Most firms follow the pragmatic rule, which causes them to adopt a policy of "creeping incrementalism." In other words, companies start with low-risk, low-cost entry modes, such as exporting and contractual agreements, and then, provided their experiences have been rewarding, they move on to more complex modes of entry such as investment.
The advantage of this pragmatic approach, says Root, is that it saves the time and cost involved in gathering, analyzing, and assessing information on alternative entry modes. This approach is a safe one for managers, who are usually rewarded well for immediate successes (no matter how irrelevant they may be to the company's future) and punished for failures (no matter how important they may be to the learning process). But according to Root, the cost of lost opportunities associated with this rather timid type of management is great. Future prospects that might have been identified through systematic surveillance of the business environment are certain to be missed. Although some form of graduated entry is likely to be the best approach, the particulars of the strategy should be the product of long-term planning, based on an analysis of all the options.
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