Framing the change: how incumbent’s senior managers frame technological changes to manage legitimacy.
Author: Nina Versluijs Student number: 134434373 1st version, 24th of June 2022
MSc. in Business Administration, Digital Business track
Faculty of Economics and Business (ABS), University of Amsterdam
Supervisor: Dr. Z. Kashanizadeh
Word count: 14 947 words
Statement of originality
This document is written by Nina Versluijs who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Table of contents
Abstract ... 5
1. Introduction ... 7
2. Literature review ... 13
2.1. Concept of framing ... 13
2.2. Technological frames ... 16
2.3. Strategic issues and technological change ... 19
2.4. Framing practices during strategic change ... 21
2.5. Sensemaking and -giving ... 23
2.6. Legitimacy of changes ... 23
2.7. Rhetoric instruments ... 27
3. Research design and methodology ... 28
3.1. Case study company ... 28
3.2. Research design ... 29
3.3. Data collection ... 30
3.4. Data analysis strategy ... 32
4. Findings ... 38
4.1. Drivers ... 39
4.2. Process ... 43
4.3. Framing strategies over time ... 50
4.4. Outcome ... 51
5. Discussion ... 53
5.1. Discussion and contribution ... 53
5.2. Limitations ... 55
5.3. Suggestions for future research ... 56
6. Conclusion ... 58
References ... 61
Appendix ... 70
Appendix A: Coding scheme drivers ... 70
Appendix B: Coding scheme process ... 73
Appendix C: Coding scheme outcome ... 86
Abstract
Change management literature has indicated that legitimacy of change to stakeholders is necessary in order for a company to conduct technological change successfully (Kotter, 1996). A way to legitimize technological transformation is by rhetorical strategies, which exist of internal and external communications of new strategies (Suddaby & Greenwood, 2005). The study answers the question: “How do incumbents’ senior managers frame technological changes to their audience in order to manage legitimacy?”.
In order to answer the question a case study of the Dutch incumbent, ASML Holding NV (ASML) is conducted. The study follows an inductive qualitative approach via document analysis to investigate the way how senior managers’ fame technological changes to shape the interpretation of their audience. Via transcripts of quarterly held earning calls, data is collected to identify framing strategies utilized by senior managers. For this research the Gioia methodology is chosen and the data analysis technique used in this thesis is coding, all the quotes will be coded according to the Gioia method (Gioia et al., 2012).
The empirical findings elaborate on drivers, process and outcomes of framing strategies.
Three different drivers relate to senior managers’ possible frame shifting over time: (1) market dynamics, (2) financial results, (3) sales of shares. The process, emphasizes how senior managers frame technological changes in order to legitimize its salience to their audience. A typology is established of framing strategies which senior managers use to legitimize technological change. The typology exists of two axes: (1) the extend of urgency which the technological change is articulated with, especially compared to prior schema(s), and (2) the extend of internal certainty the technological change is articulated with, by the actor compared to prior schema(s). Finally, the outcome of the drivers and process is the company's stock price of shares and orders of the new technology.
I theorize about four categories of framing strategies which are not mutually exclusive, (1) confidence and incremental framing, (2) confidence and radical framing, (3) careful and incremental framing, (4) careful and radical framing, through which senior managers try to legitimize technological changes to their audience. Furthermore, this study finds evidence that senior managers shift frame strategies over time because of the influence of several triggers.
Keywords: Technological frames; framing strategies; frame shift; legitimacy; technological changes; incumbent; senior managers.
1. Introduction
In the past years, digital technologies have become more important for companies. With this, more and more companies undertake initiatives to investigate and adopt new digital technologies to maximize operations, which is considered the digital transformation. New entrants in the market innovate to enhance products and services for customers. There is fear among incumbents that new entrants may disrupt the current market. Digital technologies cause a big shift in the competitive environment (Zaki, 2019). The digital transformation of a company typically entails changes to critical business operations and has impact on products, processes, and organizational structures (Matt et al., 2015). In order for incumbents to stay competitive, it is crucial to initiate technological changes. Therefore, stakeholders need to embrace digital disruption and incumbents’ senior managers should inspire digital disruption in order to reach competitive advantage. However, the interpretation of digital technologies can be challenging for people, because of their uncertainty and complexity (Kaplan & Tripsas, 2008). Change management literature has indicated that the legitimacy of the change to the audience is necessary in order for a company to conduct technological change successfully (Kotter, 1996). A way to legitimize technological transformation is by rhetorical strategies, which exist of internal and external communications of new strategies (Suddaby & Greenwood, 2005).
Framing strategies can be applied by senior managers to influence the audience’s perception of technological changes. Within the management and organization literature, the theoretical construct of framing is a central and highly researched topic (Cornelissen & Werner, 2014). Goffman (1974) defines the concept of frames as the “schemata of interpretation”, which concerns the cognitive ability that enables actors to interpret incoming information and assimilate it to a priorly given belief system and develop conceptualization towards this information (Chong & Druckman, 2007; Hoffmann, 2006).
The schemata of interpretation also apply when actors face new technologies.
Orlikowski and Gash (1994) identify the underlying assumptions and interpretations of technology as technological frames. Whenever a technology first emerges an actor might not be sure about what the technology is about and what the performance possibilities are (Kaplan
& Tripsas, 2008). Technological frames influence an actor’s technological choices, whether to invest, adopt, or support the technology, has a consequence on providing effort, investment, legitimacy, or scale economies for the evolution of the technology (Kaplan & Tripsas, 2008).
Sensemaking and acceptance of technological changes are crucial for the success of organization’s change management (Fiss & Zajac, 2006). Senior managers need to explain and legitimize technological changes to their stakeholders. It is especially crucial for a company that external stakeholders understand and support technological changes. As the interpretation of external stakeholders may determine their trust in the company. Especially public companies rely on the trust of external stakeholders as it influences the company’s stock prices of shares, this reflects the investors perception of its ability to earn and grow profits in the future.
Most academic discussion about social cognition has been referring to strategy, and change management (Balogun et al., 2015; Gioia & Chittipeddi, 1991; Kaplan, 2008; Kaplan
& Tripsas, 2008; Logemann et al., 2019). Although research has been conducted concerning the social cognition of technologies. In literature, the incongruence of technological frames has been studied, which are the differences between organizational members’ individual frames and the organizational frames (Orlikowski & Gash, 1994). The incongruences are important to understand the change process of technological changes and the framing process. However, Davidson and Pai (2004) argue that the lack of alignment between different groups is not insightful anymore and recommend researching other areas of technological frames. Davidson (2002) analysed the way that an executive manager stimulated the thinking of other individuals about new uses of IT to change organizational culture. The frames of the manager influence the
thinking of others. Lin and Cornford (2000) used the actor-network to gain understanding how a group manipulates frames of other individuals to gain support for their own technology selection. The studies demonstrate that powerful organizational individuals can affect the content and direction of a framing process. Another study that discusses technological change theory is Barrett (1999) and emphasizes on how belief systems of people or organizations can influence the interpretations and actions towards technologies. Barret linked the importance of market institutions as a frame domain in the organizational field of the London Insurance Market.
Literature indicates organizations make use of different framing practices to frame strategic changes to their stakeholders (Oliver, 1991). However, there is a scarcity of studies that research the detail of these framing tactics (Werner and Cornelissen, 2014). Framing strategies are important in order to influence the audience’s interpretation of technological changes. Therefore, Werner and Cornelissen (2014) have researched framing tactics that actors use for legitimacy of institutional changes to their stakeholders and to build common ground.
The two following discursive framing tactics are theorized in the article, frame shifting, and frame blending. This research was limited to institutional changes, and therefore, may not be transferable to technological changes.
The framing strategies senior managers use and the interpretative shift of technological frames within an organization could be stimulated by environmental triggers (Davidson, 2006).
According to Davidson, investigation of the circumstances that drive interpretative shifts could broaden the literature beyond the current attention on incongruence, to emphasize the ongoing process of framing that frequently occurs in technological change projects.
Davidson (2006) revisited Orlikowski and Gash’s (1994) TFR (Technology Frames of Reference) to point out research strategy to stimulate theory development. Research would benefit to shift attention to the processual perspective about technological frames and
emphasize on structural aspects, rather than focusing on the content of technological frames (Davidson, 2006; Kaplan & Tripsas, 2008). Findings about frame content are always related to the context of the case, however, conceptualization of frame structures could help to conduct comparative analyses between cases. Davidson argues (2006, p. 30): “A more dynamic perspective of frame change as an ongoing interpretive process, triggered by a variety of organizational circumstances, could help move technological frame research beyond these well- established tenets of technological frame theory.”. Fiss & Zajac (2006) argue that more qualitative research needs to be conducted concerning the symbolic process that establishes legitimation of the strategic change’s meaning. Besides, there is a need to examine continuities and changes in framing strategies, their forms, and the content of frames over time (Benford, 1997, p. 417).
In other words, whilst prior research has highlighted the content of technological frames (e.g., Agarwal et al., 2010; Nath Mishra & Agarwal, 2010), reframing changes (e.g., Benford
& Snow, 2000), and discursive tactics to legitimize institutional change (e.g., Werner and Cornelissen, 2014), there remains a gap in the understanding of framing structures and how framing practices shift over time in order to legitimize technological changes.
To address this limitation in the literature, my research provides empirical evidence by using a qualitative research design on how leaders shape the interpretation of external stakeholders in order to legitimize technological changes. The study answers the question:
“How do incumbents’ senior managers frame technological changes to their audience in order to manage legitimacy?”. In order to answer the question a case study of the Dutch incumbent, ASML Holding NV (ASML) is conducted. The high-tech company a public firm listed on the stock exchange and employs more than 14.000 people worldwide. Its vision is to enable groundbreaking technology to solve some of humanity’s toughest challenges. The company aims to provide leading patterning solutions that drive the advancement of microchips, together
with their partners (ASML, n.d.). Due to the global pandemic and the digital transformation, the demand for the products has grown enormously. The machines manufactured by ASML are part of a highly complex production process involving a lot of different suppliers and equipment. Innovation is at the core of the firm, innovative groundbreaking technology is their way to gain competitive advantage. Therefore, being innovative is expected from a strategic perspective. The board of directors is keen on technology and is informing about the developments regarding the innovation projects. Within this study, the communication from ASML towards their external stakeholders is examined via quarterly held meetings. ASML supplies the semiconductor industry with technologically complex lithography solutions and legitimacy can only be achieved if the audience understands the technology. Therefore, communication about technological changes is very much important to gain legitimacy.
With this thesis I contribute to the literature by building theory about frame structures and change in frame structures to establish a more general understanding of technological changes in organizations (Davidson, 2006). To better understand how companies use frames to legitimize the meaning of technological changes, this study contributes theoretically to the framing construct in social movement literature, that emphasizes frames as a key factor to reach successful change (e.g., Benford & Snow, 2000; Fiss & Zajac, 2006; Gioia et al., 1994; Snow et al., 1986). The stream of legitimacy theory is enriched by examining how the audience’s technological frame can be shaped by different framing strategies. This research extends qualitative insight into framing behavior of senior managers and I explore how these framing practices develop over time (Spieth, 2021), in order to determine whether certain conditions influence the framing practices (Fiss & Zajac, 2006). Furthermore, this study contributes to the literature by presenting new insights of possible framing strategies based on the act of framing combined with technological frames, which provides a different angle to the research of framing technological changes. Implications for organizations generated by this study come from the
leadership role of managers within incumbents concerning the use of framing, to influence their audience’s belief system. Framing a new interpretive scheme can provide acceptance and understanding of the novel technology.
In order to answer the research question, this study deepens the understanding of how technological changes are communicated by senior managers. I categorize the different rhetoric used into four framing strategies. Secondly, I add to the understanding of framing strategies whether certain factors over time induce change in the framing strategies of senior managers.
Thirdly, the outcomes of the way how senior managers frame technological changes are determined. This thesis is built up into five chapters: after the introduction, the second chapter introduces the most important literature around theoretical concepts. The literature review establishes an understanding of the current knowledge in the area of research and to discover the unknown in this domain. The third chapter explains the research design and methods of the thesis, in which the data collection, data analysis, and the reliability and validity are described.
Chapter four shows the findings of the study. The findings are debated in chapter five in the discussion section and gives a conclusion of the study, which refers back to the introduction.
2. Literature review
The purpose of the literature review is to establish an understanding of the current knowledge in the area of research, to discover the unknown in this domain, and to identify the literature gap. Existing theory and research are important to determine research objectives, as the study is built upon the existing knowledge and ideas. In the past twenty years technology became increasingly more important for companies and so has the trend of digital transformation really accelerated now. Technological framing is a relatively new phenomenon (Orlikowski & Gash, 1994). However, the underlying theoretical concepts of technological framing, cognitive ability, and framing have an extensive history in the academic debate. This chapter discusses the literature regarding the research area from a broad perspective to a more specific focus, to substantiate the research question. The different scholars and views are organized thematically and within subheadings.
2.1. Concept of framing
The theoretical construct of framing refers to the understanding of cognition processes, framing also may be used for the legitimation of strategic organizational change (Gioia &
Chittipeddi, 1991). The concept of framing is about guiding people’s information processing and can be understood as the “schemata of interpretation” which allows actors "to locate, perceive, identify, and label" situations or issues (Goffman, 1974, p. 21). It is a social representation, which refers to the daily thinking of people and the ideas that give coherence to their beliefs, ideas, and the connections they create (Moscovlcl, 1988). Frames help actors to reduce the complexity of the environment in order to make interpretations, decisions, and actions. The theoretical construct of frame is central within the management and organization theory (Cornelissen & Werner, 2014). In this widespread of framing research there are key
research traditions, from language, cognition, and culture. The literature is overwhelming and has caused unclarity around the definition of frame construct, Dewulf et al. (2009) note that the construct of framing has different meanings within research paradigms. There are two primary theories on framing to distinguish: The first view deliberates frames as cognitive representations of knowledge and are considered as “autonomous mental models that serve as resources for interpretations” (Jorgenson & Steier, 2013, p. 391). The second view emphasizes frames as “an active processual phenomenon” that involves interaction among actors about the meaning of the context (Benford & Snow, 2000, p. 614). The interactional view enables insight for understanding alternative events. Prior research has divided different levels of framing into micro-, meso-, and macro-level. Micro-level framing explains the cognition, perspective, and decision-making of an individual within the organization. The meso-level of framing explains the meaning of an event and can influence transformations within the organization or groups.
Macro-level frames belong to analyses of the institutional fields and social and economic change (Cornelissen & Werner, 2014).
Frame of reference is a knowledge structure that helps give guidance to individuals’
understanding and information processing. This social representation enables actors to connect the reference with their beliefs, ideas, and the connections they create and synthesize the information for decision making. Frame of reference allows classification of behavior, persons, and objects (Miller & Sardais, 2013; Moscovlcl, 1988). Recently, the literature continued to dive deeper into frames of reference and their effect on decision-making or social judgment (Cornelissen & Werner, 2014). Cognitive frames are different from the act of framing, which is an activity that actors do and implies a presentation of an issue or event in a slightly different way by means of language and symbolic gestures to reinforce frames or to create new frames (Cornelissen & Werner, 2014). Framing is temporary and can be adjusted according to changes within the context, it is a dynamic process (Fisher et al., 2017; Snow et al., 2007). “The
development of this perspective is rooted in symbolic interactionist understandings of the process of meaning construction and the ways in which people make sense of their world”
(Snow et al., 2014, p. 38).
How people make sense of the world relates to the concept of sensemaking, for example in times of change actors try to give meaning to these new events, issues, or experiences. The way people make sense of change through perceived symbolic signs, especially language symbols seem to be important. Managers who combine framing and a narrative form of language, establish an effective way of sensemaking (Logemann et al., 2019). Sensemaking differs from the cognitive frame, as it is not the pure cognitive interpretation process, but the interpretation in coincidence with an action (Gioia et al., 1994). The process of sensemaking contains iterative sensegiving and sensemaking, in which sensegiving is the action that is influenced by symbolics (Gioia & Chittipeddi, 1991), for example the attempt of CEOs to communicate their vision to the stakeholders so they can make sense of it. Managerial sensemaking is an important factor for managers to analyze, communicate, and implement technological-induced change initiatives (Lüscher & Lewis, 2008). The technological frame of people is most similar to the concept of cognitive frames, however, it specifically regards to the assumptions and interpretations of technology (Orlikowski & Gash, 1994). Frame resonance is another highly discussed concept in social movement framing literature. Snow and Benford (1988) introduced the term frame resonance which emphasizes the ability of a collective frame to resonate to the audience. Snow and Benford ask: “under what conditions do framing efforts strike a responsive chordor resonate with the targets of mobilization?” (1988, p. 198).
The concept of framing enables organizations to understand the sensemaking process of actors and framing strategies provide the possibility for companies to legitimize strategic change towards their stakeholders.
2.2. Technological frames
To conduct digital technologies in complex and uncertain situations managers tend to rely on their interpretations and assessments about these technologies, for example, big data, cloud computing, blockchain, artificial intelligence (Technological Change - Megatrends - PwC, n.d.). To accept technology, a user's perception of usefulness and perceived ease are fundamental (Davis, 1989). Framing is important to understand how new meanings and practices are associated with technological innovations and might force a revision in current logic (Purdy et al., 2019). Orlikowski and Gash (1994, p. 178) established a theoretical concept based on social cognition to focus on technology and its role in enterprises, which is called technological framing:
We use the term technological frame to identify a subset of members’ organizational frames that concern assumptions, expectations, and knowledge they use to understand technology in organizations. This includes not only the nature and the role of the technology itself, but the specific conditions, applications, and consequences of the technology in particular contexts.
Orlikowski and Gash (1994) established the Technological Framing of Reference (TFR) and found three domains to define the interpretations of technologies: (1) nature of technology, which concerns the understanding of the technology including its capabilities and functionalities. (2) Technology strategy, regards the interpretation and understanding of an organizations’ decision-making about the acquirement and implementation of a certain technology. (3) Technology in use, refers to the understanding of the technology’s practical usage on a regular basis. Whenever new digital technologies are implemented in an organization, reactions and interpretations to organizational changes are affected by varying technological frames of actors (Davidson, 2006; Herscovitch & Meyer, 2002; Spieth et al., 2021; Young et al., 2016). Beliefs about novel technologies are significant for making digital
transformation decisions, therefore, managers need to think critically and seek to understand the opportunities of technologies (Solberg et al., 2020). Interpretations of technology may lead to greater support, but if the technologies fail and actors are disappointed, the frame may impose barriers (Agarwal et al., 2010; Kaplan & Tripsas, 2008). Inconsistencies and incongruences in a group social cognitive perspective on technologies may cause problems for IT-enabled organizational change in highly dynamic settings, in which new information continuously comes available. Examining a shared group’s technological frames can help an organization create alignment within the project (Orlikowski & Gash, 1994; Young et al., 2016).
Technological frames can be used for the discovery of indifferences in interpretations of new digital technology, evaluate whether actors are likely to support their implementation and management of technological change. Furthermore, frames enable actors to gain power and influence (Kaplan, 2008). Within the social movement literature, there has been done research about strategical changes (Balogun et al., 2015; Gioia & Chittipeddi, 1991; Kaplan, 2008;
Kaplan & Tripsas, 2008; Logemann et al., 2019). Kaplan and Tripsas (2008) propose a cognitive model of technology trajectories (figure 1) with three main components: actor’s technological frames and interpretive processes, a collective technological frame, and the evolution of technology. Actors’ technological frames shape and are shaped by collective technological frame. Besides, the organizational members’ shape the technology evolution by their choices and actions, and the technology constrains and enables technological frames.
Therefore, there is an indirect relation between the technology and the collective technological frame as it is shaped by the actions and interactions of organizational members. By understanding the relation between interpretative processes and technology trajectories, actors can shape their audience frames about technical changes. The mechanisms in the cognitive model of technological change which is proposed by Kaplan and Tripsas (2008) still need
further research. A question that remains in our understanding is how senior managers influence both the individual as well as the collective frames by means of framing practices.
Figure 1: Cognitive model of technology trajectories (Kaplan and Tripsas, 2008).
Spieth et al. (2021) established a measurement instrument to assess the micro-processes of technological frames and how technological frames are formed (Kaplan & Tripsas, 2008).
They identified five factors that are the antecedent of technological frames and shape the interpretation of digital technologies on an individual level. The factors are personal attitude, application value, organizational influence, leader influence, and industry influence. The dimensions are different but interrelated and a change in one dimension does not imply a change in another (Spieth et al., 2021). The instrument established by Spieth et al. (2021) explains how technological frames are shaped, the dimensions are shortly examined to gain a better understanding of their signification. Personal attitude is about the private use, experience, and interest of digital technologies. Application value regards to the perception of the actor whether the digital technologies make it possible to work more freely, facilitate the coordination of working tasks, make work more flexible, increase the effectiveness in work steps, and reduce
the possibility to make mistakes. Organizational influence concerns the degree the colleagues of an actor remind the use of digital technologies during their job, recommend digital technologies, demand to use digital technologies, and help to use digital technologies for their work. Supervisor influence focuses on the attitude of a supervisor towards the digital technologies. So for example, if the supervisor is willing to integrate digital technologies into the firm, he would have an interest in, would speak about digital technologies, and would request the actor to use the digital technologies. Industry influence, regards the extent to which:
competitors make (successfully) use of digital technologies and customers and suppliers demand the use of digital technologies. This scale can be combined with archival documents to investigate technological frames.
2.3. Strategic issues and technological change
Companies adopt emerging technologies to provide digital solutions. This transforming process of companies is considered the digital transformation, in which companies integrate digital technologies into their business and fundamentally change the business processes, culture, and customer (Boulton, 2021). In the late 1980s, less than 1% of the world’s technologically stored information digitally, although in 2012, 99% was digital formatted (Hilbert & López, 2011). Companies that successfully transform their business so they can be competitive in the digital transformation and leverage the full potential of disruptive technologies, are reshaping customer value proposition (Berman, 2012). Companies invest large numbers of money into IT initiatives to encourage the digital transformation, but a high percentage of the projects seem to fail (Behnam Tabrizi et al., 2019; Kane et al., 2015).
Knowledge about how technology is being perceived, is significant for the understanding of technological development, adoption, and change in organizations (Orlikowski & Gash, 1994).
Besides, technology knowledge is crucial for greater information technology (IT) strategic
alignment between executives. If there is not a mutual understanding of the potential of IT in the business, it is difficult to decide to execute the strategy (Johnson & Lederer, 2010). At the beginning of a technological change, people are optimistic and consider the opportunities that come along with the change. But this is followed by a distinct view in which the threats are more considered rather than the benefits. If actors perceive the change as a threat for the current way of working it will create resistance towards the change (Hilbert, 2020).
Strategic issues can have an impact on an organization’s strategy and the competitive advantage. Besides, the strategic issues can have consequences for the top-level decision- makers and strategic change within the organization. Hence, the legitimacy of strategic issues is important to gain power and influence. The formulation of strategy has an influence on the strategical change (Dutton & Duncan, 1987). Commitment to change is defined by Herscovith and Meyer (2002) as a mindset that connects an actor to a course of action assumed necessary for the successful implementation of a change initiative. The mindset is influenced by three components: (1) the desire to support the change based on a belief of its benefits, (2) recognition that there are costs for the failure and therefore support is provided for the change, and (3) the feeling of obligation to support the change (Herscovitch & Meyer, 2002). Actors’ technological frame reinforces the assessment of costs and benefits for a technological change. Depending on an individuals’ technological frame, change commitment is or is not provided. According to Gioia’s and Chittipeddi’s (1991) study on strategic change, it can be useful to involve processes whereby the management team first tries to assign meaning to strategy-relevant opportunities and threats. Then followed by establishing a vision that stakeholders could influence, so they accept and act upon to initiate desired changes (Gioia & Chittipeddi, 1991). In order to examine how senior managers shape the audience’s belief system about technological changes, it is crucial to determine whether the communication is about a technological change and what defines a technological change. According to Ayres (1985) technological change includes the
research and development, introduction of new products and processes (innovation), and improvement of existing products and processes.
2.4. Framing practices during strategic change
Most knowledge that people have gained is by the communication with others, it affects their way of thinking and results in new content (Moscovlcl, 1988). These individual previous experiences generate knowledge and create frames, according to Kaplan (2008, p. 738) examples of these histories are “career histories, project experience, functional membership, position in the hierarchy -and contexts- including the firm, the industry, and the prevailing technological paradigm”. Kaplan (2008) studied two large enterprises in technological strategic decision-making. In order to determine how cognitive frames influence organizational strategy making, Kaplan (2008) established the framing contest model. The framing contest model argues that the type of framing used by a person is influenced by their own interests.
Furthermore, between organizational members’ frames, congruence might exist (Orlikowski &
Gash, 1994), and engaging in framing practices becomes necessary. Framing is both an unconscious cognitive activity as well as an activity which people can put their will into, this means framing practice is accessible for influence and reflection (Hoffmann, 2006). In these situations of congruence, leaders can use social abilities to encourage collective frames (Kaplan, 2008). Kaplan (2008) suggests two framing practices: (1) establish or undermine legitimacy of the frame, or the claimsmakers, and as is argued by Snow and his colleagues (1986): (2) realign frames by using the alignment processes frame bridging, amplifying, extending, and transforming. The goal of frame alignment is to meet congruence between two parties’ their interpretations (Snow et al., 1986). Thus, framing enables alignment of frames in order to reach congruence among actors for transformation initiatives (Snow et al., 2014) and may change individual frames so new frames are created.
Despite the context specificity of research on content of frames, some similarities have been identified in frame domains among different organizational case studies. The first frame domain that is developed: (a) frames related to information technology features and attributes, (b) frames related to organizational applications of IT, (c) frames related to incorporating IT into work practices, and (d) frames related to developing IT applications in organizations (E.
Davidson, 2006).
According to Oliver’s (1991) study, firms use different framing practices to frame strategic changes towards shareholder value management and can be categorized as acquiescence, compromise, avoidance, defiance, and manipulation. Acquiescence frames concern the implication of an organization that obeys norms and institutional processes.
Besides, the organization chooses actively and strategically to reach compliance with institutions for their own benefits. Manipulation is an active response to reach legitimacy and
“can be defined as the purposeful and opportunistic attempt to influence institutional burdens and evaluations”, especially influence tactics are efforts to manipulate beliefs and values (Oliver, 1991, p. 157).
Werner and Cornelissen (2014) have researched framing tactics that actors use for legitimacy of institutional changes to their stakeholders and to build common ground. The two following discursive framing tactics are theorized in the article, (a) frame shifting, which
“involves specific forms of disjunctive and counter-factual language, which is a tactic where individual actors query the institutionalized cognitive schema in a field and articulate and promote an alternative frame that marks the contrast with the prior cognitive understanding.”, (b) frame blending, “involves conjunctive language and analogies through which actors discursively iterate between or integrate cognitive schemas in a field, including bridging between past schemas as part of a proposed novel schematization.”. Yet, there is a lack of
specification of the different types of framing practices that senior managers may use in order to legitimize technological changes.
2.5. Sensemaking and -giving
Several theories have been developed on how people make sense in organizations.
Weick (1995) wrote a book Sensemaking in Organization and describes the process of how people make sense in organizations. Sensemaking is considered as an ongoing process in which individuals shape their surroundings and behaviors in order to rationalize what people are doing.
Interactions between members of organizations activate and situate these processes. Weick (1995) argues that actors’ representations of certain events play an important role in the development of subjectivity and collective understanding. Sensemaking regards the process of interpreting and linking activities to a frame of references based on previous experiences, traditions, ideologies, and actions. All actors make sense of events in a different and in their own way.
2.6. Legitimacy of changes
Legitimacy is a central concept in organizational institutionalism and is viewed as the cultural support for a firm (Meyer & Scott, 1983). Suchman argued that too little researchers defined the term legitimacy, and so he defined it as “a generalized perception or assumption that the actions of an entity are desirable proper, or appropriate within some socially constructed systems of norms, values, beliefs and definitions” (1995, p. 574). In theory, an organization would be considered completely legitim when there are no alternatives and no doubt is raised.
Scott wrote in his book Institutions and Organizations: “legitimacy is not a commodity to be possessed or exchanged but a condition reflecting cultural alignment, normative support, or
consonance with relevant rules or laws” (1995, p. 45). Suchman (1995) determines two basic perspectives of legitimacy, the institutional and strategic view. The institutional view accentuates how beliefs become embedded in organizations. Whereas the strategic view emphasizes legitimacy by means of attaining organizational objectives. Legitimacy is necessary in order to let the audience accept changes or new events. Suchman (1995) determines three forms and nine subtypes of legitimacy and are all based on different dynamics in which they all describe a different element of legitimacy. Firstly, the pragmatic form, is based on self-interest of an organization’s audience and considers the organization as legitimate as long as there are benefits for their own sake. Exchange legitimacy considers an act legitimate when there is an exchange between the constitution and organization. Another subtype of pragmatic legitimacy is influence legitimacy, the audience does not only support the organization because of self- interested exchanges, it rather emphasizes whether the audience sees the organization as responsive to their larger interests. The third subtype, dispositional legitimacy, concerns whether the audience perceives the organization as positive or negative by means of the organization’s personality attributes. If the audience treats organizations as if they were personalities and as evaluations of organizational acts were positive, their perception of organizational legitimacy would increase.
The second form is moral legitimacy, which is based on normative approval. Moral legitimacy is not based on judgments, nor on self-interest, but more based on whether the organizational acts are morally right. Within moral legitimacy, there are four subtypes:
consequential, procedural, structural, and personal legitimacy. Consequential legitimacy rests on the valuation of certain organizational output characteristics and thus considers that the audience will act morally legitimate if the value of the output is acceptable. Procedural legitimacy is based on the procedures to achieve the desired output and becomes even more important if there are no clear outcomes to measure. Structural legitimacy is based on the
organization’s structural characteristics, which is its capacity to perform certain work activities.
An organization is considered legitimate when the audience feels there is a fit between the tasks and the organizations ability, it is “the right organization for the job” (Suchman, 1995, p.581).
The last subtype of moral legitimacy form is personal legitimacy, which gains legitimacy of actors through the charisma of organizational members.
Unlike pragmatic and moral legitimacy, cognitive legitimacy is more based on cultural ideas and exists out of two subtypes: comprehensibility and taken-for-grantedness.
Comprehensibility is built on the audience’s cultural models to assess whether the organizational activities are considered meaningful. In order to be considered legitim, an organization must conform to the audience’s belief system and understand their experienced reality of daily life. Taken-for-grantedness is not based on the evaluation of actors to gain legitimacy but is rather based on the belief that “for things to be otherwise is literally unthinkable” (Suchman, 1995, p. 583). According to Suchman, this type of legitimacy is the most subtle and powerful source. However, Suchman (1995, p. 585) argues cognitive legitimacy is probably the most difficult to operationalize:
As one moves from the pragmatic to the moral to the cognitive, legitimacy becomes more elusive to obtain and more difficult to manipulate, but it also becomes more subtle, more profound, and more self-sustaining, once established.
In the early stage of technological change, comprehensibility is the base for legitimacy, or the extent to which the change features connect with established institutional logics (Suddaby
& Greenwood, 2005). Organizations can strategically use framing practices to adjust their communication and reach improved legitimacy (Fisher et al., 2017). The legitimacy of technological transformations can be influenced by rhetorical strategies and depend on two different elements. Firstly, “institutional vocabularies, or the use of identifying words and referential texts” help to let the actor make sense of the change (Suddaby & Greenwood, 2005,
p. 35). Secondly, the audience needs to understand the salience of the transformation, linguistics is an effective manner to manipulate actors’ interpretations about innovations, and theorizations of change can be used for this purpose (Suddaby & Greenwood, 2005). Suddaby and Greenwood (2005) examined the role of rhetorical strategies in legitimating institutional change. In their case study, the efforts of (de)legitimate new organizational form of competing parties is followed. The two parties used two discursive elements: first institutional vocabularies (words and arguments) to invoke two different logics of professionalism and second is the theorizations of change by which actors try to argue innovations against change. The authors identified five theorizations of change, teleological, historical, cosmological, ontological and value based, and enable the possibility to make innovations comprehensible for the audience.
A study from Kellogg (2011) shows that even when two companies have the same political and cultural opportunities, change is endorsed by the access of change managers to relational spaces, by which is meant the extent of interaction, inclusion, and isolation of other actors in order to induce change practices. According to Suchman (1995) there are three strategies for gaining legitimacy. Firstly, it is important to conform to the current environment. Secondly, managers need to select between environments to pursue the audience’s support. Thirdly, environmental structure need to be manipulated by creating new audiences. In order to maintain legitimacy, an organization should perceive change and protect accomplishments by police operations, communicate subtly, and stockpile legitimacy. Finally, to repair legitimation it is necessary to normalize, restructure, and not to panic.
Snow et al. (2007, p. 388) write, “The scant research on frame variation has generally focused on changes in the way an issue or movement is framed from one point in time to another, with even less attention devoted to variation in framing the same event across different actors”. By examining the variation of the same events from
different actors, factors can be recognized which have an influence on the framing activity (Snow et al., 2014).
2.7. Rhetoric instruments
The theoretical constructs framing and sensegiving are both exercised by means of communication. Rhetoric instruments represent a concept and tools for this are symbols, analogies, metaphors, narratives, contrast, catchphrases, and spin. These instruments enable actors to empower the persuasion and clarity of their message. Within framing, the most pervasive symbol is the linguistical construct. Metaphor refers to the explanation of another concept which is already known to the actor, symbols and metaphors help to legitimize change to an actor by let them make sense of the proposed change so they can relate the event to a previous experience (Gioia et al., 1994). Symbols and especially linguistics are the basic of sensemaking. Furthermore, rhetoric instruments relates to the literature of narratives. Narratives are useful for sensegiving (Logemann et al., 2019) and are active constructions of embedded participants’ local ‘realities’ and ‘a potent tool for meaning-making’ (Zilber, 2007, p. 1038).
Some significant gaps remain in our understanding of the management of technological frames, especially the way of shaping the understanding of stakeholders’ technological frames in order to enhance its salience (Spieth et al., 2021). This study answers the following question:
“How do incumbents’ senior managers frame technological changes to their audience in order to manage legitimacy?”.
3. Research design and methodology
3.1. Case study company
The research character is exploratory and the purpose of this study is to gain a new understanding of the structure of framing strategies that are used by higher management to legitimize technological changes to their audience, and how this changes over time. The case study examines the framing practices of the Dutch high-tech incumbent, ASML.
Since the 1980s ASML has grown into a semiconductor industry leader and became global innovation leader. The company was founded in 1984 by electronics giant Philips and the chip-machine manufacturer ASMI, and established ASM Lithography to develop lithography systems for the semiconductor market. After some time the company, ASMI could not keep up with the high investments that ASML needed and decided to withdraw themselves, while Philips kept investing. In 1995, ASML became an independent publicly traded company listed on the Amsterdam and New York stock exchanges, in the following years Philips sold all their shares.
The initial public offering facilitated growth opportunities for ASML. Within the company, research and development is an important aspect, over the years many technological changes have taken place and new technologies were introduced. In 2010s, ASML introduced the new technology Extreme Ultraviolet (EUV) lithography (ASML, n.d.). At the time of the launch of EUV lithography, Eric Meurice was the CEO of ASML, a position he held from 2004 to 2013. According to Meurice (2011), this technology marks a new era in lithography as it uses shorter wavelength to manufacture smaller chip features which results in faster and more powerful chips. ASML is convinced that there is no other choice than EUV technology to reach further chip shrinkage in the future. The problem with EUV is that it is highly complex and therefore, the readiness of the technology is difficult to predict. However, the complex
technology provides ASML with a big competitive advantage, and they consider the complexity as a way to differentiate themselves to be the only available supplier for the next generation.
After the introduction of EUV, several firms were acquired in order to accelerate EUV’s development. I argue that ASML is a suited case to examine the way how senior managers shape their audience’s belief system about technological changes, due to ASML’s innovative character and development of new complex technologies, and actors find it difficult to understand and shape a belief about complex technologies (Kaplan & Tripsas, 2008).
Furthermore, ASML is a typical case for the industry as the introduced technologies are complex and difficult to grasp for stakeholders. Besides, ASML is a public traded company, and interpretation of stakeholders is an important factor. Because trust of the stakeholders determine the value of the company’s shares.
Figure 2: Timeline ASML from introduction EUV technology to 2020.
3.2. Research design
The study follows an inductive qualitative approach to investigate the way how senior managers’ fame technological changes to shape the interpretation of their audience. Qualitative research provides the best fit for questions and to discover new theory (Yin, 1994), therefore, inductive reasoning is the most logical (Barczak, 2015). The research strategy is a case study with a grounded theory lens, which is inductively derived from the study of the phenomenon.
The research is a single case study and the unit of analysis is ASML. A case study is detailed research of a certain organization, event, process, or phenomenon within a specified time frame.
The unit of observation of the study concerns the communication of senior managers towards their audience, this phenomenon describes communication of individuals towards the collective, and works within an interpretative paradigm. Within interpretivism, assumptions are based on subjective meanings and social phenomena, the reality is socially constructed and could be perceived in many ways by different actors. Humans can experience social realities differently because of the meaning they give to them, in such situations, there is not a law that applies to all. Following an epistemological subjective approach, a phenomenon is developed by inductive inference. Epistemology refers to the assumptions about the development of knowledge (Saunders et al., 2019). Data is retrieved over a longitudinal time horizon for a period of 10 years from 2011 to 2020, within this time span, the newest technology, EUV is introduced, and two different CEOs were in charge.
3.3. Data collection
In this research, qualitative data will be used because of its richness in providing insight into details. To understand the drivers, process, and outcomes of framing strategies, essential quotes out of news articles and reports are collected. To gain insight in a more comprehensive matter about the company’s context, news articles via Nexis Uni are searched from the time period 2011 till 2020. ASML’s web page is consulted to clarify technologies that the firm uses and broadly gives an indication about the technological changes that have taken place in the past years. Transcript of quarterly held earning calls provide data to identify framing strategies utilized by senior managers.
For the sake of this study, the data collection method document analysis is used, a systematic procedure to examine documents (Bowen, 2009). As a research method, document
analysis is especially a good fit for qualitative case studies as there is need for detailed insights of the phenomenon. The document analysis is a secondary source as the data was not collected for the sake of this research, however, it is possible to conduct studies based on only documents especially to build theory (Glaser & Strauss, 1967). The data needs to be found, selected, appraised, and synthesized in order to conduct the right analytic procedure (Bowen, 2009).
Essential to document analysis is to take the authenticity and credibility of the document into account in order to know how to interpret the data correctly. The firm’s earning calls demonstrate the vision of the CEO and the past or future strategy, which is explained to interested parties, including investors, and financial analysts. Besides, the higher management communicates important changes within the firm. Analysts concentrate on the way management communicates about certain events or issues and try to notice whether the mood of the management has changed from previous quarters. The senior managers are the unit of observation, by conducting document analysis the communication of senior managers can be truly observed, and relevant quotes will be collected. This method is highly more effective than for instance conducting interviews with senior managers about their communication style.
Document analysis enables access to obtain data on the context within senior managers operate.
Furthermore, documents contribute to the determination of changes in the framing strategies over time.
The earning calls transcripts are available via Nexis Uni and have high retrievability.
Reports are available due to the Regulation Fair Disclosure Wire publications (FD), which is a regulation issued by the United States Securities and Exchange Commission that addresses selective disclosure. The rule obligates all publicly traded companies that when nonpublic information is provided to certain persons, this information must be made public. Earning calls are intentional selective disclosure, so the company should make this information public simultaneously (U.S. Securities and Exchange Commission, 2000). Within Nexis Uni the
publications can be found to execute key search research on the company name specified to the Fair Disclosure Wire publications and desired timeline, which is in this case 2010 till 2020.
Earning calls usually have the same structure and are given four times a year, mostly and the end of the quarter. Firstly, the management team gets introduced by the host of the call.
The call continues with some legal statements to emphasize the fact that the call will probably contain predictions about the future. Management reports financial information about the projected earnings and revenues but also summarizing past financial performance, a short recap of company press releases. CEO’s and CFO’s elaborate on the major events and issues the company’s performance has faced the past quarter. Usually, the call ends with a Q&A between the analysts and ASML.
3.4. Data analysis strategy
To conduct this research the Gioia methodology is chosen (Gioia et al., 2012). The methodology emphasizes a systematic approach to new concept development and grounded theory articulation. One of the reasons Gioia et al. (2012) designed a methodology is to help researchers with a systematic approach to conduct research that leads to credible interpretations.
Furthermore, theory development following the traditional scientific method engages more in the extension and refining of existing knowledge. Goia et al. (2012, p. 16): “Advances in knowledge that are too strongly rooted in what we already know delimit what we can know.”
Therefore, a systematic inductive approach is established with the purpose to apprehend concepts related to human organizational experience which is suitable for people who encounter that experience and to the experience’s scientific theorizing (Gioia et al., 2012).
The data analysis technique used in this thesis is coding, all the quotes will be coded according to the Gioia method (Gioia et al., 2012). Coding ‘represents the operations by which data are broken down, conceptualised, and put back together in new ways. It is the central
process by which theories are built from data’ (Strauss & Corbin, 1990, p. 57). Data will be analyzed in two parts via an inductive approach. First, the aim is to understand the level of the managers terms and codes, and second, at the abstract theoretical level of themes. The first- analysis focuses to maintain the informants’ terms as they are being said, and are not condensed into more generalized categories. After this process the categories are labeled. The second-order analysis focuses attention on whether emerging themes suggest concepts that explain observed phenomena. Second-order themes can condense into second-order aggregate dimensions. In appendix A, B, and C, the coding schemes are presented for all the data.
3.6 Data structure
The first-order terms, second-order themes, and aggregate dimensions are visualized in a data structure, illustrated in figure 3. The first-order codes in the data structure show from which first-order codes the concepts come from. This illustrates the first-order codes are linked to the theoretical second-order codes, and provides evidence the theory is grounded in the data.
Second-order themes are the concepts to build the grounded model. Other investigators can review the data based on the database and retrieve conclusions from it rather than be limited to the written reports, this results in an increase of the reliability of the case study.
Figure 3: Data structure (Gioia et al., 2012).
1st-order codes 2nd-order themes Aggregate dimensions
Uncertainty in current environment Transition to new technology Competition
Legal issue Increase revenue Decrease revenue
Large shareholders sell their shares Investment of customers
Continued technology improvement Strong believe in technology
Technology will add value for customer Technology implementation
New technology crucial for market needs Customers' demand for new
technology
Technology as enabler Technology importance
Customer recognition and readiness of technology
Customers' requirements of new technology
Internal confidence in technology Added value for customers EUV roadmap
Technology improves performance Technology explanation
Operational proven technology End customer behavior Competitive technology
Confident in leadership position in the semiconductor equipment marketplace
Industry has turned the corner on EUV Technology adoption
Future demand of customers Operational targets will be met soon Uncertainty in technology transition There is a probability the customer will choose for EUV
Technological complexity Technology progress Continuation of technology improvement is needed Phases technology introduction Transition to new technology
Increasing customer confidence in EUV for manufacturing readiness is critical
Decrease stock price Increase stock price Trust investors
Market share First large order EUV First order EUV China
Order EUV
Outcome Financial results
Driver
Confidence and incremental framing
Confidence and radical framing Process Process Sales of shares
Market dynamics
Careful and radical framing Process Careful and incremental framing Process
Stock price
3.7 Reliability and validity
The trustworthiness of a research is important, therefore this paragraph discusses the benefits and limitations of the study. The data collected from the earning conference calls transcripts are not affected by my research purpose, this can be considered a benefit, as the data is not influenced. Nevertheless, the limitation of the fact that this data was not collected for the sake of my research agenda (Bowen, 2009) is that I should read specifically and filter whether the information concerns the correct topic to answer the research question. The earning conference calls discuss several topics such as financial results of past quarter, vision of the company for the upcoming quarters, but also practical information about technologies. When senior managers frame technological changes to the audience they might include output details in terms of orders or revenue in order to legitimize its salience. Therefore, it is crucial to be alert whether the communication is intended to legitimize technological changes. In this study Ayres’s (1985) definition of technological change is applied to assess the communication of ASML’s senior managers, which means that technological changes include the research and development, introduction of new products and processes (innovation), and improvement of existing products and processes.
Despite these limitations, an advantage would be that I have no prejudices concerning the conduction of document analysis nor the technologies discussed by the company.
Experienced researchers may have a more predetermined way data analysis conduction, as I am new to document analysis my attitude and work manner is more open minded. Moreover, documents are stable and suitable to review multiple times and includes detailed information such as names and details of events from documents give an advantage in the research process.
As I am not familiar with ASML’s technologies, the interpretation will develop over time, the first time I read a document I might not consider a quote as technological changing framing strategy, but after reading a lot of documents, this might change as I gain a better understanding
of the complex technologies. That is one of the reasons why the study benefits highly from the possibility to analyze data over a longer period of time. In this matter, framing practices of senior managers are comparable during different company phases. Lastly, the use of secondary data is valuable when time and resources are limited, the process is more cost-effective as the data is already available (Johnston, 2017). Due to my limited time to conduct this research, this is an important advantage to take into account.
The Gioia methodology is designed to seek qualitative rigor in inductive research (Gioia et al., 2012). Within qualitative research, researchers struggle with the credibility of their findings as well as the sceptical attitudes of their readers about the conclusion’s plausibility and defensibility (Gioia et al., 2012). In order to achieve credibility, the data collection’s procedures are explained extensively. The data that will be collected from the documents, will be displayed in an Excel file and available for reanalysis. However, in qualitative research, the analysis is largely depending on the researcher’s subjective interpretation. Therefore, the researcher bias may arise as I become the instrument to interpret the data myself and might be biased because of my own belief system. I might be biased towards the case study as I consider the company as innovative and progressive. The Gioia methodology helps to combat this bias by analyzing the data in two separate phases, the first-order analysis maintains the terms that the person has used, rather than directly generalizing the terms into categories. When there is a better understanding of the phenomenon, the second-order of analysis is conducted and categories are placed within themes, which are theoretical concepts. By analyzing the data in two phases, the informants’ terms have remained and there is more availability for the investigator to interpret the data, which helps to avoid jumping into conclusions. The Gioia analysis method increases the study’s credibility, as it establishes confidence in the truth value of the findings.
In the previous paragraph, a detailed description is given on how the data is collected and analyzed. The purpose of the detailed elaboration is to ensure the data collection and
analysis is dependable, this means another person should find the same data and come to the same conclusion under the same conditions (Clark et al., 1981). Furthermore, as this study concerns a single case study there is limited evidence to provide scientific generalization.
However, ASML is a typical company for the industry and therefore generalization is possible for other cases in the industry. Besides, the study has a more empirical perspective and establishes a deeper understanding of the phenomenon.
4. Findings
All findings presented in this section are based on documents from Nexis Uni. Figure 4 displays the grounded process model. The empirical findings elaborate on the drivers, process and outcome that were identified during the data analysis. The drivers, indicate the internal or external reasons for managers to shift frames over time. The process, emphasizes how senior managers frame technological changes in order to legitimize its salience to their audience.
Finally, the outcome is the result of the drivers and process. In the following section the three emerged concepts are explained. To gain a better understanding of the emerged grounded model, each concept will be explained by representative quotes from the data analysis.
Figure 4: Technological framing change process grounded model.
4.1. Drivers
Three different drivers relate to senior managers’ possible frame shifting over time: (1) market dynamics, (2) financial results, (3) sales of shares.
4.1.1. Market dynamics
The first driver that has influence on frame shifting over time are the market dynamics.
Market dynamics include the themes uncertainty in the current environment, transition to new technology, competition, and legal issues.
Uncertainty in the current environment is indicated by the following quotes from Eindhovens Dagblad (2011-03), translated from Dutch to English:
Cedar [an analist] expects it is possible to make chips with a capacity of 64 and also 128 Gigabit. But later, without EUV technology, that development will stop. He says he is not alone in his concerns. “A lot of people in the semiconductor industry are very concerned about EUV. Not only about its availability, but also about its cost. These things are going to cost many millions of dollars.”.
Competition is a factor of market dynamics that might drive actors to shift frame strategies over time in order to legitimize technological changes. What competitors develop or do in the market has effect on the possible success of another companies technologies.
Volkskrant (2012-01), translated from Dutch to English:
The enormous expenditure on the development of new machines has not done ASML any harm. Last year, the first so-called EUV machine rolled off the production line. The device, which costs about 75 million euros to purchase, uses extreme ultraviolet (EUV) light and can therefore work even more accurately and precisely than its predecessors, which use deep ultraviolet light. 0.000016 millimeters. Where predecessors, which are
