Penrose's “unused services”: a cross‐cultural perspective on growth of firms

Abstract

Purpose

Penrose introduced the concept of “unused services” which she identified as the internal inducement to firm growth. The purpose of this paper is to explore “unused services”, insufficiently examined in the literature to date, by applying Eastern conceptual thinking to refine Penrose's arguments.

Design/methodology/approach

The centrality of “unused services” to Penrose's theory is highlighted. The rationale for a general propensity of entrepreneurial managers to overlook the generation of such services in practice is developed and two Chinese concepts (Xing and Shi from Sun Tzu) are employed to work through their implications for Penrose's concept.

Findings

The continuous availability of unused services represents the firm's propensity to grow (Shi) and is derived from the disposition of existing resources (Xing). The authors' cross‐cultural perspective highlights the fundamental and inherent force governing the growth of the firm as the process through which the management team makes meaning of existing and potential productive resources to explore and exploit their unused services.

Practical implications

Greater focus is required on the relationship between a firm's physical resources and the thinking and sense‐making of its managers. The art of achieving growth from a firm's productive resources arises from the meaning‐making capability and progression in managerial thinking of the management team, facilitating its members to “see” and exploit the inherent force for growth available in unused services.

Originality/value

The paper's cross‐cultural perspective permits refinement of Penrose's theory true to her focus on the inherent incentives and constraints on firm growth. Thus, thinking is advanced in terms of exploring the dominant factor governing the identification of potential productive opportunities within firms, i.e. their source of growth. Implications for practice are provided in the research agenda.

Citation

Chen, Z., Doyle, E. and Fanning, C. (2012), "Penrose's “unused services”: a cross‐cultural perspective on growth of firms", Journal of Knowledge-based Innovation in China, Vol. 4 No. 1, pp. 66-79. https://doi.org/10.1108/17561411211208776