Mitigating escalation of commitment through error management climate and the devil’s advocate approach

Using an experimental setting, we examine the circumstances under which the devil’s advocate method reduces decision-makers’ tendencies to continue failing projects—known as escalation of commitment (EoC). We propose that a firm’s error management climate (EMC) affects the effectiveness of the devil’s advocate approach. First, we assess how an open EMC (learning from errors) versus a blame EMC (preventing errors) influences escalation tendencies. Our findings reveal that an open EMC has a two-fold effect resulting in no overall difference in escalation levels between the two levels of EMC. By analyzing key drivers of EoC, we provide process evidence revealing that an open EMC both encourages admitting failure and increases risk-taking, with these opposing effects canceling each other out. Second, we demonstrate that implementing a devil’s advocate reduces escalating behavior in both EMCs. Our process evidence reveals how the devil’s advocate effectively reduces escalation in both EMC types by countering the goal-substitution effect and overweighing of positive information. These results have practical relevance for firms considering the devil’s advocate as a management control tool to prevent project escalation.