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Edith Penrose’s Organizational Theory of the Firm: Contract, Conflict, Knowledge and Management

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Organizations as Knowledge Systems

Abstract

In 1959 Edith Penrose published The Theory of the Growth of the Firm (TGF). This book marked the first attempt by an economist to examine the internal workings of firms, in order to explain endogenous knowledge creation, innovation and firm growth. Penrose saw the external environment as an ‘image’ in the minds of management, and suggested a dynamic interaction between the internal and external environments, which defined what she called firms’ ‘productive opportunity’. She placed particular importance on human resources — in particular management — and saw managerial constraints as limiting the rate of growth of firms, albeit not their size per se.

I am grateful to numerous colleagues for comments and discussion pertaining to the issues covered in this paper, notably Perran Penrose, Anastasia Pseiridis, Haridimos Tsoukas and an anonymous referee. Errors are mine.

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Authors
  1. Christos Pitelis
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Editor information

Editors and Affiliations

  1. Organization and Management, ALBA, Greece

    Haridimos Tsoukas (George D. Mavros Research Professor) (George D. Mavros Research Professor)

  2. ALBA, Greece

    Nikolaos Mylonopoulos (Assistant Professor of Information Systems) (Assistant Professor of Information Systems)

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© 2004 Christos Pitelis

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Pitelis, C. (2004). Edith Penrose’s Organizational Theory of the Firm: Contract, Conflict, Knowledge and Management. In: Tsoukas, H., Mylonopoulos, N. (eds) Organizations as Knowledge Systems. Palgrave Macmillan, London. https://doi.org/10.1057/9780230524545_11

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