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A note on Cyert and March (1963) and Penrose (1959): A case for synergy

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  • Pitelis, Christos

Abstract

Cyert and March’s 1963 seminal book is one of the two major economics-based theories of the firm that goes inside the ‘black box’ (the firm) – the other being the contribution of Edith Penrose. The two theories have differences, but also similarities, and substantial scope for cross-fertilisation that have gone unnoticed in the literature. In this note we try to integrate important ideas in both books, paying particular attention to the issue of ‘excess resources’ /slack, and (intra-firm) conflict. We then build on the integrated framework by delving into the nature of intra-firm conflict, the degree of intra-firm rivalry and the relationship between firm performance and ‘productive opportunity’. We derive propositions common to the two theories, but also new ones, of import to our understanding of organisational growth and change.

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  • Pitelis, Christos, 2007. "A note on Cyert and March (1963) and Penrose (1959): A case for synergy," MPRA Paper 23939, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:23939
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    References listed on IDEAS

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    Cited by:

    1. Elsner, Wolfram & Schwardt, Henning, 2015. "The (dis-)embedded firm: Complex structure and dynamics in inter-firm relations. Adding institutionalization as a Veblenian dimension to the Coase-Williamson approach – An emerging triangular organiza," MPRA Paper 67193, University Library of Munich, Germany.
    2. Alain Verbeke & Wenlong Yuan, 2007. "Entrepreneurship in multinational enterprises: A Penrosean perspective," Management International Review, Springer, vol. 47(2), pages 241-258, March.

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    More about this item

    Keywords

    Behavioral theory of the firm; Edith Penrose; excess resources; slack; conflict; innovation;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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