Stopping a project: what research says about escalation of commitment
In a complex environment, a disappointing result is not enough to condemn a project, but past investment is no more sufficient to justify continuing it. For SHR's “Management complexe” programme, the specific management question is this: how can managers decide on additional funding without turning the defence of a project into a defence of their own decisions?
What the literature establishes
Barry M. Staw (1976, Organizational Behavior and Human Performance) experimentally studied resource allocation following negative feedback on an investment decision. In the experimental setting, participants responsible for the initial decision committed more additional resources than those who had not made it. The finding shows that personal responsibility can influence continued investment beyond a purely forward-looking assessment of its value.
When past expenditure becomes an argument
Hal R. Arkes and Catherine Blumer (1985, Organizational Behavior and Human Decision Processes) documented the sunk cost effect: prior investment of money, time or effort can increase the tendency to continue an activity. Their work highlights, in particular, the desire not to appear wasteful. This mechanism is distinct from a project's future value: expenditure that is already irrecoverable does not become recoverable simply because additional funding is approved.
The premature conclusion
One might conclude that a struggling project should be stopped, or that its sponsor should be excluded from all subsequent decisions. These studies justify neither general rule: continuing may remain appropriate if expected future benefits justify the costs and risks still to be incurred. The useful distinction concerns the reasons for continuing, rather than a principled opposition between perseverance and abandonment. (our executive and employee training programmes)
What the evidence does not settle
These studies draw in part on experimental settings and do not establish a universal stopping threshold for organisational projects. In medtech or a partnership with a higher education institution, a delay may accompany useful learning, a regulatory requirement or a hypothesis that has become less plausible. An overrun alone therefore neither establishes escalation of commitment nor reveals the quality of the decision.
A practical check in Lausanne
In Lausanne, one application of the “Management complexe” programme could be to test a continuation record for projects within a medtech company, a higher education partnership, an international sports organisation or a scale-up in the Lake Geneva region. Before each additional funding decision, this record would separate sunk expenditure from future costs, specify the remaining expected benefit and document an observable condition for reconsideration, with a review date. Over a period defined in advance, measure the proportion of additional funding decisions with this record completed before approval, then check at the review date whether the condition was examined. This indicator documents decision discipline; it does not, on its own, prove that the projects retained are the right ones. To go further: explore the Complex Management training in Lausanne in the canton of Vaud, or browse our executive and employee training programmes in Switzerland.
In pictures: Complex Management in Lausanne
- complex management
- Lausanne
- research
- training lausanne