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The influence of performance feedback frequency and affective commitment on the sunk cost effect
Author(s) -
Chen DerFa,
Chen PengKwang,
Chung ShaoHsi,
Cheng KuoChih,
Wu ChenHo
Publication year - 2020
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3144
Subject(s) - sunk costs , investment (military) , stock (firearms) , business , economics , microeconomics , marketing , engineering , mechanical engineering , politics , political science , law
The purpose of this study is to explore how combined effect of feedback frequency of investment performance and manager's affective commitment on reduction of the sunk cost effect. To this end, we designed an experimental questionnaire to collect data from production managers of electronics manufacturing companies listed on Taiwanese stock markets and used a hierarchical regression model to examine the relationships among variables. The results from 336 samples showed that just considering performance feedback frequency or affective commitment does not necessarily reduce the sunk cost effect. Only high feedback frequency jointed with high affective commitment can suppress the willingness of manager to continue a disadvantageous investment project.