Edith Penrose

Edith Elura Tilton Penrose (November 15, 1914 – October 11, 1996) was an American-born British economist, whose best known work is The Theory of the Growth of the Firm (1959), which describes the ways which firms grow and how fast they do.

The Theory of the Growth of the Firm, 1959
Edith T. Penrose (1959), The theory of the growth of the firm, Cambridge, MA.


 * Management tries to make the best use of the resources available.
 * p. 5


 * Difficulties arise when an attempt is made to acclimatize the theory to an alien environment and, in particular, to adapt the analysis of the expansion of the innovating multi-product, ‘flesh and blood’ organisations that businessmen call firms.
 * p. 13


 * A firm is more than an administrative unit; it is also a collection of productive resources the disposal of which between uses and over time is determined by administrative decision.
 * p. 24


 * If profits are a condition of successful growth, but profits are sought primarily for the sake of the firm, that is, to reinvest in the firm rather than to reimburse owners for the use of their capital or their 'risk bearing,' then, from the point of view of investment policy, growth and profits become equivalent as the criteria for the selection of investment programmes.
 * p. 30


 * There is no need to deny that other 'objectives' are often important—power, prestige, public approval, or the mere love of the game— it need only be recognized that the attainment of these ends more often than not is associated directly with the ability to make profits.
 * p. 30


 * Internal inducements to expansion arise largely from the existence of a pool of unused productive services, resources and special knowledge, all of which will always be found within any firm.
 * p. 66


 * A firm is essentially a pool of resources the utilization of which is organized in an administrative framework.
 * p 149

Quotes about Edith Penrose

 * Mrs Penrose was a senior economist in the Merrill/ Johns Hopkins research into the growth of firms and her book was much looked forward to. She does indeed make wise observations, out of her research and her wide reading, about various things which happen, or may happen, in a growing business... A theory of the growth of firms surely should involve generalizations about their economic environment, or, in other words, just those questions about the (equilibrium) structures of industries which the author rules out of court at the start.
 * T.G.F. Andrews (1961). Review of the "The Theory of the Growth of the Firm," in: The Oxford Magazine: A Weekly Newspaper and Review.


 * In recent years economists and historians have increasingly turned their attention to modern economic institutions. Economists such as Edward S. Mason, A. D. H. Kaplan, John Kenneth Galbraith, Oliver E. Williamson, William J. Baumol, Robin L. Marris, Edith T. Penrose, Robert T. Averitt, and R. Joseph Monsen, following the pioneering work of Adolph A. Berle, Jr., and Gardiner C. Means, have studied the operations and actions of modern business enterprise. They have not attempted, however, to examine its historical development, nor has their work yet had a major impact on economic theory. The firm remains essentially a unit of production, and the theory of the firm a theory of production.
 * Alfred D. Chandler, Jr. The Visible Hand (1977) p. 5.


 * Edith Penrose has been one of the most significant economists of the second part of the twentieth century. Her contribution to the theory of the firm has reinvented and productively developed the classical tradition in economics. It has informed the currently dominant resource/knowledge-based theory of the firm. Penrose's contribution, however, extends to a great variety of areas, to include industry organization, strategic management, international business, human resource management, economics of innovation and technological change, history, methodology, macroeconomics, and much more.
 * Christos Pitelis (ed.), The growth of the firm: the legacy of Edith Penrose. (2002).