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Essay / Research Paper Abstract
This 3 page paper explains what the Penrose Effect is as well as how and why it occurs. The paper then looks at how this is aligned to the growth theory of Marris. The bibliography cites 2 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEpenrose.rtf
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Unformatted sample text from the term paper:
experiences are used by the firm in the way that it operates and grows, this means that as well as being resources, they are also constraints (Penrose, 1959). To provide
management services to the company the management needs to have relevant skills and knowledge concerning the internal as well as the external environment, and be able to work with others
inside the organization (Penrose, 1959). The capacity of the managers is therefore key in the way that the firm develops in terms of the scope, scale and complexity of the
firms development (Penrose, 1959). The internal management resource is also limited, as there is the need for internal skills and knowledge this makes management a resources that cannot simply be
brought in when needed, if management is hired from the external environment they will need time to develop the knowledge of the internal workings of the firm, which further limits
the pace of development that a firm can undertake at any period in time. The impact of this is if a firm is growing at a fast rate it is
likely to face managerial problems as it cannot support continual rapid growth, a point will be reached where the management reach the limit of their current capacity. Therefore rapid growing
firms will have to slow down, their management team while management resources and capacity are increased, either internally or through bringing in external management and giving them time to acclimatize
and gain the internal skills and knowledge This can stated succulently as "managerial time and attention are the scarce resources that are the
binding constraint on the rate of the growth of the firm" (Tan and Mahoney, 2003). The phenomenon of the rapid growth followed by a period of slower growth that
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