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² With about 11,500 citations in Google scholar at the time of writing, The Theory of the Growth of the Firm is now one of the most cited books in the fields of economics, business, and management.

³ See the following by Penrose, Edith T.: “The Growth of the Firm—A Case Study: The Hercules Powder Company,” Business History Review 34 (Spring 1960): 1–23CrossRefGoogle Scholar; The Growth of Firms, Middle East Oil and Other Essays (London, 1971), 43–63Google Scholar; “The Theory of the Growth of the Firm: Twenty-Five Years After,” Acta Universitatis Upsaliensis: Studia Oeconomicae Negotiorum (Uppsala Lectures in Business) 20 (1985): 1–16Google Scholar; “Multinational Corporations,” in The New Palgrave: A Dictionary of Economics (London, 1987)Google Scholar; and The Theory of the Growth of the Firm (Oxford, 1959; 3rd ed. 1995).Google Scholar

⁴ Her focus on these topics is reflected in her decision to serve as the (first) editor of the Journal of Development Studies (as opposed to editing a journal on the theory of the firm, or on international business).

⁵ Kay, Neil, “Hercules and Penrose,” Contributions to Political Economy 18 (1999): 67–86.CrossRefGoogle Scholar

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⁸ See, for example, Kindleberger, Charles P., American Business Abroad (New Haven, Conn., 1969).Google Scholar

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¹¹ Dunning, John H., “The Contribution of Edith Penrose to International Business Scholarship,” Management International Review 43, no. 1 (2003): 3–19Google Scholar; Management International Review, special issue on “Edith Penrose and the Future of the Multinational Enterprise,” 47, no. 2 (2007)Google Scholar. Penrose herself (as well as her supervisor Fritz Machlup) was uneasy about the scope for formalizing her work; see Pitelis, “Edith Penrose and the Resource-based View of (International) Business Strategy”; Buckley, Peter J. and Casson, Mark, “Edith Penrose's Theory of the Growth of the Firm and the Strategic Management of Multinational Enterprises,” Management International Review 47, no. 2 (2007): 151–73.CrossRefGoogle Scholar

¹² Li, Peter Ping, “Toward a Learning-Based View of Internationalization: The Accelerated Trajectories of Cross-Border Learning for Latecomers,” Journal of International Management 16, no. 1 (2010): 43–59.CrossRefGoogle Scholar

¹³ See, among others, the Journal of International Business Studies, “JIB/AIB 50th Anniversary Issue: Innovations in International Business Theory,” special issue 40, no. 9 (2009).Google Scholar

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¹⁵ In her words: “To treat the growth of the firm as the unfolding of its genetic nature is downright obscurantism. To treat innovation as chance mutations not only obscures their significance, but leaves them essentially unexplained, while to treat them directly as purposive attempt of men to do something makes them far more understandable.” Penrose, Edith T., “Biological Analogies in the Theory of the Firm,” American Economic Review 42, no. 5 (1962): 819.Google Scholar

¹⁶ Penrose, Theory of the Growth of the Firm, xiii.

¹⁷ Penrose, Edith T., “History, the Social Sciences and Economic Theory with Special Reference to Multinational Enterprise,” in Multinational Enterprise in Historical Perspective, ed. Teichova, Alice, Levy-Leboyer, Maurice, and Nussbaum, Helga (Cambridge, U.K., 1986), 10.Google Scholar

¹⁸ Ibid., 11.

¹⁹ Jones, Geoffrey and Khanna, Tarun, “Bringing History (Back) into International Business,” Journal of International Business Studies 37 (2006): 353–68.CrossRefGoogle Scholar

²⁰ For an incisive recent discussion on business history and international business theory, see Buckley, Peter J., “Business History and International Business,” Business History 51, no. 3 (2009): 307–33.CrossRefGoogle Scholar

²¹ Hymer, International Operations of National Firms.

²² Penrose, Edith T., “Limits to the Growth and Size of Firms,” American Economic Review 45, no. 2 (1955): 531–43.Google Scholar

²³ Penrose, “Foreign Investment and the Growth of the Firm”; Penrose, Growth of Firms, Middle East Oil, 64–81; letter to Martin Slater, 10 Apr. 1979, Penrose Archive, Queen's College, Cambridge, U.K.

²⁴ As explained below, the transaction-costs perspective originated from Coase, Ronald H., “The Nature of the Firm,” Economica 4 (1937): 386–405. It suggested that high costs of exchanging in markets could be seen as a reason for the emergence of firms (which in this context internalize market-exchange transactions). Penrose's own resource-based view suggests that firms are likely to be superior to markets in terms of developing and leveraging intrafirm resources and capabilities, in order to achieve their objectives. Applications of such insights to cross-border transactions led to the theory of the MNE and FDI.CrossRefGoogle Scholar

²⁵ Boulding, Kenneth E., The Image: Knowledge in Life and Society (Ann Arbor, 1956).CrossRefGoogle Scholar

²⁶ Jones, Geoffrey, Beauty Imagined: A History of the Global Beauty Industry (New York, 2009)Google Scholar; Loasby, Brian, “Uncertainty and Imagination, Illusion and Order: Shackleian Connections,” G. L. S. Shackle Biennial Memorial Lecture, 4 Mar. 2010, University of Cambridge, St. Edmund's College.Google Scholar

²⁷ Penrose, “The Hercules Powder Company”; Penrose, Growth of Firms, Middle East Oil, 43–63.

²⁸ Pitelis, “Edith Penrose and the Resource-based View of (International) Business Strategy.”

²⁹ Penrose, “The Hercules Powder Company”; Penrose, Growth of Firms, Middle East Oil, 43–63.

³⁰ Penrose, Growth of Firms, Middle East Oil, 49.

³¹ Ibid., 62.

³² Coase, “The Nature of the Firm”; Hymer, International Operations of National Firms ; and the following by Williamson, Oliver E.: Markets and Hierarchies: Analysis and Antitrust Implications—A Study in the Economics of Internal Organization (New York, 1975)Google Scholar; Economic Organization: Firms, Markets, and Policy Control (New York, 1986)Google Scholar; “Transaction Cost Economics: The Natural Progression,” American Economic Review 100, no. 3 (2010): 673–90.CrossRefGoogle Scholar

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³⁴ Penrose, “Foreign Investment and the Growth of the Firm”; Penrose, Growth of Firms, Middle East Oil, 69–70, emphasis added.

³⁵ Penrose, “Multinational Corporations.”

³⁶ Penrose, Theory of the Growth of the Firm, xv.

³⁷ Penrose, Edith T., “Growth of the Firm and Networking,” in International Encyclopaedia of Business and Management (London, 1996), 1720.Google Scholar

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⁴⁵ Penrose, “Multinational Corporations,” 562.

⁴⁶ Ibid., 563; Ohlin, Bertil, Interregional and International Trade (Cambridge, U.K., 1933).Google Scholar

⁴⁷ Coase, , “The Nature of the Firm”; Demsetz, Harold, The Economics of the Business Firm: Seven Critical Commentaries (Cambridge, U.K., 1995).Google Scholar

⁴⁸ Penrose, “Foreign Investment and the Growth of the Firm”; Penrose, Growth of Firms, Middle East Oil, 72.

⁴⁹ Penrose, Growth of Firms, Middle East Oil, 67.

⁵⁰ Ibid., 70.

⁵¹ Papanastassiou, Marina and Pearce, Robert, The Strategic Development of Multinationals: Subsidiaries and Innovation (Houndmills, Basingstoke, 2010).Google Scholar

⁵² Penrose, Edith T., “International Economic Relations and the Large International Firm,” in New Orientations: Essays in International Relations, ed. Penrose, E. F., Lyons, Peter, and Penrose, Edith T. (London, 1969). Reprinted in Penrose, Growth of Firms, Middle East Oil, 91.Google Scholar

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⁵⁴ Ibid., 84.

⁵⁵ Penrose, Edith T., “The State and the Multinational Enterprise in Less-Developed Countries,” paper read to a conference at the University of Reading, May 1970. Reprinted in Penrose, Growth of Firms, Middle East Oil, 119–35.Google Scholar

⁵⁶ Hymer, “The Efficiency (Contradictions) of Multinational Corporations,” 441–48; Hymer, “The Multinational Corporation and the Law of Uneven Development”; Penrose, “The State and the Multinational Enterprise in Less-Developed Countries,” 121.

⁵⁷ Penrose, “Problems Associated with the Growth of International Firms,” 82–90.

⁵⁸ It is important to emphasize that my statements here come from an international business perspective. Economists have largely ignored Penrose and Hymer, even when dealing with the same issues and even when employing similar ideas. For example, economics-based theories of the MNE, such as Markusen, James R., Multinational Firms and the Theory of International Trade (Cambridge, Mass., 2002)Google Scholar, apply similar ideas to Hymer, in the context of formal models of the MNE. Hymer is rarely cited. See, for example, the review by Russ, Katheryn N., “The New Theory of Foreign Direct Investment: Merging Trade and Capital Flows,” International Finance 12, no. 1 (2009): 107–19CrossRefGoogle Scholar. Russ cites Hymer in a final draft, having failed to do so in earlier ones (an observation made by an anonymous reviewer of this article and incorporated here with gratitude). As Russ observes, “In the 1980s, it became the work of theorists like Ethier, Grossman, Helpman, Markusen and Razin to pinpoint exactly why FDI differs from the way Mundell and neoclassical growth models envisioned it, as it became clear that Hymer was right: FDI was increasing, but between rich countries and in tandem with intrafirm trade” (p. 108).

⁵⁹ Teece, David J., “Towards an Economic Theory of the Multiproduct Firm,” Journal of Economic Behavior and Organization 3, no. 1 (1982): 39–63CrossRefGoogle Scholar; Pitelis and Teece, “CrossBorder Market Co-creation.”

⁶⁰ For example Penrose, Edith T., The Large International Firm in Developing Countries: The International Petroleum Industry (London, 1968)Google Scholar; Penrose and Pitelis, “Edith Elura Tilton Penrose.”

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⁶³ Penrose, The Large International Firm in Developing Countries.

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⁶⁵ Vernon, Raymond, Sovereignty at Bay (Harlow, U.K., 1971)Google Scholar. Pitelis, Christos N., “Beyond the Nation State: The Transnational Firm and the Nation State,” Review of Radical Political Economics 22, no. 1 (1990): 98–114CrossRefGoogle Scholar; Pitelis, Christos N., Market and Non-Market Hierarchies: Theory of Institutional Failure (Oxford, U.K., 1991).Google Scholar

⁶⁶ Penrose, “The State and the Multinational Enterprise in Less-Developed Countries,” in Penrose, Growth of Firms, Middle East Oil, 123, 132, 133.

⁶⁷ Penrose, Edith T., “The Changing Role of Multinational Corporations in Developing Countries,” paper submitted to the United Nations Groups of Eminent Persons to study the impact of Multinational Corporations on Development and on International Relations, Geneva, 1973.Google Scholar

⁶⁸ Ibid, 38.

⁶⁹ Ibid, 39.

⁷⁰ Pitelis and Teece, “Cross-Border Market Co-creation”; Mahoney, Joseph T., McGahan, Anita M., and Pitelis, Christos N., “The Interdependence of Private and Public Interests,” Organization Science 30, no. 10 (2009): 1115–39Google Scholar.

⁷¹ Hymer, International Operations of National Firms.

⁷² Dunning and Pitelis, “Stephen Hymer's Contribution.”

⁷³ Penrose, Edith T., “A Note on Development Planning and the Role of the Enterprise with Special Reference to Egypt,” National Institute of Planning of the United Arab Republic, Memono. 827Google Scholar, in Penrose, Growth of Firms, Middle East Oil, 304, 306, 315.

⁷⁴ Penrose, Edith T., “Economics and the Aspirations of Le Tiers Monde,” inaugural lecture, School of Oriental and African Studies, London, 10 Feb. 1965, in Penrose, Growth of Firms, Middle East Oil, 319–36.Google Scholar

⁷⁵ Ibid., 322.

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⁷⁷ Penrose uses the term explicitly for the case of nations in an unpublished 1980 manuscript entitled “OPEC, Absorptive Capacity and Developing Countries,” Penrose Archive, Queens’ College, Cambridge. There she talks about “the absorptive capacity of the oil-exporting countries” (starting sentence, unpaged).

⁷⁸ Penrose, “Economics and the Aspirations of Le Tiers Monde,” in Penrose, Growth of Firms, Middle East Oil, 333.

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⁸⁴ Penrose, “The Changing Role of Multinational Corporations in Developing Countries,” 8.

⁸⁵ Penrose, Edith T., “Dumping, ‘Unfair’ Competition and Multinational Corporations,” Japan and the World Economy 1 (1990): 185.Google Scholar

⁸⁶ Penrose, “Problems Associated with the Growth of International Firms” and “International Economic Relations and the Large International Firm,” both in Penrose, Growth of Firms, Middle East Oil, 82–90, 91–118.

⁸⁷ Penrose, “Problems Associated with the Growth of International Firms,” 89.

⁸⁸ Penrose, “International Economic Relations and the Large International Firm,” 116. Penrose returned to the issue of interfirm cooperation in The Theory of the Growth of the Firm, 3rd ed. (Oxford, 1995)Google Scholar and in “Growth of the Firm and Networking,” in International Encyclopaedia of Business and Management (London, 1996)Google Scholar. She also dealt with this issue in her last published paper, “Strategy/Organization and the Metamorphosis of the Large Firm,” Organization Studies 29, no. 8/9 (2008): 1117–24. In these papers she makes the point that interfirm cooperation blurs the boundaries of the firm and may be calling for a more novel framework/theory.CrossRefGoogle Scholar

⁸⁹ Penrose, “International Economic Relations and the Large International Firm,” 117.

⁹⁰ Jones and Khanna, “Bringing History (Back) Into International Business.”

⁹¹ Ibid.

⁹² See Wilkins, Mira, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (Cambridge, Mass., 1974)CrossRefGoogle Scholar; Penrose, “Multinational Corporations”; Penrose, Theory of the Growth of the Firm; Chandler, “Organizational Capabilities and the Economic History of the Industrial Enterprise”; Pitelis, Christos N., “Edith Penrose's ‘The Theory of the Growth of the Firm’ Fifty Years Later,” in Penrose, Edith T., The Theory of the Growth of the Firm, 4th ed. (Oxford, 2009).Google Scholar

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