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Penrose Effect, the

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Abstract

Penrose, Edith T. (1914–1996) book (1959) provides a theory of the growth of the firm, maintaining that the binding constraint on the rate of the growth of the firm arises from the limited capacities of its existing management. This managerial constraint on the rate of growth of the firm is known as the Penrose effect. The article discusses the reasons why the Penrose effect arises, reviews how this effect has been empirically examined, and suggests some future research directions.

Keywords

  • Penrose Effect
  • Management Constraints
  • Existing Business Activities
  • Entrepreneurial Services
  • Managerial Diseconomies

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Authors and Affiliations

  1. Department of International Business and Trade, National Chengchi University – College of Commerce, 64, the SEC2, T2-nan Road, 116, Wenshan, Taipei, 116, Taiwan, China

    Danchi Tan

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  1. Danchi Tan
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Correspondence to Danchi Tan .

Editor information

Editors and Affiliations

  1. Stanford University , Stanford, California, USA

    Mie Augier

  2. Tusher Ctr Intellectual Capital, University of California Tusher Ctr Intellectual Capital, Berkeley, California, USA

    David J. Teece

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Tan, D. (2016). Penrose Effect, the. In: Augier, M., Teece, D. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-94848-2_647-1

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  • DOI: https://doi.org/10.1057/978-1-349-94848-2_647-1

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