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Articles on Group Context
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Organizations, and the groups and individuals within them, sometimes face the thorny dilemma of whether or not to continue failing courses of action. Escalation of commitment describes the tendency to “carry on” with such questionable endeavors, regardless of whether doing so is likely to result in success. Despite the wide variability between and...
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... Hubris bias, in short, increases the likelihood of escalating commitment because hubristic founders tend to ignore negative feedback. Instead, they are excessively confident that obstacles will be easily overcome and ambitious goals will eventually be achieved (Roberto, 2002;Sleesman et al., 2018). This behavior is connected to the inherent inclination of hubristic founders to perceive them as invincible and capable of reversing the course of negative trends (Roberto, 2002;Sleesman et al., 2018). ...
... Instead, they are excessively confident that obstacles will be easily overcome and ambitious goals will eventually be achieved (Roberto, 2002;Sleesman et al., 2018). This behavior is connected to the inherent inclination of hubristic founders to perceive them as invincible and capable of reversing the course of negative trends (Roberto, 2002;Sleesman et al., 2018). Accordingly, hubristic founders prefer overinvesting in risky strategies to overcome adverse situations. ...
Plain English Summary
In business practice, it is not surprising to observe that entrepreneurs who have earlier been successful are afflicted by hubris. We outline how hubristic founders cope with their exit strategies from their firms. We identify three critical elements for developing fruitful reflections on entrepreneurship. First, when founders are affected by hubris, they overlook the possibility of voluntarily alienating their firms. Second, they tend to set a high-performance threshold because they struggle to admit negative performance. When firm performance falls below the expected threshold, hubristic founders tend to increase investments in the same strategic choices, leading them to experience low performance. Consequently, the outcome of such a spiral is likely to be firm bankruptcy. There is, instead, a low probability that this perseverant approach might lead to positive firm performance in the long term. Third, hubristic founders tend to exit the business using a financial harvesting strategy when a firm performs above the expected threshold. In a nutshell, this study calls founders to look at the fundamental distortions generated by entrepreneurial hubris in exit strategies and provide illustrative cases, quotes, and anecdotes. As a result, entrepreneurs might become more sensitive to hubris fallout and, hence, be encouraged to use tools that can help them prevent, or at least mitigate, the pernicious effects of hubris.
... Previous research across management and related disciplines identifies several determinants of escalation (Staw & Fox, 1977;Staw & Ross, 1989). One key conclusion is that social pressures-ever present in organizationsregularly drive escalation of commitment (for review, see Sleesman et al., 2012Sleesman et al., , 2018. Our research extends this prior work by suggesting that decision makers can alleviate some of these social pressures through precommitment: a public pledge to change course conditional on a concrete future state of the world. ...
Following through on commitments builds trust. However, blind adherence to a prior course of action can undermine key organizational objectives. How can this challenge be resolved? Four primary experiments and five supplemental experiments (collective N = 7,759, all preregistered) reveal an effective communication strategy: precommitment (i.e., a public pledge to change course conditional on a concrete future state of the world). In the presence (vs. absence) of precommitment, observers deemed decision makers who de-escalated commitment as more trustworthy. This effect held across the roles of the decision makers (entrepreneurs vs. established leaders), the relationship with the decision makers (follower vs. third-party observer), contexts (consumer products vs. infrastructure projects), and measures (perceived integrity vs. incentivized behavior). These benefits for integrity were attenuated when the precommitment was to a vague future action or was not conditional on a concrete future state of the world. Finally, results revealed that precommitment can yield a negative externality: undermining perceived confidence and motivation among followers at a project’s inception. Altogether, our work provides a nuanced perspective on a communication strategy decision makers can use to align short-term personal incentives (i.e., reputation management) and long-term organizational incentives (i.e., value maximization).
... The digital age has ushered in a new era of consumer empowerment, information sharing, and social engagement, which has fundamentally altered the dynamics of marketing and consumerbrand relationships. Celebrities, who once basked in the unwavering adoration of their fans and the public, now find themselves exposed to greater scrutiny, accountability, and volatility (Sleesman et al., 2018). Negative events involving celebrities, whether stemming from their behavior, affiliations, controversies, scandals, or lapses in judgment, can unleash a tempest of consumer reactions that challenge the very foundation of the halo effect (Cornwell & Kwon, 2020). ...
... Corporate governance and internal auditing provide mechanisms for the alignment of the managers' incentives with those of the firm's principals (Shleifer and Vishny 1997;Tawfik et al. 2023). The escalation literature suggests that strong corporate governance and monitoring incentives help alleviate the escalation of commitment by managers (Buchholtz et al. 1999;Huang et al. 2016;Sleesman et al. 2018;Licht 2021). The rotation of duties in management has been proposed as a de-escalation strategy (Chulkov and Barron 2019). ...
... The empirical analysis controls for multiple firm, industry, and executive characteristics; however, examination of the impact of variation in corporate governance, perhaps in a smaller and more granular data set, remains an area for future research. Sleesman et al. (2018) point out that escalation of commitment is a complex process driven by multiple organizational and economic factors, and a more detailed analysis of its context is important. ...
This article investigates the relationship between the decision-making bias known as escalation of commitment and the turnover of non-CEO executives in top management teams. The phenomenon of escalation of commitment is observed when decision makers persist with business investments that have a low likelihood of success. Theoretical explanations for the association between executive turnover and escalation include self-justification and reputation protection. Top managers may conceal prior errors, escalate commitment to earlier decisions, and exit the organization before the outcome of decisions is observed. Successor managers do not have a commitment to earlier decisions and have the capability to stop investments that are discovered to be failing. Empirical analysis utilizing a sample of over 1600 U.S. firms confirms that departures by non-CEO executives from top management teams are associated with an increased likelihood of new reporting of discontinued operations and extraordinary items by firms and a reduction in the firms' performances relative to their industry. These effects reflect de-escalation activities and are amplified in the years concurrent with and following a joint departure of multiple management team members. Prior empirical studies on escalation and de-escalation behavior focused on CEO turnover. The contribution of this article is its documenting of the key role of non-CEO managers and team turnover in the context of escalation.
... The semi-structured interview protocol was drafted based on the purpose of the study and previous literature (e.g., Aarons et al., 2011;Sleesman et al., 2018), piloted with three administrators, each with at least 20 years of professional experience across building, district, and regional levels, and then iteratively refined based on their feedback. Interviews were conducted using video conference software (Zoom), and each interviewer and participant collaborated on the same digital whiteboard (Google Jamboard) to document the interview process. ...
Schools are a critical setting to promote healthy youth development through the provision of evidence-based programs (EBPs), yet preventive EBPs in schools are underutilized. The Exploration, Preparation, Implementation, Sustainment (EPIS) framework highlights numerous factors that may influence program adoption during the Exploration phase and progress monitoring during the Implementation phase. However, no research has systematically and simultaneously identified the factors that influence school administrators’ decision-making during these important processes. We conducted semi-structured interviews with 24 school administrators in the Midwestern region of the U.S. to understand how they weigh various considerations that inform their adoption and progress monitoring of prevention programs. Results indicated that school administrators consider five separate factors during the adoption decision, prioritized in the following order: need for the program, school community buy-in, contextual fit, resources, and program characteristics (including the evidence-base). Further, administrators consider five indicators to monitor program performance, prioritized as follows: intervention fidelity, quantitative and qualitative data that determine if the identified need was met, school community buy-in, resource consumption, and program characteristics. Implications for prevention scientists and suggestions for future research are discussed.
... A concept that shares striking similarities with organizational path dependence is escalating commitment (Sleesman et al. 2018). It prevents organizational decision-makers from changing their course of action, despite continued negative feedback on the outcome. ...
... Entrepreneurial reentry can be understood as a form of persistence within a career domain, especially if an entrepreneur considers one or more prior venturing experiences to be a failure. Studies on entrepreneurial resilience (Hartmann et al., 2022) and escalation of commitment (Sleesman et al., 2018;McMullen & Kier, 2016), i.e., continuing to invest resources into a potentially failing course of action, largely conclude entrepreneurs frequently persist when faced with adversity or the prospect of firm failure and also note the influence of person-specific variables such as self-efficacy, outcome expectations, hubris, and passion in contributing to persistence (Cardon & Kirk, 2015;Kiani et al., 2023;Hayward et al., 2010). Others observe, in many cases, little time passes between failure and reentry (Lin & Wang, 2019;Amaral et al., 2011), suggesting entrepreneurs can recover quickly or persevere through grief. ...
Business failure may be a challenging experience for many entrepreneurs, yet entrepreneurs continue to engage in venture creation and development. The present study integrates Social Cognitive Career Theory (SCCT) with recent theoretical and empirical insights on habitual entrepreneurship to explain and predict how past performance shapes entrepreneurs’ subsequent career-related cognitions and behavior. Leveraging a novel cross-national dataset of 2,093 experienced entrepreneurs in Latin America, this study found that compared to experienced entrepreneurs without prior failure, failed entrepreneurs are more likely to start new businesses. The study also found, counter to expectations, that the likelihood of entering paid employment decreases, rather than increases, after a venture failure. The study concludes by considering the implications of these findings and suggesting avenues for future research.
... Despite the growing recognition of the importance of government investment in innovation for fostering city innovativeness, there is a notable gap in the existing literature regarding the role of mayoral overconfidence in shaping this relationship (Rehman, 2022;Wilkins, 2014). While previous studies have explored the impact of government investment on city innovativeness, they have not adequately examined the moderating effect of mayoral overconfidence, particularly in the context of human capital competition (Kiss et al., 2022;Sleesman et al., 2018). This gap in knowledge is significant because the level of human capital competition within a city can significantly influence the outcomes of government investment in innovation. ...
This study explores the phenomenon of managerial behavioral patterns resulting from complex social environments and investigates the behavioral differences of government officials under different conditions based on an irrational hypothesis. Leveraging big data and text sentiment analysis, the study introduces a measure of self-confidence by analyzing the texts of officials’ work reports and speeches. Focusing on innovation as a common goal pursued by local governments, the research examines whether irrational factors, such as overconfidence, influence the allocation of innovation investment by municipal officials and subsequently impact urban innovation development. The study employs an environmental boundary model rooted in high-level echelon, deviance, and innovation theories. Panel data from innovative cities spanning the period 2006–2021 serve as the research sample to examine the hierarchical relationship between mayoral self-confidence levels, government innovation investment, and urban innovation power. The empirical analysis reveals that government innovation investment significantly contributes to urban innovativeness. However, the findings indicate that mayoral overconfidence negatively moderates this relationship, and the moderating effect of overconfidence varies across different environments. This research sheds light on the crucial role of government officials’ self-confidence in influencing innovation investment and urban innovation outcomes. The findings emphasize the importance of considering the impact of irrational factors on decision-making processes in local governance. By understanding the moderating effect of mayoral overconfidence, policymakers and stakeholders can develop strategies that enhance the effectiveness of government innovation initiatives and promote sustainable urban innovation.
... When these restructuring efforts remained unsuccessful, family firm owners shifted their focus from firmlevel to portfolio-level SEW (Phase 2: de-escalation), which led to de-escalating behaviors toward their poorly performing portfolio firms (i.e., divesting or liquidating). To develop a theoretical model of family firms' restructuring in the context of portfolio entrepreneurship (Sieger et al., 2011) using our data, we drew upon the escalation-of-commitment literature (e.g., Sleesman et al., 2012Sleesman et al., , 2018 coupled with the SEW perspective (Gómez-Mejía et al., 2007). ...
... (Interview, expert) These observations reveal that family firm owners are truly committed to their non-core portfolio firms, even in sustained periods of poor performance. Thus, they engage in escalating behaviors (e.g., Sleesman et al., 2012;Sleesman et al., 2018;Staw, 1976Staw, , 1981 to preserve (conserve and recover) the SEW they associate with these specific portfolio firms, i.e., firm-level SEW. In particular, our data showed that family firm owners escalate such commitment by first engaging in financial (e.g., new machines/buildings) and non-financial and cognitive (e.g., management attention, training) investments. ...
... Second, we contribute to the literature stream on restructuring in family firms (for a review, see King et al., 2022) and, relatedly, advance the literature on escalation of commitment in family firms (Chirico et al., 2018;Salvato et al., 2010aSalvato et al., , 2010bWoods et al., 2012). We propose that next to the general already-identified antecedents of escalating behaviors, such as ego threat or the desire to "save face" (e.g., Boulding et al., 1997;Sleesman et al., 2018;Zhang & Baumeister, 2006), family firm owners' SEW preservation considerations on the firm and portfolio levels also constitute a strong antecedent for escalating (firm-level SEW) and de-escalating (portfolio-level SEW) behaviors toward family firm portfolios. Specifically, we find that based on their firm-level SEW, family firm owners escalate their commitment to poorly performing portfolio firms (Chirico et al., 2018;Salvato et al., 2010a), by first investing and then reshuffling their assets. ...
How do owners of family firm portfolios restructure poorly performing firms? To answer this question, we conducted an in-depth qualitative case-study analysis of six poorly performing family portfolio firms, on the basis of 39 interviews, 117 pieces of archival data, and observations we gathered over 2 years. Drawing upon the socioemotional wealth (SEW) perspective and escalation-of-commitment literature, we suggest that family firm owners initially show refraining behaviors toward restructuring their poorly performing portfolio firms. Subsequently, they exhibit escalating behaviors by first investing and then reshuffling assets, to safeguard firm-level SEW. Yet, when retaining these poorly performing firms threatens the existence of the remaining portfolio and, thus, portfolio-level SEW, family firm owners exhibit de-escalating behaviors by divesting. Preferably, they attempt a sale and, when a sale is no longer an option, a liquidation. We developed a model that contributes to a more granular theoretical understanding of the family firm’s restructuring behavior, in the context of portfolio entrepreneurship.
... The selection of politically aligned contractors (Lehne et al. 2018), intentional design of weak construction contracts (Cantarelli 2011), deliberate underestimation of costs (Flyvbjerg et al. 2018), deliberate overestimation of benefits (Flyvbjerg 2013), selection of politically aligned project management team (Whaley 2016), strategic misrepresentation (Flyvbjerg et al. 2002), ministerial interferences (public servants) , direct political influence (i.e., Minister influence , location and type of project) (Ameyaw et al. 2017), pre-election commitments ), organisation's governance shortfalls (Damoah et al. 2020), political election cycles (Terrill and Danks 2016) and escalating commitment (Sleesman et al. 2018). ...
