Entrepreneurial Strategies 135be shortages until the vendors can adjust their capacity. If the inputs are newly created,
developed, or engineered, they may be of uneven quality and in short supply. In either
event, input costs are likely to be at their highest during the emergence stage.
Customer Uncertainty. Uncertainty also plagues the output (customer) market. To a
large extent, the customer market is only vaguely understood: buyer needs and wants,
income levels, demographic characteristics, psychographic profiles, and buyer behavior
characteristics. Prices and the points at which customers will resist high prices are uncer-
tain. There may be quite a bit of instability as firms, producing widely diverse and non-
standard products, come to market with different and nonstandard prices. The customer
is also confused by the variety of product offerings, the lack of standardization, the per-
ception of rapid obsolescence, and the erratic quality of some competitors.
Controlling Uncertainty. In the face of difficult structural conditions and constraints,
what must the new venture in an emerging industry do to be successful?
Look toward developing, generating, acquiring, and controlling resources that have the four attrib-
utes (rare, valuable, hard to copy, nonsubstitutable) needed for sustainable competitive advantage.The priority in an emerging industry is to acquire resources. Ventures that acquire
resources early are more likely to set the rules and standards for industry competition,
technological configuration, and product quality. Speeding up decision making, product
development and introduction, and organizational systems and processes all have posi-
tive effects on firm survival and performance.^40 One industry that is attempting to speed
itself up and that represents a typical emerging industry in its early stages is super-
conductive materials.
The next priority is to employ resources to gain a defendable foothold in the indus-
try on which to build. The early acquisition of a core group of loyal customers is a major
accomplishment. It enables the firm to develop experience in production and marketing,
evaluate new products and alternative pricing schemes, and provide steady cash flow.
From this base, expansion is possible.
Last, because knowledge and information can possess the four attributes of SCA, the
new venture must move as quickly as possible to develop an intelligence network to fore-
cast future environmental trends, competitive moves, and technological developments.^41
The initial turbulence and change that made the formation of a new industry possible
are not likely to subside once a handful of early new entrants has formed. The turbu-
lence may continue unabated, often for years. While the new entrants sort out the stan-
dards, later entrants make their appearance and attempt to capitalize on the efforts of the
first movers. Older and larger firms attempt to invigorate their operations by entering
new markets or forming joint ventures. Regulators, organized labor, and the gov-
ernment conspire to appropriate and tax the “profits” of new ventures. These so-called
profits are in reality the early excess returns, which the founders may need for reinvest-
ment to recoup the firm’s up-front investment, encourage future investment, and main-
tain its technological or marketing advantages. Taxes and other appropriations leave the
firm and, in aggregate, the industry underinvested and therefore smaller than it other-
wise might have been. The result, of course, is diminished output, innovation, and em-