Management International Review

Edith Penrose and the Future of the Multinational Enterprise: New Research Directions

This paper demonstrates the continued relevance of Penrose's Theory of the Growth of the Firm (1959) (TGF) to explain MNE expansion patterns. Explaining MNE growth requires explicit attention to three elements not addressed fully by Penrose: 1) technology-based firm-specific advantages, 2) dynamic capabilities, and 3) melding location-bound and internationally transferable knowledge, especially through astute human resources management. TGF includes foundational insights on the dynamic capabi...

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

This paper provides a formal model of Edith Penrose's Theory of the Growth of the Firm which has important implications for the strategy of multinational enterprises. The model provides an analysis of the trade-off between product diversification and foreign market penetration. It also can account for the speed of entry into foreign markets. Formalizing Penrose's Theory of the Growth of the Firm provides an account of internationalization incorporating geographical expansion patterns, sequent...

Dynamic Capabilities and Multinational Enterprise: Penrosean Insights and Omissions

Penrose's legacy is a curious one. Much cited, but little read, her work is recognized as one of the main intellectual foundations for modern resource based theories of business strategy and theories of organizational routines and capabilities. However, Penrose did not aim to contribute to the field of strategy; her goal was to advance understanding of the nature of the firm and its growth. Nevertheless, there are important insights in Penrose's work that have implications for international b...

A Note On Penrosean Growth, Resource Bundles and the Uppsala Model of Internationalisation

The Uppsala model of the internationalization process of the firm has many similarities with Penrosean growth theory but has been limited by ambiguity about the internal mechanisms of growth. Core insights from Penrose's Theory of the Growth of the Firm may advance development of the Uppsala model. Penrose's theory of growth is a powerful adjunct to the Uppsala model of the internationalization process of the firm. A variation on the Uppsala model that incorporates the dynamic and interdepend...

Edith Penrose and a Learning-Based Perspective On the Mne and Oli1

This paper applies insights from Edith Penrose's work to extant theory of the multinational enterprise (MNE) as enveloped by John Dunning's Ownership, Location, Internalization (OLI) Paradigm. The paper suggests that Penrose's knowledge/learning-based approach has important implications on the nature of, and the interactions between, O, L and I, and it helps endogenize and integrate the three elements of Dunning's triad in the context of a dynamic, and strategic perspective of the MNE. More i...

The Penrose Effect: 'Excess' Expatriates in Multinational Enterprises

Penrose's (1959) theory of firm growth argues that firm knowledge and experience gives rise to "excess" resources which can be (re)deployed to explore and exploit productive opportunities leading, ultimately, to the achievement of firm goals. This key insight on organizational slack in the context of expatriate managers within multinational enterprises (MNE) was examined. Expatriates are not only a viable way of examining the Penrosian concept of slack but, as an unique element of MNE managem...

Entrepreneurship in Multinational Enterprises: A Penrosean Perspective

This paper applies Penrose's (1959) insights on the quantity of managerial services required for firm-level organic expansion to the analysis of entrepreneurial activities in MNEs. These insights are used to build a framework relevant to entrepreneurial activities in MNEs, and then apply this framework to assess the metanational model (Doz/Santos/Williamson 2001) in terms of the quantity of managerial services required to implement it. Penrose's (1959) insights on firm-level growth processes ...

The Dynamics of Japanese Firm Growth in U.S. Industries: The Penrose Effect

This paper proposes that multinational firms that are more capable in developing new managerial resources are less vulnerable to the Penrose effect in the process of international expansion. The paper hypothesizes that firms were more capable to achieve growth in consecutive time periods when they send more expatriates to the local operations and when they have greater home experience before entering into the local market. The empirical results based on a sample of Japanese investments in the...

Knowledge Management and Involvement in Innovations in Mnc Subsidiaries1

This study investigates Penrose's analysis of the relationship between resources (especially knowledge), management of those resources and innovation in a sample of 313 Australian subsidiaries of foreign-owned multinational corporations (MNC). The frequency of use of knowledge management (KM) techniques by subsidiaries tended to be associated with factors internal to the MNC/subsidiary such as MNC size, level of technology and extent of communications networks. The subsidiary's involvement in...