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

Zusammenfassung

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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 capabilities approach in strategy and contributes to assessing normative models in international strategy. Penrose did not appreciate fully the unique knowledge recombination challenges prevailing in international business, especially in the context of the large MNE. This uniqueness of knowledge recombination is the raison d'etre of international business as a separate field of inquiry.

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Auszug

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

Introduction

Edith Penrose (1959), in her landmark study, The Theory of the Growth of the Firm (TGF) - which had earned 3745 citations on Google Scholar at the time of writing the present piece - observed that external demand per se limits neither firm-level growth rates, nor absolute size, as firms can normally search for investment opportunities inside and outside their present markets. Rather, the key constraints to rapid firm-level growth and to firm size originate inside the firm:

"A firm's rate of growth is limited by the growth of knowledge within it, but a firm's size by the extent to which administrative effectiveness can continue to reach its expanding boundaries" (Penrose 1995, xvii).

The question arises whether Penrose's thinking on firm-level growth is (still) applicable to the international business (IB) context, and whether this context requires an extension or refinement of her ideas. In an entry to the Palgrave in 1987, Edith Penrose claimed that both Hymer-based and Coase-based perspectives on international growth through foreign direct investment (FDI) and multinational enterprise (MNE) activity, fail to distinguish between domestic investments and cross-border ones. She concluded:

"There a...

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