Self-Justification and Escalation of Commitment in Organizations

Introduction

Self-justification is an underlying motive for decision makers who remain committed to failing projects. However, as Steinkuhler et al. (2014) argue, it may also be described as an indirect cause of escalation of commitment. The way in which justification is manifested in the decision-making process requires the medium of new cognitive constructs that assist the decision maker in renewing commitment. These constructs can consist of selective perception, sunk cost effect, and over-optimism. In many cases, these are not isolated constructs but work in tandem to bring about the justification the decision maker wishes to demonstrate regarding the project.

This paper summarizes the study by Steinkuhler et al. (2014) and shows how the construct of selective perception has been utilized by the international organization known as the SSPX — a fraternal priestly Society within the Catholic Church — as it has attempted to remain committed to a controversial course of action that some of its leaders and decision makers have opposed. It will discuss the effects of this escalation of commitment as a result of selective perception and offer a recommendation for what the Society could do to rectify a situation that has resulted in a fracturing of the Order.

The Study: Self-Justification and Commitment Escalation

Steinkuhler et al. (2014) show that self-justification is an indirect driver of commitment escalation in failing projects. Determining whether to abandon a project that is not succeeding is a challenging decision for executives; as the researchers point out, the common tendency is to stick with the project and become "locked in" even though it means "throwing good money after bad" (Steinkuhler et al., 2014, p. 67). Thus, the escalation of commitment occurs — but self-justification is a root cause for it in the first place.

In their study, Steinkuhler et al. (2014) provide an overview of the literature related to escalation of commitment, identifying Staw (1976) as the first academic to discuss the subject. As a corollary, self-justification is viewed as a direct cause — but Steinkuhler et al. argue that it is actually an indirect cause because it triggers "other cognitive processes" that hamper the executive's ability to cut ties with a failing project (p. 67). In order to justify the self, the executive's thought processes change: selective perception is affected, sunk cost effect is produced, and over-optimism results. These three cognitive processes are what directly lead to escalation of commitment; self-justification is only an indirect motivator operating through them.

The researchers examine their theory by studying the venture capitalist world of business, an environment in which decision makers must routinely decide whether or not to abandon a project that is not succeeding. Their findings show sufficient "external validity" for the argument tested in the field, and demonstrate that decision makers in venture capital utilize selective perception, sunk cost effect, and over-optimism to create the means through which "self-justification indirectly drives escalation" (p. 210). In other words, self-justification remains the underlying reason for the escalation of commitment, but the three other variables act as constructs through which the need to justify is rationalized by the decision maker.

Cognitive Constructs: Selective Perception, Sunk Cost, and Over-Optimism

The idea of self-justification holds that when one embarks on a project and has deemed it a good idea, there is a tendency to remain committed to it and to commit ever more resources even when it shows signs of failing, because the ego of the person wants to be proven correct in the end. The commitment stems from the decision maker wanting to justify himself through ultimate success. Admitting failure would be to admit that one was wrong.

The concept of selective perception is one in which "blinders," so to speak, are put on. That is, the decision maker sees only that portion of data he wants to see and ignores the rest. "Biased belief updates," for example, are one way in which selective perception is manifested in the business world (Steinkuhler et al., 2014, p. 194). Instead of new information updating beliefs, initial beliefs dictate the evaluation. There is no real evaluation or modification taking place — it is a system in which the decider's bias is rooted in the first assessment and does not incorporate new information or the possibility of developing understanding.

Sunk cost effect is described as money, time, and energy being so thoroughly invested in a project that they cannot be retrieved. Therefore, project managers are more likely to continue with the original course of action, reasoning that since the resources allocated to it cannot be recovered, one might as well press on. Thus, more time, energy, and money are sunk into a project, and "good money" follows "bad," as the saying goes.

Over-optimism is defined as the "tendency of decision makers to systematically overestimate the probability of good performance and underestimate the probability of bad performance" (p. 195). The reason for this is that the decision maker is extremely hopeful, or does not consider or believe that anything unfortunate could occur to plague the project, cause delays, or bring about misfortune.