Edith Penrose’s Theory of the Growth of the Firm and the Strategic Management of Multinational Enterprises

Peter J. Buckley and Mark Casson
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Peter J. Buckley: University of Leeds (CIBUL)

Chapter 5 in Foreign Direct Investment, China and the World Economy, 2010, pp 53-77 from Palgrave Macmillan

Abstract: Abstract Foss (2002, p. 148) says ‘Penrose’s work is, in the crucial dimensions, at variance with economic orthodoxy … It should be thought of as a contribution to economic heterodoxy’ Penrose and Pitelis (2002, pp. 19 et seq.), in describing Fritz Machlup as ‘Edith’s supervisor’ at Johns Hopkins says ‘A fascinating paradox is how Machlup, a doyen of neo-classical economics, should have been partially responsible for a work so far removed from the mainstream’. Penrose has also been claimed as a feminist economist (Best and Humphries, 2003). Our argu- ment is that Penrose sought to create a theory of the growth of the firm which was logically consistent and empirically tractable. Her sub- sequent adoption as grandmother of the resource based view has only limited validity, based on a selective reading of her work and in defiance of its holistic qualities. See the debate between Rugman and Verbeke (2002, 2004) and Kor and Mahoney (2004) and Lockett and Thompson (2004), the latter based on Penrose’s (1960) analysis of the Hercules Powder Company.

Keywords: Foreign Direct Investment; Strategic Management; Market Size; Average Cost; Market Entry (search for similar items in EconPapers)
Date: 2010
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Chapter: Edith Penrose’s Theory of the Growth of the Firm and the Strategic Management of Multinational Enterprises (2010)
Journal Article: Edith Penrose’s Theory of the Growth of the Firm and the strategic management of multinational enterprises (2007)
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DOI: 10.1057/9780230248328_5

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