Book Chapter
In 1959, Edith T. Penrose, an economist who had already made important academic contributions on international patent systems and the methodology of economics, published her classic volume, The Theory of the Growth of the Firm. She then went on to further distinction in a long career that included seminal work on the political economy of oil, the role of the multinational enterprise in economic development, and the history of Iraq.
Her "theory of the growth of the firm" was, and continues to be, ignored by the mainstream of the economics profession, but from the 1980s has become important to the development of institutional economics, evolutionary economics, innovation studies, and resource-based theories of the firm.
In this paper, the author shows Penrose's theory was shaped by the organizational realities of the US industrial corporation in the 1950s, when she researched and wrote the book, and how, to be useful to us now, the theory must be elaborated and modified to comprehend how strategy, organization, and finance in the US industrial corporation have been transformed over the past forty years or so in the face of important changes in technological, market, and competitive conditions.
