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Abstract
Penrose's book The Theory of the Growth of the Firm presents a growth theory that overwhelmingly relates to organic growth, with little explicit focus on acquisitive growth. This article addresses the gap in her growth theory by drawing on the historical case of Enodis, and insights from the resource-based view of the firm, to develop a Penrosean theory of acquisitive growth. It concludes that acquisitive growth not only enables a firm to grow more quickly, but that under specific conditions, through its increase in the diversity of resources at the disposal of managers, it may act as a spur to future organic growth.
Notes
1. CitationPenrose, “Biological Analogies.”
2. CitationPenrose, “Limits to the Growth.”
3. CitationPenrose, Theory.
4. CitationPenrose, “Hercules.”
5. CitationMarris, Economic Theory; CitationPitelis, “Globalization, Development and History”; CitationPozzi, “Entrepreneurship and Capabilities.”
6. Penrose, Theory, 128.
7. Penrose, Theory, 5.
8. Marris, Economic Theory; Pitelis, “Globalization, Development and History”; Pozzi, “Entrepreneurship and Capabilities.”
9. CitationConnell, “Entrepreneurial Enterprise”; CitationJones and Miskell, “Acquisitions and Firm Growth”; CitationKor and Mahoney, “Penrose's Contributions”; CitationLee and Xuehua, “Origins of Business Groups”; CitationLockett and Thompson, “Penrose's Contribution”; CitationWild, “Learning the Wrong Lessons.”
10. See Wild, “Learning the Wrong Lessons.”
11. CitationBarnard, Functions of the Executive; CitationCyert and March, “Organizational Structure”; CitationSimon, Administrative Behavior.
12. Penrose, “Hercules,” 2–3.
13. Penrose, Theory, 75.
14. CitationMahoney, “Path Dependence,” 507.
15. Penrose, Theory, 85.
16. Penrose, Theory; CitationKor, Mahoney and Michael, “Resources, Capabilities.”
17. CitationLockett et al., “Organic and Acquisitive Growth.”
18. Penrose, Theory, 77.
19. Penrose, Theory, 84.
20. Lockett et al., “Organic and Acquisitive Growth.”
21. CitationTeece, “Technological Change”; CitationCohen and Levinthal, “Absorptive Capacity.”
22. CitationCyert and March, A Behavioral Theory.
23. CitationLevinthal and March, “The Myopia of Learning.”
24. Penrose, “Hercules,” 2–3.
25. CitationWernerfelt, “A Resource-Based View.”
26. Penrose, Theory, 126.
27. See Wild, “Learning the Wrong Lessons.”
28. See Wild, “Learning the Wrong Lessons.”
29. CitationLangley, “Strategies for Theorizing.”
30. CitationLangley, “Strategies for Theorizing.”
31. CitationLangley, “Strategies for Theorizing.”, 703.
32. “S. & W. Berisford,” Financial Times, Oct. 22, 1927.
33. “S. & W. Berisford,” March 4, 1933.
34. “S. & W. Berisford Profits Rise,” Financial Times, Nov. 29, 1963.
35. “Berisford's Policy,” Financial Times, Jan. 7, 1960.
36. “S. & W. Berisford Confident,” Financial Times, Jan. 20, 1971.
37. “S. & W. Berisford Confident,” Financial Times, Jan. 20, 1971
38. “Berisford Sees Expansion,” Financial Times, Jan. 30, 1974.
39. “Berisford Terms for S & Z Group,” Financial Times, Feb. 8, 1973; “Berisford Sees Expansion,” Financial Times, Jan. 30, 1974.
40. “Berisford Terms for S & Z Group,” Financial Times, Feb. 8, 1973; “Berisford Sees Expansion,” Financial Times, Jan. 30, 1974
41. Berisford plc., Annual Report, 1978.
42. Berisford plc., Annual Report, 1979.
43. Berisford plc., Annual Report, 1981.
44. “Berisford's Controversial Bid for British Sugar,” Financial Times, May 13, 1980.
45. “Berisford's Controversial Bid for British Sugar,” Financial Times, May 13, 1980
46. “British Sugar Chief Criticises Berisford's Financial Position,” Financial Times, March 9, 1982.
47. “Victory is Sweet for Berisford,” Financial Times, July 10, 1982.
48. “Financial Service Sweeten Berisford,” Guardian, Jan. 18, 1985.
49. Berisford plc., Annual Report, 1984.
50. Berisford plc., Annual Report, 1985.
51. Berisford plc., Annual Report
52. Berisford plc., Annual Report
53. “Berisford's Capture,” Guardian, June 28, 1988.
54. Berisford plc., Annual Report, 1987; “S. & W. Berisford makes $20m Seed Purchase,” Times, July 5, 1988.
55. Berisford plc., Annual Report, 1988.
56. Berisford plc., Annual Report, 1983.
57. “Power Proposal,” Guardian, Dec, 9, 1988; Berisford plc., Annual Report, 1988.
58. Berisford plc., Annual Report, 1988.
59. Berisford plc., Annual Report, 1985.
60. Berisford plc., Annual Report, 1989.
61. “View from City Road,” Independent, Dec. 19, 1989.
62. Berisford plc., Annual Report, 1989.
63. “Berisford Faces,” Times, March 19, 1990.
64. “Berisford Faces,” Times, March 19, 1990
65. “Berisford Faces,” Times, March 19, 1990
66. “Slimmer Berisford,” Times, Dec. 11, 1990.
67. Berisford plc., Annual Report, 1990; “Stronger Board,” Times, March 13, 1990.
68. See board member details in Berisford plc., Annual reports, 1990 and 1991.
69. Berisford plc., Annual Report, 1990.
70. Berisford plc., Annual Report, 1990
71. Berisford plc., Annual Report, 1990
72. Berisford plc., Annual Report, 1990, 1990, 1991; “Berisford International,” Times, June 13, 1991.
73. CitationChandler, Scale and Scope.
74. CitationToms and Wright, “Divergence and Convergence.”
75. CitationToms and Wright, “Corporate Governance.”
76. CitationHaynes, Thompson, and Wright, “The Impact of Divestment”; CitationHoskisson and Johnson, “Research Notes”; CitationMarkides, “Diversification.”
77. “How Berisford Shed a £1.2bn Debt,” Financial Times, July 8, 1991.
78. Berisford plc., Annual Report, 1992.
79. Berisford plc., Annual Report, 1992; “Berisford Suspended,” Times, Dec. 20, 1994.
80. “Berisford Steps In,” The Times, April 20, 1993; “Berisford to Bid,” Sunday Times, March 14, 1993.
81. Berisford plc., Annual Report, 1993.
82. “Berisford Buys Magnet,” Independent, Jan. 14, 1994.
83. “Berisford Raises Cash,” Times, Jan. 14, 1994; “Berisford Buys Magnet,” Independent, Jan. 14, 1994.
84. Berisford plc., Annual Report, 1995.
85. “Bowkett Touch,” Sunday Times, Jan. 22, 1995.
86. “Berisford Pays,” Independent, Dec. 21, 1994.
87. Berisford plc., Annual Report, 1995.
88. “2 Stove Companies,” New York Times, Feb. 27, 1955.
89. “Sales and Mergers,” New York Times, Nov. 2, 1958.
90. “Heating-Cooling in a Package,” New York Times, Jan. 12, 1959.
91. “Merger Planned by Welbilt,” New York Times, Jan. 31, 1959.
92. “Welbilt Corporation,” New York Times, July 3, 1959.
93. “Does it Really Matter,” New York Times, Sept.28, 1972.
94. “Who's in the Kitchen,” New York Times, Aug. 23, 1981.
95. “Welbilt to Acquire Welmoore Industries,” Southwest Newswire, March 21, 1984.
96. “Welbilt Acquires German Food Service Division of Minstar,” Business Wire, Jan. 28, 1986.
97. “Acquisition Expands Bakery Equipment Line: Purchase of Fedco Systems,” Business Wire, March 7. 1986.
98. “Welbilt Acquires Two Manufacturers of Bakery Production Equipment,” Business Wire, March 31, 1987.
99. “Welbilt Grabs Sales,” Crain's New York Business, March 23, 1987.
100. “Welbilt Acquires Food Handling Systems of Dallas,” Business Wire, Oct. 20, 1987.
101. “Welbilt Acquires Six Alco Foodservice Equipment Companies,” PR Newswire, April 3, 1989.
102. “LBO,” Crain's New York Business, March 19, 1990.
103. “Welbilt Corporation to Acquire Lincoln Foodservice Products,” PR Newswire, July 1, 1994.
104. Berisford plc., Annual Reports, 1995, 1996, 1997; “Berisford,” The Times, Dec. 7, 1995.
105. Berisford plc., Annual Report, 1995.
106. Berisford plc., Annual Report, 1995
107. Berisford plc., Annual Report, 1995, 1996.
108. Berisford plc., Annual Report, 1995, 1997.
109. Berisford plc., Annual Report, 1995
110. ‘Berisford Serves,” The Sunday Times, Jan. 3, 1999.
111. Enodis plc., Annual Report, 2000.
112. Enodis plc., Annual Report, 2001.
113. “CEO's Decentralized Approach Achieves Unifying Vision,” Appliance Manufacturer, Feb. 1996.
114. “CEO's Decentralized Approach Achieves Unifying Vision,” Appliance Manufacturer, Feb. 1996
115. Enodis plc., Annual Report, 2001.
116. Berisford plc., Annual Report, 1999.
117. Berisford plc., Annual Report, 1999.
118. “Enodis Lists its Future in the US,” Foodservice Equipment & Supplies, Aug. 2000.
119. Enodis plc., Annual Report, 2000; “Berisford,” Times, May 23, 2000.
120. Berisford plc., Annual Report, 1999.
121. “Enodis Passes Divide,” Financial Times, Nov. 22, 2006.
122. “Enodis Losses Cut,” Financial Times, May 9, 2003.
123. “Enodis Unveils,” Financial Times, March 21, 2001.
124. “Enodis Struggling,” Financial Times, Jan. 17, 2002.
125. Enodis plc., Annual Report, 2002.
126. Enodis plc., Annual Report, 2005.
127. “Manitowoc Triumphs,” Telegraph, July 1, 2008.
128. See CitationBerkers, “Tastes Differ”; CitationHiggins and Toms, “Financial Institutions”; CitationKininmonth, “Growth, Development”; CitationPineda, “Manufacturing Profits”; CitationRoca, “Adaptive Strategies.”
129. See Connell “Entrepreneurial Enterprise”; Jones and Miskell, “Acquisitions and Firm Growth”; Kor and Mahoney, “Penrose's Contributions”; Lee and Xuehua, “Origins of Business Groups”; Wild, “Learning the Wrong Lessons.”
130. Penrose, Theory, xiii.
131. Berisford plc., Annual Report, 1981, 4.
132. Berisford plc., Annual Report, 1981, 4.
133. Berisford plc., Annual Report, 1981, 5.
134. Berisford plc., Annual Report, 1981, 5
135. Berisford plc., Annual Report, 1981, 5
136. “Berisford International,” Times, June 13, 1995.
137. “Berisford Keen to Spend,” Times, Dec. 7, 1995.
138. Examples include: Convotherm, providing capabilities in commercial combination ovens, a fast growing global market, combining convection and steam heating (Waples, 1999; “Berisford Acquisition,” Times, Jan. 5, 1999); Prolon a manufacturer of heat resistant polymeric commercial tableware, a product that could be combined with the cooking supplies business of Lincoln and taken to the existing customer base (Berisford plc., Annual Report, 1997); also Merrychef UK, providing capabilities in rapid cooking technology (Enodis plc., Annual Report, 2000).
139. Examples include: Acquisition of Sammic, Spain's leading food service equipment manufacturer for £21.8m, with eight distribution branches throughout Spain, as well as branches in Portugal, France and the UK (Berisford plc., Annual Report, 1997; “Berisford Buys in Spain,” Times, Aug. 1, 1997); also New Ton, Thailand's leading supplier of ice-making machines (Berisford plc., Annual Report, 1998).
140. Jones and Miskell, “Acquisitions and Firm Growth.”
141. Jones and Miskell, “Acquisitions and Firm Growth.”
142. Acquisitions include Convotherm Elektrogerate, Aladdin Temp-Rite, Viscount Catering, Sammic, Guyon Productions, Kitchen Ventilation Services, Gamble Technical Services, and Prolon.
143. “Welbilt Grabs Sales,” Crain's New York Business, March 23, 1987.
144. The largest acquisition in the decade prior to the Scotsman purchase (1987–97) was a public company, Lincoln, with sales of $58m in comparison to group turnover of $426.5m (Annual Reports 1987–97).
145. Berisford plc., Annual Report, 1996.
146. Long-term debt at Welbilt was just $35m in 1987 (“Welbilt's Really Cooking,” Crain's New York Business, April 25, 1988).
147. Berisford plc., Annual Report, 1989.
148. CitationSchlosser, Fast Food Nation, 3.
149. CitationSchlosser, Fast Food Nation, 3
150. CitationSchlosser and Wilson, Chew on This.
151. CitationRoyle, Working for McDonalds.
152. CitationKroskey, “Think Globally.”
153. Schlosser, Fast Food Nation.
154. “Enodis Lists its Future in the US,” Foodservice Equipment & Supplies, Aug. 2000.
155. Enodis plc., Annual Report, 2007.
156. Enodis plc., Annual Report, 2007
157. “CEO's Decentralized Approach Achieves Unifying Vision,” Appliance Manufacturer, Feb. 1996; Berisford plc., Annual Report, 1997.
158. CitationHarrison et al., “Resource Complementarity”; CitationWang and Zajac, “Alliance or Acquisition.”
159. CitationKor and Mahoney, “Penrose's Resource-Based Approach.”
160. CitationMahoney, “The Management of Resources.”
161. Penrose, Theory, 77.
162. CitationShepherd and Wiklund, “Comparing Apples.”
163. Kor, Mahoney, and Michael, “Resources, Capabilities.”
164. CitationCrook et al., “Strategic Resources and Performance”; CitationNewbert, “Empirical Research.”
165. See CitationPorac and Thomas, “Cognitive Categorization”; CitationPorac, Thomas, and Baden-Fuller, “Competitive Groups”; CitationPorac et al., “Rivalry”; CitationHodgkinson, “Cognitive Analysis.”
166. CitationLado and Wilson, “Human Resource Systems.”
167. CitationGinsberg, “Minding the Competition.”
168. Wernerfelt, “A Resource-Based View.”
169. CitationLockett, O'Shea, and M. Wright, “Development.”
170. CitationBarney, “Strategic Factor Markets”; CitationRumelt, “Theory, Strategy and Entrepreneurship.”
171. Barney, “Strategic Factor Markets.”
172. See the meta-analysis by CitationKing et al., “Meta-Analysis.”
173. CitationFuller, Netter, and Stegemoller, “Returns to Acquiring Firms.”
174. CitationBarney, “Returns to Bidding Firms”; CitationHarrison et al., “Synergies”; Harrison et al., “Resource Complementarity.”
175. CitationDenrell, Fang, and Winter, “Economics of Strategic Opportunity.”