnglish
JournalJournal of Small Business Management
DOIs
Publication statusE-pub ahead of print - 5 Mar 2020

Keywords

  • Escalation of commitment
  • behavioral decision-making
  • managerial perceptions
  • new product development (NPD) project
  • stage-gate system

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