TY - JOUR
T1 - Organic and Acquisitive Growth
T2 - Re-examining, Testing and Extending Penrose's Growth Theory
AU - Lockett, Andy
AU - Wiklund, Johan
AU - Davidsson, Per
AU - Girma, Sourafel
N1 - Funding Information:
The work reported in this paper was supported by the Australian Research Council through Discovery Projects.
PY - 2011/1
Y1 - 2011/1
N2 - abstract: Edith Penrose's theory of firm growth postulates that a firm's current growth rate will be influenced by the adjustment costs of, and changes to a firm's productive opportunity set arising from, previous growth. Although she explicitly considered the effect of previous organic growth on current organic growth, she was largely silent about the effect of previous acquisitive growth. In this paper we extend Penrose's work to examine how previous rates of organic and acquisitive growth influence current organic growth. Employing a panel of Swedish firms over a 10-year period, our results suggest the following. First, previous organic growth acts as a constraint on current organic growth. Second, previous acquisitive growth has a positive effect on current organic growth. We conclude that organic growth and acquisitive growth constitute two distinct strategic options facing the firm, which have a differential impact on the future organic growth of the firm.
AB - abstract: Edith Penrose's theory of firm growth postulates that a firm's current growth rate will be influenced by the adjustment costs of, and changes to a firm's productive opportunity set arising from, previous growth. Although she explicitly considered the effect of previous organic growth on current organic growth, she was largely silent about the effect of previous acquisitive growth. In this paper we extend Penrose's work to examine how previous rates of organic and acquisitive growth influence current organic growth. Employing a panel of Swedish firms over a 10-year period, our results suggest the following. First, previous organic growth acts as a constraint on current organic growth. Second, previous acquisitive growth has a positive effect on current organic growth. We conclude that organic growth and acquisitive growth constitute two distinct strategic options facing the firm, which have a differential impact on the future organic growth of the firm.
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U2 - 10.1111/j.1467-6486.2009.00879.x
DO - 10.1111/j.1467-6486.2009.00879.x
M3 - Article
AN - SCOPUS:78649697880
SN - 0022-2380
VL - 48
SP - 48
EP - 74
JO - Journal of Management Studies
JF - Journal of Management Studies
IS - 1
ER -