Persuading analysts about the appropriateness of the explorative activities of newly-public high-technology firms: A model of strategic communication and legitimation

This research project focuses on an important but underexplored aspect of strategic communication and legitimacy. In particular, it examines the purposeful use of communication when executives of newly-public high-technology firms engage in conversations about their new explorative activities during ECCs to proactively defend, maintain and extend their legitimacy with analysts. Prior work in this context appears to have not adequately considered the potential for firms to not only maintain their legitimacy through substantive actions that compromise their long-term sustainability, but also extend it to new domains of activity through symbolic management. Considering how vital explorative activities are for firms’ long-term sustainability, this is an important gap in knowledge that this research project attempts to address. Employing a mix of analytical tools, I attempt to identify the ways analysts guide their ECC conversations with executives, the communication strategies used by executives in these conversations, and the difference between those strategies that are successful in persuading analysts about the appropriateness of firms’ explorative activities and those that lead to legitimacy contestation. I apply these analytical tools to ECC transcripts and corresponding analyst reports of three firms. My findings suggest that analysts are willing to approve of firms’ explorative activities, as long as executives communicate purposefully with them and offer signals of conformity to the shareholder-value principle. Furthermore, my empirical work results in my Communication Process Model which outlines 6 alternative pathways to legitimacy extension, maintenance or contestation. My study makes a number of contributions to theory, methods and practice. Regarding theory, my study adds to existing research on strategic communication and legitimacy. With regard to methods, my study adds to conversation analysis, argumentation analysis, and the operationalization of legitimacy. Last, my findings hopefully encourage executives to engage in more exploration, and provide them with a comprehensive communication guide to assist their efforts.