Exploring the value of a novel decision-making theory in understanding R&D progress decisions

Purpose – The purpose of this article is to explore the ability of a novel psychological theory of how people make decisions, narrative-based decision theory, to help explain people's decisions about whether to continue investment in a research and development (R&D) project (R&D progress decisions). Design/methodology/approach – The paper applies the new theory to an empirical finding of existing research on R&D progress decisions; the finding that instruction in the sunk cost principle seems to mitigate the sunk cost effect in R&D progress decision-making. Findings – By interpreting the empirical finding in terms of narrative-based decision theory, the paper is able to clarify and extend an earlier explanation for the empirical finding. More specifically, by drawing on narrative-based decision theory the paper is able to provide a more detailed explanation of how the predictor variable (sunk cost) and the moderator variable (instruction in the sunk cost principle) may exert an influence. Research limitations/implications – Based on the result of the exploration, the authors call for further investigations into narrative-based decision theory's value in explaining R&D progress decisions, and other management decisions. Practical implications – Furthermore, the authors call for investigations into how narrative-based decision theory may help decision-makers in improving the quality of R&D progress decisions. Originality/value – Narrative-based decision theory is a recent theory from the field of naturalistic decision-making. To the authors' knowledge, this is the first article that, by using an example, illustrates how the theory may help in explaining the findings of empirical research on management decisions