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Handbook on the Economics and Theory of the Firm

Handbook on the Economics and Theory of the Firm

Elgar original reference

Edited by Michael Dietrich and Jackie Krafft

This unique Handbook explores both the economics of the firm and the theory of the firm, two areas which are traditionally treated separately in the literature. On the one hand, the former refers to the structure, organization and boundaries of the firm, while the latter is devoted to the analysis of behaviours and strategies in particular market contexts. The novel concept underpinning this authoritative volume is that these two areas closely interact, and that a framework must be articulated in order to illustrate how linkages can be created.

Chapter 18: Edith Penrose and George Richardson

Brian Loasby

Subjects: business and management, strategic management, economics and finance, industrial economics, industrial organisation, institutional economics


Brian J. Loasby 18.1 INTRODUCTION Edith Penrose and George Richardson met only twice: in Oxford at his invitation at about the time that The Theory of the Growth of the Firm was published (Penrose, 1959), and at her invitation in Waterbeach after its republication in 1995. The topics discussed at the first meeting are now forgotten; at the second they ranged widely but did not include economics (Richardson, 2002, p. 37). Richardson’s analysis of the organization of industry in terms of complementarities and similarities between the capabilities that are required to undertake particular activities seems a natural development of Penrose’s account of the evolution of the specific sets of activities undertaken by each firm that succeeds in growing, and extends it to the evolution of interfirm relationships. Both add valuable detail to Marshall’s theory of the interlinked evolution of economic systems and human knowledge, in which essential roles are played by the specific internal and external connections that are developed, consciously and unconsciously, by each firm. It may therefore seem surprising that the direct contacts between the two were so slight. However, this absence of contacts between people whose ideas (and attitudes) seem in retrospect to be closely connected is not so uncommon as one might imagine; and in this instance there is a good reason that is worth exploring for its historical, methodological and substantive interest. In summary, the eventual convergence was the unintended consequence of attempts to deal with what have often been conceived as distinct problems: the...

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