A Cross-Cultural Study on Escalation of Commitment Behavior in Software Projects Mark Keil (USA), Bernard C. Y. Tan (Singapore), Kwok-Kee Wei (Singapore), Timo Saarinen (Finland), Virpi Tuunainen (Finland), and Arjen Wassenaar (Netherland) MIS Quarterly Vol. 24 No. 2, pp. 299-325/June 2000

Why this one? Multinational cooperation. Suppose to be about software projects, but is actually more universal. Seeking Cross-culture understanding. Interesting to me.

Multinational cooperation.

Suppose to be about software projects, but is actually more universal.

Seeking Cross-culture understanding.

Interesting to me.

The Dilemma You’ve already invested 1 million US$ in a project out of a projected 1.5 million US$. Project manager tells you that due to some project issues cost will most probably rise to 2.25 million US$. So … project isn’t going very well. But, you’ve already invested 1 million US$. WILL YOU PROCEED?

You’ve already invested 1 million US$ in a project out of a projected 1.5 million US$.

Project manager tells you that due to some project issues cost will most probably rise to 2.25 million US$.

So … project isn’t going very well. But, you’ve already invested 1 million US$.

WILL YOU PROCEED?

Escalation of Commitment Software projects Difficulty of measuring progress. Project scope to changes frequently. “ 90% complete syndrome” - giving a false perception that successful project completion is near. Software projects tend to be “90% complete” for half of the entire duration (Brooks 1975).

Software projects

Difficulty of measuring progress.

Project scope to changes frequently.

“ 90% complete syndrome” - giving a false perception that successful project completion is near.

Software projects tend to be “90% complete” for half of the entire duration (Brooks 1975).

Sunk Cost Effect Financial theorists "recommend” - level of sunk cost should not be considered when deciding whether to continue or abandon a project. Sunk Cost Effect : But, managers find it hard to ignore…

Financial theorists "recommend” - level of sunk cost should not be considered when deciding whether to continue or abandon a project.

Sunk Cost Effect : But, managers find it hard to ignore…

Problems with previous research Lacking theoretical background (prospect theory). Models are too simple : One variable assessment only. Only 8-14% of the variance. So, the contribution would be : Richer theory. Shed light on the effects of cross culture.

Lacking theoretical background (prospect theory).

Models are too simple : One variable assessment only. Only 8-14% of the variance.

So, the contribution would be :

Richer theory.

Shed light on the effects of cross culture.

Previous Research (that I think is interesting)

Integrating theories Risk-taking theory : Risk - “the non-zero probability that some undesirable outcomes will occur”. The greater uncertainty associated with continuing, rather than terminating, a software project is a risk that often leads to negative outcomes.

Risk-taking theory : Risk - “the non-zero probability that some undesirable outcomes will occur”.

The greater uncertainty associated with continuing, rather than terminating, a software project is a risk that often leads to negative outcomes.

Risk Behavior Risk Perception : “a decision maker’s assessment of the risk inherent in a situation” (Sitkin and Pablo 1992) Risk Propensity : “the tendency of a decision maker to take risky actions” (Kogan and Wallach 1964; Sitkin and Pablo 1992)

Risk Perception : “a decision maker’s assessment of the risk inherent in a situation” (Sitkin and Pablo 1992)

Risk Propensity : “the tendency of a decision maker to take risky actions” (Kogan and Wallach 1964; Sitkin and Pablo 1992)

Culture related? Hofstede’s “Uncertainty Avoidance” : Low uncertainty avoidance -> comfortable with uncertainty -> higher risk propensity & lower risk perception. High uncertainty avoidance ->uncomfortable with uncertainty -> lower risk propensity & higher risk perception.

Hofstede’s “Uncertainty Avoidance” :

Low uncertainty avoidance -> comfortable with uncertainty -> higher risk propensity & lower risk perception.

High uncertainty avoidance ->uncomfortable with uncertainty -> lower risk propensity & higher risk perception.

Hypothesis H1 : Risk propensity has inverse effect on risk perception. H1a : The inverse relationship will be stronger in cultures lower on uncertainty avoidance. H2 : Risk perception has inverse effect on willingness to continue a project. H3 : Risk propensity has direct effect on willingness to continue a project. H4 : Level of sunk cost has a significant inverse effect on risk perception. H4a : The inverse relationship will be stronger in cultures lower on uncertainty avoidance. H5 : Level of sunk cost has direct effect on willingness to continue a project.

H1 : Risk propensity has inverse effect on risk perception.

H1a : The inverse relationship will be stronger in cultures lower on uncertainty avoidance.

H2 : Risk perception has inverse effect on willingness to continue a project.

H3 : Risk propensity has direct effect on willingness to continue a project.

H4 : Level of sunk cost has a significant inverse effect on risk perception.

H4a : The inverse relationship will be stronger in cultures lower on uncertainty avoidance.

H5 : Level of sunk cost has direct effect on willingness to continue a project.

Theoretical Model Summary

Method Sample 185 Finland (59), 121 Netherlands (53), 230 Singapore (9). Experimental Scenario You’re an acting president. Decision needed on software project. 4 levels of suck costs (15%, 40%, 65%, 90%). Two parts : Indicate probability to continue. Risk Propensity and Perception Questionnaire.

Sample

185 Finland (59), 121 Netherlands (53), 230 Singapore (9).

Experimental Scenario

You’re an acting president.

Decision needed on software project.

4 levels of suck costs (15%, 40%, 65%, 90%).

Two parts :

Indicate probability to continue.

Risk Propensity and Perception Questionnaire.

Results H1 : supported . Risk propensity shows an inverse effect on risk perception. H1A : supported. Culture is a factor. H2 : supported . Risk perception shows inverse effect on willingness to continue a project. H3 : not supported. Risk propensity doesn’t show significant direct effect on willingness to continue a project. H4 : not supported. Sunk cost doesn’t show effect on risk perception. H4A : like H4. H5 : supported . Level of sunk cost shows effect on willingness to continue a project

H1 : supported . Risk propensity shows an inverse effect on risk perception.

H1A : supported. Culture is a factor.

H2 : supported . Risk perception shows inverse effect on willingness to continue a project.

H3 : not supported. Risk propensity doesn’t show significant direct effect on willingness to continue a project.

H4 : not supported. Sunk cost doesn’t show effect on risk perception.

H4A : like H4.

H5 : supported . Level of sunk cost shows effect on willingness to continue a project

Results summary

Some of my thoughts Isn’t international research terrific? A very simple construct. Extremely easy to understand and follow. Yet, offers something new while referring to the “old”. Only Uncertainty Avoidance?! How about Masculinity? Long Term Orientation? And other cultural measures? Culture is everywhere. Moving to an international settings for research should change our perspective.

Isn’t international research terrific?

A very simple construct. Extremely easy to understand and follow.

Yet, offers something new while referring to the “old”.

Only Uncertainty Avoidance?! How about Masculinity? Long Term Orientation? And other cultural measures?

Culture is everywhere. Moving to an international settings for research should change our perspective.