Measuring Up? Persistence and Change in Analysts' Evaluative Schemas Following Technological Change

We examine shifts in how analysts assess the strategies of incumbent firms following a radical technological change. Specifically, we use an inductive study of earnings conference call transcripts and analyst reports to study how analysts’ evaluative schemas change with technological change in the wireline telecommunications industry. We find three temporal themes. At first, analysts pressure firms to reverse strategic changes that are at odds with the existing “income”-focused metrics and logic that constitute the evaluative schema. Next, schema change unfolds with the ongoing technological change, as firm performance declines when measured with traditional metrics, and as managers frame strategic changes using new “growth”-focused metrics and logic. Finally, a distinct shift in the schema is apparent as analysts’ increasing attention to growth spurs a more positive view of strategic changes that they previously opposed, a less positive view of previously supported strategies that conformed to an income ...