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The influence of performance feedback frequency and affective commitment on the sunk cost effect

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  • Der‐Fa Chen
  • Peng‐Kwang Chen
  • Shao‐Hsi Chung
  • Kuo‐Chih Cheng
  • Chen‐Ho Wu

Abstract

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.

Suggested Citation

  • Der‐Fa Chen & Peng‐Kwang Chen & Shao‐Hsi Chung & Kuo‐Chih Cheng & Chen‐Ho Wu, 2020. "The influence of performance feedback frequency and affective commitment on the sunk cost effect," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 873-882, July.
    • Handle: RePEc:wly:mgtdec:v:41:y:2020:i:5:p:873-882
    DOI: 10.1002/mde.3144
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    References listed on IDEAS

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    Cited by:

    1. Quinn Andrew Wesley Keefer, 2021. "Did the 2011 Change to NFL Rookie Compensation Alter How Sunk Costs Affect Utilization?," Journal of Sports Economics, , vol. 22(4), pages 387-411, May.

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