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A Final Word on Edith Penrose
Author(s) -
Rugman Alan M.,
Verbeke Alain
Publication year - 2004
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/j.1467-6486.2004.00429.x
Subject(s) - economic rent , multinational corporation , normative , economics , profit (economics) , neoclassical economics , microeconomics , positive economics , sociology , political science , law , finance
Rugman and Verbeke (2002) established that Edith Penrose's contribution to the resource‐based view in strategic management has been misunderstood by many scholars in the field. The present paper augments this analysis, and demonstrates that Penrose did not view the pursuit of rents as a worthwhile endeavour. Penrose did build on a number of conceptual foundations of neo‐classical economics, and accepted the profit‐maximizing assumption as largely consistent with the pursuit of an optimal growth path. But optimal growth, not the pursuit of rents, was the focus of her analysis. In addition, Edith Penrose's real normative agenda was the increase of societal welfare at the macro‐level through innovation at the firm‐level. Penrose's work on multinational enterprises shows that she had a strong preference for eliminating rents that would accrue to large multinational firms at the expense of local firms in host countries.