10 of 10 people found the following review helpful:
5.0 out of 5 stars
Ground-Breaking and Fascinating, July 15, 2001
This book helped provide the foundation for what has become known as the resource-based view of the firm (RBV). Back in 1959, when the male gender dominated the economics discipline, Ms. Penrose set out to answer this question: Was there "something inherent in the very nature of any firm that both promoted its growth and necessarily limited its RATE of growth."
I found this book so interesting and helpful (I am a business appraiser) that I read it twice. This led me into studying the resource-based view of the firm.
I recommend this book for anyone interested in the broad topics of business strategy and management. Related books that I recommend include "Contemporary Strategy Analysis," by Robert Grant; "Modern Competitive Analysis, by Sharon Oster; and "Why Firms Succeed," by John Kay.
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7 of 7 people found the following review helpful:
4.0 out of 5 stars
A classic that has guided management academics for decades, July 28, 2005
The Theory of the Growth of the Firm is a classic book in management literature, and one that is explored by academics as well as business enthusiasts. With this book, Penrose founded what's known as the resource-based view. Essentially, she determined that there must be something inside the firm that drives its growth (i.e. success).
The author explores the reasons for such growth. Penrose moves away from the neoclassical economics model of the firm towards a definition of the firm as one that has administrative responsibilities (strategic planning or management) and a view of the firm as a collection of resources (human resources, technologies and other capabilities a firm has). She argues that choice of how those resources are put to use is central to a firms "entrepreneurial" activity.
Penrose goes on to say that change and growth of firms must be driven from inside the firm because the economy as a whole does not constrain firms. Managers, she says, know that they can alter their environment, and that the environment is not independent of their activities.
The resources that are available within firms are ever changing, of course, and often come together in bundles. This means that there are always some resources that are not being used, or being used inefficiently. Managers who realise this can develop those resources and grow their companies as a result. Thus, it is knowledge in combination with resources that drives growth. This is also what makes each firm unique: there are hundreds of ways to combine those resources, and each firm does it differently.
The book then talks about how growth takes place - sometimes as part of a diversification process or through an acquisition or merger. Penrose also discusses the role of time, and the difference between a small or a larger company growing. Growth, she concludes is possible for all firms - size does not necessarily mean that a firm is more efficient (which is the typical economic argument). The only thing that constrains growth, really, is the limited capacity we humans have for managing a lot of change at once.
The style of writing is conversational, if somewhat dated. The only slight drawback is that Penrose often returns to hammer on the same point. But that's not unusual for this type of book. The most astonishing aspect by far is that Edith Penrose was a woman, in a world of business and academia that then, and still now, consists largely of men.
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6 of 6 people found the following review helpful:
5.0 out of 5 stars
A richly rewarding read, August 8, 2003
I find myself springing to the defense of this book, because when I read it - right through - it was with a sense of appreciation for its acumen. Penrose's terminology is a little idiosyncratic but it does not take long for the reader to adjust. Moreover, when reading it with the circumstances of actual companies in mind, it presents a way to gain insight into their histories. One other way to express this is that my notes on this book are very detailed and lengthy. I didn't make these notes simply because the book is a "classic".
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