1 ORGANIZATIONAL ESCALATION IN INNOVATION: A PROCESS PERSPECTIVE

This paper introduces a new comprehensive temporal model of organizational escalation of commitment in the context of innovation projects to explain how and why managers decide to continue new product development despite negative feedback. Two theory-development case studies of failing innovations serve to develop a model that describes the eight phases through which escalation unfolds until exit. Each phase is characterized by distinctive sets made up of three key categories — belief, decision-unit, and procedures — that interact, shape and are shaped by feedback and actions. I show that escalation in innovation is driven by the decision-makers ' collective belief. The research describes how this belief emerges, and expands into the organization, leading to action and setting of organizational structures. It highlights the reinforcement of the system composed of belief, decision unit and procedure that favors belief persistence despite negative feedback, leading to escalation. It also describes how subsequent changes in each of the three categories in the system make the belief vanish and eventually lead to exit