Feeding and Breaking the Escalation of Commitment: The Role of Organizational Politics and Institutional Processes

This paper offers a longitudinal study grounded in the observation of an organization that was trapped in escalation of commitment to a failed strategy for a decade. Specifically, we will show how internal (organizational) and external (institutional) phenomena enabled the emergence of the strategy, fed the management team’s escalation of commitment despite internal opposition and institutional push-back and, eventually, constrained the management team to acknowledge failure and halt the escalation cycle. The case study reveals two mechanisms which played a central role in halting escalation and forcing a strategic reorientation: (1) expansion of organizational membership brings in new recruits who promote discrepant interpretations of ongoing courses of action thereby feeding political struggles inside the organization; (2) institutional field-level pressures provide political resources to internal opponents and enable them to force the management team to acknowledge failure and break the escalation cycle.