Toward an Audience‐Based View of Incumbent Adoption of Potentially Discontinuous Technologies: Evidence From Fintech

ABSTRACT We advance an audience‐based view of incumbent adoption of potentially discontinuous technologies. Drawing on theories of discursive institutional processes and categorical legitimacy, we model how incumbents navigate mixed judgments from external groupings in their environment, that is, audiences, when adopting prospective discontinuous technologies. We argue that incumbents filter this noisy discursive environment by factoring in audiences' credibility and authority. We develop contextualized hypotheses and test them on a longitudinal sample of 149 incumbent financial firms responding to the emergence of financial technology in Europe from 2000 to 2016, distinguishing industry insiders, support experts, the general public, and regulators. Uniform engagement across audiences has a non‐linear influence on adoption. Incumbents respond most visibly to judgments from the general public and resist positive engagement from support experts. Industry insiders' and regulators' engagement did not have robust direct linear effects. Our findings reveal a preparadigmatic legitimacy puzzle wherein conventional institutional predictions systematically fail or reverse when legitimacy signals remain contested across audiences. We develop four propositions theorizing the expertise penalty, democratic legitimacy under uncertainty, authority without clarity, and temporal heterogeneity of audience influence, establishing the need to differentiate between audiences to understand incumbent responses in the preparadigmatic phase of technology evolution.