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Journal of Indian Institute of Management Bangalore

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DO IPL TEAMS ESCALATE COMMITMENT FOR COSTLY PLAYERS? WHEN DO PLAYER STATUS AND REPUTATION MATTER?

This paper explores the micro-foundational level (target-level) determinants of the team or organisation's escalation of commitment (EOC) decisions. Taking the context of the Indian Premier League (IPL), we explain why some players are retained by the same franchise over seasons compared to others. We argue that players' survival in the same IPL franchises results from selectors' self-justification for costly players and institutional pressure to retain more legitimate players. We use the Cox proportional hazard model on Indian Premier League (IPL) players’ data from 2008 to 2019 to test the proposed hypotheses. Our results show that the salary paid to the IPL players depends on the expected utility of the players in the seasons. The teams paying a high salary to certain players are more likely to retain them in the upcoming IPL season, such continued faith serving as self-justification or a vote of confidence in favour of their prior decision. 

Further, our results support that players' status (based on their debut in the international formats) and reputation (based on their performance in the prior season) are essential sources of gaining legitimacy for IPL franchises. Therefore, the players' high status and reputation increase institutional pressure to retain such players and increase the team’s EOC (player survival in the same team) for the particular players. Moreover, we argue that IPL team EOC for costly players depends on their legitimacy deficit. Our findings support that player reputation and high status positively moderate the relationship between player-level sunk cost and the IPL team's EOC for the particular player. Various aspects of individual players analysed in the study have implications for the decision-makers in the IPL and other franchise and professional clubs’ team managers. It helps in understanding which player-level heterogeneities impact a team’s decision-making regarding the retention of players.