The Main Street Dilemma: How Journalists Cover Incumbents’ Adoption of Discontinuous Technologies

Abstract

Scholars investigating incumbent inertia have recently begun to examine the role that external constituents play in incumbents’ adoption of discontinuous technologies. However, this research stream has primarily focused on the role of securities analysts and investors while neglecting other important constituents, particularly journalists. We expand the literature by empirically examining how incumbents’ adoption efforts affect coverage by journalists based on a rich sample of 352 product launches in the automotive and photography industries. We find evidence that, in contrast to financial-market-oriented constituents, journalists dedicate more attention to technological initiatives the higher the extent of discontinuity, but also cover them more controversially. We also find an important distinction among different types of hybrid technologies. Specifically, journalists perceive hybrid technologies that try to establish a technological alternative to the discontinuous technology as more controversial than hybrid technologies introduced to ease the transition to the discontinuous technology. Overall, our study provides a more nuanced understanding of infomediary responses to discontinuous technological change. Most importantly, we highlight that incumbents are not only confronted with evaluation challenges from Wall Street, as has previously been highlighted, but also face distinct pressures from Main Street, particularly as journalists cover discontinuities more controversially.