The goal is attainable: the effects of goal gradient and sub-goals on escalation of commitment in a new product evaluation

Purpose - The purpose of this study is to investigate whether, in the context of making a go/no-go decision regarding a failing new product, the use of a stopping rule and/or a new decision-maker would reduce the escalation of commitment (EOC). Design/methodology/approach - This study uses a classroom experiment design and uses logistic regression and a chi-square test to analyze its data. Findings - The findings show that both responsible and non-responsible participants are more likely to perceive the negative performance of a new product as less negative and believe that the goal for the product can be reached when there is a stopping rule and proximal negative feedback indicates a level of performance below but very close to it than when there is no stopping rule. Therefore, they are more likely to continue the failing new product, whether they are responsible for the product or not. However, non-responsible decision-makers are more likely than their responsible counterparts to discontinue the failing new product in the absence of a stopping rule. Research limitations/implications - This paper extends the theory of EOC by showing that the use of a stopping rule and/or a new decision-maker may not reduce EOC. Practical implications - This paper provides useful guidelines for managers on how to reduce EOC. Originality/value - The originality and value of this paper are found in the investigation of a situation in which the use of a stopping rule and/or a new derision-maker may not reduce the EOC.