FORTHCOMING: Penrose in the New Economy


Forthcoming in Strategic Management Review  —

Edith Penrose’s theory eminently fit the mid‐20th century firms and industries that she studied. What would she say about the very different firms in today’s New Economy?

In this paper, I update Penrose’s model with new theories of the firm that emerged after she wrote, including economics of contracting and of the new digital economy. These newer theories fit well with her concepts, and even help complete Penrose’s model.

I also explore how firms in the New Economy leverage their internal resources by using alliances, ecosystems, and platforms to access the services of external resources. These strategies expand the pool of resources available to the firm, and enable firms to grow faster than Penrose imagined. Further, these bundles of resources are governed by administrative mechanisms that she did not originally contemplate, including the use of code to automate decisions.

While Penrose taught us to see the firm as a bundle of resources, we now see that not all bundles of resources are firms. This new perspective helps bring Penrose up to date with firms and industries in the New Economy.

The current manuscript is here: BGC Penrose New Economy v7