Edith Penrose

“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.”

“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.”

“A firm is essentially a pool of resources the utilization of which is organized in an administrative framework.”

“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.”

“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.”

“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.”

“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.”

“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.”

“Management tries to make the best use of the resources available.”