Emotional intelligence and escalation of commitment: a review of contemporary literature and implications for future research

Abstract

Making investment decisions in the rapidly evolving financial landscape is exceptionally challenging, particularly when emotions guide these decisions. The literature indicates that investors often find themselves bound by emotions, leading to an increased commitment to investment when shaping their portfolios. Previous research also reveals that emotional intelligence has an impact on individuals’ decision-making. This systematic literature review critically analyzes studies of emotional intelligence and its influence on the investment decisions made by managers with escalation behavior. This review analyzes the papers from top journals from the year 1990-2020 and highlights that emotional intelligence has a significant impact on the escalation of commitment. The paper also discusses the necessity for further research in this arena by way of a discussion of the limitations of current literature. In discussing potential future research, the article emphasizes that longitudinal studies examining the relationship between individual and collective EI and escalation tendencies can provide valuable insights into the dynamic interplay between emotional competencies and decision outcomes over time. Additionally, experimental research exploring the effectiveness of EI interventions, such as training programs or coaching initiatives, in reducing escalation risks and enhancing decision quality can offer practical implications for organizational practice.