Anticipated regret and escalation of commitment to failing, new product development projects in business markets

Abstract

Escalation of commitment, defined as the continuation in a failing course of action, is a persistent problem for decision makers in business markets, especially those involved in new product development (NPD). To address this issue, we use Anticipated Regret Theory to develop a model and then empirically test it to demonstrate how forward-looking emotions can lead decision makers to continue failing NPD projects in business-to-business (B2B) markets. We recognize that there are two countervailing types of anticipated regret (i.e., keep regret and drop regret) and test both in our model by adopting a mixed-methods empirical approach. In a quantitative study, a total of 280 subjects completed a NPD decision-making exercise in which various antecedents of persistence with a losing new, business-to-business NPD project were examined. The results suggest that anticipated drop regret plays a significant role in commitment to a failing course of action, whereas anticipated keep regret actually reduces commitment. In a second, qualitative study, twenty experienced NPD professionals operating in high-technology, B2B markets were interviewed either in-person or by telephone. The results suggest that anticipated drop regret is a more serious problem than anticipated keep regret, supporting the quantitative study.