I combine research from institutional theory and technological change to explore stock market reactions as firms respond to radical technological change and, further, how these reactions affect firms' subsequent responses. An incumbent firm's stock price will decrease to the extent that it is forced it to depart from its stock market identity. Negative reactions from the stock market, in turn, affect subsequent response efforts. Incumbent inertia or an inability to respond to technological change may arise from institutional pressures from financial markets during the uncertain period of technological change. Copyright of the Academy of Management, all rights reserved.