The strategic responses of start-ups to regulatory constraints in the nascent drone market

Some start-ups treat regulatory constraints as exogenous and beyond their control, while other start-ups treat regulatory constraints as endogenous and possible to influence. However, thus far, no explanation has been offered for why start-ups differ in their responses to regulatory constraints. Based on 49 interviews with start-ups and other industry actors this paper examines start-ups’ responses to regulatory constraints in the market for drone applications. We find that variation in start-ups’ responses is instigated by start-ups’ temporal orientation. Start-ups pursuing applications targeted at present markets or future potential markets treat regulation as exogenous. In contrast, start-ups that pursue market applications bridging current and future potential markets are more likely to treat regulation as endogenous.