Understanding Runaway Information Technology Projects: Results from an International Research Program Based on Escalation Theory

Abstract

Abstract:Information technology (IT) projects can fail for any number of reasons, and can result in considerable financial losses for the organizations that undertake them. One pattern of failure that has been observed but seldom studied is the runaway project that takes on a life of its own. Such projccts exhibit characteristics that are consistent with the broader phenomenon known as escalating commitment to a failing course of action. Several theories have been offered to explain this phenomenon, including self-justification theory and the so-called sunk cost effect which can be explained by prospect theory. This paper discusses the results of a series of experiments designed to test whether the phenomenon of escalating commitment could be observed in an IT context Multiple experiments conducted within and across cultures suggest that a high level of sunk cost may influence decision makers to escalate their commitment to an IT project In addition to discussing this and other findings from an ongoing stream of research, the paper focuses on the challenges faced in carrying out the experiments.Key Words and Phrases:: escalating commitmentescalationinformation systems failurerunawaysoftware project managementsunk cost Additional informationNotes on contributorsMark KeilMark Keil is an Assistant Professor of Computer Information Systems in the College of Business Administration at Georgia State University. He received his D.B.A. in management information systems from the Harvard Business School in 1991. His research interests include software project management, the development and implementation of information systems, human/computer interaction, and the impacts of information technology on individuals and organizations. His research has been published in Sloan Management Review, Decision Support Systems, Proceedings of the International Conference on Information Systems, and Proceedings of the Hawaii International Conference on System Sciences.Richard MixonRichard Mixon is currently a Systems Analyst with Oxford Books, Inc. He received his M.S. in computer information systems from Georgia State University where he worked as a graduate research assistant. His research interests include software project management, the application of artificial intelligence to computer-aided tools for software design and development, and algorithmic processes. His research has been published in the Proceedings of the Allerton Conference on Communication, Control, and Computing, Proceedings of the International Conference on Information Systems, and Proceedings of the Hawaii International Conference on System Sciences. He has twelve years of experience as a systems analyst and project manager.Timo SaarinenTimo Saarinen is an Acting Associate Professor in the Department of Information Systems Science at the Helsinki School of Economics and Business Administration. He received his Ph.D. in 1993 in information systems. His research interests include the economics and management of information systems with an emphasis on organization, competitive evaluation, and risk management of systems development. He has published articles in Journal of Management Information Systems, Information & Management, European Journal of Information Systems, Behavior and Information Technology, Journal of Systems Management, and Scandinavian Journal of Information Systems.Virpi TuunainenVirpi TuUNAINEN is an Acting Senior Lecturer in the Department of Information Systems Science at the Helsinki School of Economics and Business Administration. She received her master's degree from the Helsinki School of Economics, and is currently preparing her doctoral dissertation on interorganizational systems in dyadic factory-subcontractor relationships. Her research interests include economics of information systems, success or failure ofIS investments, interorganizational systems, impacts of information technology, and network organizations. She has published her earlier work in European information systems conferences.