Keefektifan Monitoring Control dan Penalaran Moral Individu dalam De-eskalasi Komit

This research provides a comprehensive empirical evidence about the phenomenon of escalation of commitment in the decision making process of investment projects evaluation. First, the study aims to provide empirical evidence that only managers with adverse selection condition (has private information and incentives to neglect the company interests) that has a tendency to escalate the commitment. Second, we examine whether the company monitoring control and individual moral reasoning affects the tendency of managers to escalate commitment to the unprofitable project. Finally, this study also aims to test the effectiveness of the monitoring control as de-escalation strategy for the company. Research carried out by quasi-laboratory experiment method involving 125 undergraduate and master students. The results of this study indicate that managers who experience adverse selection conditions showed a greater tendency to continue an unprofitable project than managers who do not have the condition. These results are consistent with Harrel and Harrison (1994) research which showed that only managers who have private information and incentives to neglect the interests of the company (adverse selection) that have a tendency to escalate the commitment. Furthermore, this study can not provide empirical support that the monitoring control and individual moral reasoning affects the tendency of managers to do the escalation of commitment