The Effects of Self-Efficacy, Process Feedback, and Task Complexity on Escalation of Commitment in New Product Development

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Purpose: The purpose of this paper is to investigate the effects of self-efficacy, process feedback and task complexity on decisions by managers to continue or discontinue a new product after receiving negative performance feedback. Design/methodology/approach: This paper uses a classroom experiment design and uses logistic regression and a chi-square test to analyze the data. Findings: The findings of this paper show that self-efficacy, process feedback and task complexity have not only main effects but also interactive effects on managers’ go or no-go decisions; further, the main effects are mediated by interactions. The effect of self-efficacy is moderated by process feedback and task complexity. Process feedback and task complexity also have an interactive effect on decisions about new products by decision-makers. Research limitations/implications: This paper extends the theory of escalation of commitment (EOC) by showing that self-efficacy, process feedback and task complexity can influence decision-makers’ go or no-go decisions after they have received negative performance feedback. Practical implications: This paper provides useful guidelines for managers on how to reduce the likelihood of EOC. Originality/value: The originality and value of this paper lie in its being the first to examine the effects of process feedback and task complexity on the EOC.