{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,1,5]],"date-time":"2026-01-05T22:02:31Z","timestamp":1767650551545,"version":"3.41.2"},"reference-count":21,"publisher":"Emerald","issue":"4","license":[{"start":{"date-parts":[[2008,10,10]],"date-time":"2008-10-10T00:00:00Z","timestamp":1223596800000},"content-version":"tdm","delay-in-days":0,"URL":"https:\/\/www.emerald.com\/insight\/site-policies"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"published-print":{"date-parts":[[2008,10,10]]},"abstract":"<jats:sec><jats:title content-type=\"abstract-heading\">Purpose<\/jats:title><jats:p>The purpose of this paper is to examine how the real option theory is applicable to evaluation of cases of escalation and premature termination of Management Information Systems (MIS) projects.<\/jats:p><\/jats:sec><jats:sec><jats:title content-type=\"abstract-heading\">Design\/methodology\/approach<\/jats:title><jats:p>The paper compares the implications of psychological and economic escalation theories with lessons from the real option theory as applied to MIS projects. Then, it examines published case studies, and discuss when project continuation enhances and reduces value for the manager and the firm.<\/jats:p><\/jats:sec><jats:sec><jats:title content-type=\"abstract-heading\">Findings<\/jats:title><jats:p>Escalation of commitment is continuation of an investment project after receiving negative signals. Escalation was identified as a significant problem in MIS projects often explained by the desire of the manager to avoid recognizing mistakes and to protect reputation. The opposite problem of premature termination of certain investment projects was also identified. This study argues that accurate application of real option theory is critical to distinguish between escalation and premature termination. Under the real option theory, an investment project is analogous to a financial option, in that there is an opportunity to continue the project, but no obligation. Continuation has value when there is uncertainty and new information about the project may be revealed. Failure to account for the real options in a project is value\u2010reducing as it may lead to mistakes in premature termination of projects when projects with real option value are labeled as cases of irrational escalation.<\/jats:p><\/jats:sec><jats:sec><jats:title content-type=\"abstract-heading\">Practical implications<\/jats:title><jats:p>The paper details the implications of real option theory to evaluating project continuation in the MIS setting.<\/jats:p><\/jats:sec><jats:sec><jats:title content-type=\"abstract-heading\">Originality\/value<\/jats:title><jats:p>This paper applies insights from real option theory to studies of escalation in MIS. Continuing a project may be seen as escalation when it actually has value for the firm, as new information received by continuing the project reduces uncertainty.<\/jats:p><\/jats:sec>","DOI":"10.1108\/09685220810908769","type":"journal-article","created":{"date-parts":[[2008,10,25]],"date-time":"2008-10-25T07:17:23Z","timestamp":1224919043000},"page":"324-335","source":"Crossref","is-referenced-by-count":6,"title":["Escalation and premature termination in MIS projects: the role of real options"],"prefix":"10.1108","volume":"16","author":[{"given":"Dmitriy V.","family":"Chulkov","sequence":"first","affiliation":[]},{"given":"Mayur S.","family":"Desai","sequence":"additional","affiliation":[]}],"member":"140","reference":[{"key":"key2022020320271549900_b1","doi-asserted-by":"crossref","unstructured":"Benaroch, M. and Kauffman, R.J. (1999), \u201cCase for using real options pricing analysis to evaluate information technology project investments\u201d, Information Systems Research, Vol. 10 No. 1, pp. 70\u201086.","DOI":"10.1287\/isre.10.1.70"},{"key":"key2022020320271549900_b2","doi-asserted-by":"crossref","unstructured":"Benaroch, M. and Kauffman, R.J. (2000), \u201cJustifying electronic network expansion using real option analysis\u201d, Management Information Systems Quarterly, Vol. 24 No. 2, pp. 197\u2010225.","DOI":"10.2307\/3250936"},{"key":"key2022020320271549900_b3","doi-asserted-by":"crossref","unstructured":"Benaroch, M., Jeffery, M., Kauffman, R. and Shah, S. (2007), \u201cOption\u2010based risk management: a field study of sequential information technology investment decisions\u201d, Journal of Management Information Systems, Vol. 24 No. 2, pp. 103\u201040.","DOI":"10.2753\/MIS0742-1222240205"},{"key":"key2022020320271549900_b4","doi-asserted-by":"crossref","unstructured":"Bowman, E. and Moskowitz, G. (2001), \u201cReal options analysis and strategic decision making\u201d, Organizational Science, Vol. 12 No. 6, pp. 772\u20107.","DOI":"10.1287\/orsc.12.6.772.10080"},{"key":"key2022020320271549900_b5","doi-asserted-by":"crossref","unstructured":"Camerer, C. and Weber, R. (1999), \u201cThe econometrics and behavioral economics of escalation of commitment: a re\u2010examination of Staw and Hoang's NBA data\u201d, Journal of Economic Behavior & Organization, Vol. 39, pp. 59\u201082.","DOI":"10.1016\/S0167-2681(99)00026-8"},{"key":"key2022020320271549900_b6","unstructured":"Chulkov, D. (2007), \u201cEconomics of escalation: when is escalation of commitment rational for managers and for firms?\u201d, International Journal of Business Research, Vol. 7 No. 5, pp. 44\u201051."},{"key":"key2022020320271549900_b7","doi-asserted-by":"crossref","unstructured":"Dos Santos, B. (1991), \u201cJustifying investments in new information technologies\u201d, Journal of Management Information Systems, Vol. 7 No. 4, pp. 71\u201090.","DOI":"10.1080\/07421222.1991.11517904"},{"key":"key2022020320271549900_b8","doi-asserted-by":"crossref","unstructured":"Drummond, H. (2005), \u201cWhat we never have, we never miss? Decision error and the risks of premature termination\u201d, Journal of Information Technology, Vol. 20, pp. 170\u20106.","DOI":"10.1057\/palgrave.jit.2000046"},{"key":"key2022020320271549900_b9","doi-asserted-by":"crossref","unstructured":"Kanodia, C., Bushman, R. and Dickhaut, J. (1989), \u201cEscalation errors and the sunk cost effect: an explanation based on reputation and information asymmetries\u201d, Journal of Accounting Research, Vol. 27 No. 1, pp. 59\u201077.","DOI":"10.2307\/2491207"},{"key":"key2022020320271549900_b10","doi-asserted-by":"crossref","unstructured":"Keil, M. (1995), \u201cPulling the plug: software project management and the problem of project escalation\u201d, MIS Quarterly, Vol. 19 No. 4, pp. 421\u201047.","DOI":"10.2307\/249627"},{"key":"key2022020320271549900_b12","unstructured":"Keil, M. and Mann, J. (1997), \u201cThe nature and extent of information technology escalation: results from a survey of information systems audit and control professionals\u201d, IS Audit & Control Journal, Vol. 1, pp. 40\u20108."},{"key":"key2022020320271549900_b11","doi-asserted-by":"crossref","unstructured":"Keil, M. and Robey, D. (1999), \u201cTurning around troubled software projects: an exploratory study of the de\u2010escalation of commitment to failing courses of action\u201d, Journal of Management Information Systems, Vol. 15 No. 4, pp. 63\u201088.","DOI":"10.1080\/07421222.1999.11518222"},{"key":"key2022020320271549900_b13","doi-asserted-by":"crossref","unstructured":"Keil, M., Mann, J. and Rai, A. (2000), \u201cWhy software projects escalate: an empirical analysis of four theoretical models\u201d, MIS Quarterly, Vol. 24 No. 4, pp. 631\u201064.","DOI":"10.2307\/3250950"},{"key":"key2022020320271549900_b14","doi-asserted-by":"crossref","unstructured":"Kumar, R. (1996), \u201cA note on project risk and option values of investment in information technologies\u201d, Journal of Management Information Systems, Vol. 13 No. 1, pp. 187\u201093.","DOI":"10.1080\/07421222.1996.11518118"},{"key":"key2022020320271549900_b15","doi-asserted-by":"crossref","unstructured":"Mahring, M. and Keil, M. (2008), \u201cInformation technology project escalation: a process model\u201d, Decision Sciences, Vol. 39 No. 2, pp. 239\u201072.","DOI":"10.1111\/j.1540-5915.2008.00191.x"},{"key":"key2022020320271549900_b16","doi-asserted-by":"crossref","unstructured":"Natovich, J. (2003), \u201cVendor related risks in IT development: a chronology of an outsourced project failure\u201d, Technology Analysis & Strategic Management, Vol. 15 No. 4, pp. 409\u201019.","DOI":"10.1080\/095373203000136015"},{"key":"key2022020320271549900_b17","unstructured":"Newcombe, T. (1998), \u201cBig project woes halt child support system\u201d, Government Technology, Vol. 1998, pp. 34\u20105."},{"key":"key2022020320271549900_b18","unstructured":"(The) Standish Group (2004), \u201cCHAOS: the recipe for success\u201d, Research report available at: www.standishgroup.com\/chaos_resources\/index.php."},{"key":"key2022020320271549900_b19","unstructured":"Staw, B.M. and Ross, J. (1987), \u201cBehavior in escalation situations: antecedents, prototypes, and solutions\u201d, in Staw, B.M. and Cummings, L.L. (Eds), Research in Organizational Behavior, Vol. 9, JAI Press, Greenwich, CT, pp. 39\u201078."},{"key":"key2022020320271549900_b20","doi-asserted-by":"crossref","unstructured":"Taudes, A., Feurstein, M. and Mild, A. (2000), \u201cOptions analysis of software platform decisions: a case study, management\u201d, Information Systems Quarterly, Vol. 24 No. 2, pp. 227\u201043.","DOI":"10.2307\/3250937"},{"key":"key2022020320271549900_b21","doi-asserted-by":"crossref","unstructured":"Tiwana, A., Keil, M. and Fichman, R. (2006), \u201cInformation systems project continuation in escalation situations: a real options model\u201d, Decision Sciences, Vol. 37 No. 3, pp. 357\u201091.","DOI":"10.1111\/j.1540-5414.2006.00131.x"}],"container-title":["Information Management &amp; Computer Security"],"original-title":[],"language":"en","link":[{"URL":"http:\/\/www.emeraldinsight.com\/doi\/full-xml\/10.1108\/09685220810908769","content-type":"unspecified","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/www.emerald.com\/insight\/content\/doi\/10.1108\/09685220810908769\/full\/xml","content-type":"application\/xml","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/www.emerald.com\/insight\/content\/doi\/10.1108\/09685220810908769\/full\/html","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,7,25]],"date-time":"2025-07-25T00:09:06Z","timestamp":1753402146000},"score":1,"resource":{"primary":{"URL":"http:\/\/www.emerald.com\/ics\/article\/16\/4\/324-335\/181855"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2008,10,10]]},"references-count":21,"journal-issue":{"issue":"4","published-print":{"date-parts":[[2008,10,10]]}},"alternative-id":["10.1108\/09685220810908769"],"URL":"https:\/\/doi.org\/10.1108\/09685220810908769","relation":{},"ISSN":["0968-5227"],"issn-type":[{"type":"print","value":"0968-5227"}],"subject":[],"published":{"date-parts":[[2008,10,10]]}}}