Question

John Walker, the Chief Executive Officer of Consolidated Industries, had a tough decision to make. He had to decide which of four possible plants to close to save money and boost the value of Consolidated’s shares. He decided to close a subsidiary in a poor third-world nation located 6,000 miles away from the company headquarters where he was located. He reached that decision after realizing that it was the only one of the four plants at which he had met none of the workers. He also was unwilling to believe that all of the money he had put into a London subsidiary would not soon pay off if he diverted some of the money saved by closing the third-world plant to the London operations. Which of the following two concepts is illustrated by the process by which John Walker decided which plant to close:
A) Diffusion of responsibility; escalation of commitment.B) Pygmalion Effect; confirmation trap.C) Locus of control; Kohlberg's first stage of moral development.D) A high level need for moral approbation; low ego strength.

Answer 1

Answer:

A) Diffusion of responsibility; escalation of commitment.

Explanation:

Diffusion of responsibility relates to the concept of psychology in which the individual tends to create the responsibility of some different person, because the group size is to large and then the individual thinks not to take the responsibility.

Escalation of commitments relates to the fact that an individual continues with all the previous decisions and do not alter his actions, in consideration to the current circumstances.

In the given instance, John Walker the CEO never met any of the employees of third-world nation, and therefore, he continues his decision, that this plant shall be closed as he once again do not study all the plants, but believes illogically that the close of this plant will be beneficial to company.