Organic and Acquisitive Growth: Re-examining, Testing and Extending Penrose's Growth Theory

Andy Lockett, Johan Wiklund, Per Davidsson, Sourafel Girma

Research output: Contribution to journalArticlepeer-review

126 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)48-74
Number of pages27
JournalJournal of Management Studies
Issue number1
StatePublished - Jan 2011

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management of Technology and Innovation


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