Incumbent Firms’ Framing and Analysts’ Evaluations of the Adoption of Discontinuous Technologies

Abstract

How can incumbents use framing to effectively alleviate securities analysts’ concerns about the adoption of a discontinuous technology? Combining framing theory with sociological perspectives of analysts’ evaluations, we theorize that, analysts’ favorability is a function of two characteristics of how a firm rhetorically frames its actions: conformity—the degree to which the framing accommodates analysts’ deeply held beliefs, assumptions, and norms—and commensurability—the degree to which the framing matches analysts’ existing knowledge and deliberations. We then apply Snow et al.’s classic framework to conceptualize discontinuous technology adoption framing as consisting of first, three distinct strategies of adoption frame articulation—bridging, extension, and transformation—and second, adoption frame amplification—defined as the clarification and invigoration of the respective frame articulation. Theorizing that the three articulation strategies systematically differ as to their conformity and commensurability, we argue that adoption frame extension is, ceteris paribus, the most effective articulation strategy, but nevertheless unlikely to fully resonate with analysts. We propose that incumbent adopters can resolve this dilemma and gain analysts’ support if they combine adoption frame transformation with high levels of adoption frame amplification. We substantively advance research on incumbent responses to discontinuous technologies, particularly the emerging framing perspective.