The purpose of this paper is to determine how innovation happens in countries that experience risks and uncertainty. We analyzed the Argentinean telecom sector with a focus on small and medium-size enterprises. The research relies on interviews with companies offering information and communication services in diverse regions of the country. Departing from Porter's identification of strategies, we find that economic and political uncertainties lead to significant differences in strategies. We were able to identify strategies that prevail under suboptimal regulatory conditions. These are: 1) survival; 2) slow modernization; 3) infrastructure capitalization; and 4) diversification and customization. We recommend that in order to channel the creativity and innovation capabilities of these entities, governments could help produce a less uncertain and risky environment if they had a more predictable regulatory environment.