Article ID Journal Published Year Pages File Type
1027454 Industrial Marketing Management 2014 9 Pages PDF
Abstract

•Chinese managers (vs. U.S. managers) are more likely to escalate their commitment.•U.S. managers use fewer factors than Chinese managers in making NPD decisions.•Escalation decisions are moderated by the degree of product innovativeness.

Escalation of commitment in new product development has been studied extensively for the last four decades but the impact of culture on the escalation phenomenon remains largely unexplored. This study investigates how culture impacts the decision to escalate or deescalate commitment to new products. Americans are analytic thinkers whereas Chinese tend to be holistic thinkers. When it comes to decision making, analytic thinkers focus on field independent and abstract factors and believe that future is linear and static, whereas holistic thinkers focus more on contextual factors and believe that future is dynamic and nonlinear. Hence, Chinese are more likely to escalate their commitment relative to Americans on receiving a negative performance report in the new product development process. A lab experiment using weekend MBA students and managers was used to test this underlying hypothesis. The findings confirmed that analytical thinkers use fewer factors than holistic thinkers in making new product decisions, and that Chinese managers are more likely to escalate their commitment relative to American managers. The decision to escalate or de-escalate was moderated by perceived product innovativeness.

Related Topics
Social Sciences and Humanities Business, Management and Accounting Marketing
Authors
, , ,