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

27 Pages Posted: 19 Dec 2010

See all articles by Andy Lockett

Andy Lockett

Nottingham University Business School (NUBS)

Johan Wiklund

Syracuse University

Per Davidsson

Queensland University of Technology - Brisbane Graduate School of Business

Sourafel Girma

Nottingham University Business School

Date Written: November 30, 2010

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.

Suggested Citation

Lockett, Andy and Wiklund, Johan and Davidsson, Per and Girma, Sourafel, Organic and Acquisitive Growth: Re-Examining, Testing and Extending Penrose's Growth Theory (November 30, 2010). Journal of Management Studies, Vol. 48, Issue 1, pp. 48-74, 2010. Available at SSRN: https://ssrn.com/abstract=1726976 or http://dx.doi.org/10.1111/j.1467-6486.2009.00879.x

Andy Lockett (Contact Author)

Nottingham University Business School (NUBS) ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Johan Wiklund

Syracuse University ( email )

Whitman School of Management
720 University Avenue
Syracuse, NY 13244-2130
United States

Per Davidsson

Queensland University of Technology - Brisbane Graduate School of Business ( email )

Brisbane
Australia
+61 7 3864 2051 (Phone)
+61 7 3864 1299 (Fax)

HOME PAGE: http://www.qut.edu.au/ph_server_query.do

Sourafel Girma

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

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