Geography Reference
In-Depth Information
ence to MNEs.
3
In contrast, Penrose's theory of the firm's growth, and
its suitability for explaining the evolution of multinational corporations,
has received much more attention in the literature on the economics of
technological change.
Nevertheless, in Penrose's approach and in most of the RBV, the
multiplicity and heterogeneity of knowledge sources, as well as the com-
plementarity and interdependence of their internal and external natures,
are largely overlooked. In contrast to traditional economic analysis, the
emphasis is put on understanding a firm's internal functions and resources,
while the investigation of the external environment, including the market,
has been relegated to a secondary level, that is, that of the management's
perception.
4
However, as acknowledged by Penrose herself, the concepts
of entrepreneurship and management in this schema are rather slippery
because they are only related to the personal qualities of individuals. This
also implies that the influence of the factors characterizing the firm's
external environment are strongly underestimated in explaining growth.
Technological change, which is exogenously determined in the traditional
economic theory, in the RBV becomes endogenously governed by unique
and heterogeneous resources which are specific to the individual firm.
Innovation processes and sources, and their situated and contingent
nature, are therefore either unexplained, that is, treated as 'manna from
heaven' as in traditional neoclassical economics, or are made essentially
idiosyncratic, that is, built into the exclusive nature of each business
organization, as in most of the RBV literature. In the case of neoclassical
economic theory, so far the power of its formalized theoretical apparatus
has been unable to make up for its critical limitations when it comes to
the study of technological change. In particular, innovation cannot be
rationally planned due to uncertainty; firms cannot have perfect knowl-
edge of production techniques when knowledge is gained through learning
and experience, and innovation is often continuous and disequilibriating.
Transactions costs economics does bring some 'life' into the economic
model by taking into account human as well as environmental factors
in explaining the nature and existence of the firm. However, a degree of
determinism and only a minor interest in the firm's growth has so far
limited the applicability of these approaches to the analysis of innovation
sources. On the other hand, the emphasis of Penrose and the resource
based view on firms' internal mechanisms and processes, and also on new
conceptions of corporate strategy, are of the utmost importance for under-
standing technical change as an active component of firms' behaviour, and
particularly in the case of multinational firms. It is, however, largely inef-
fective in analysing the contextual nature and the interdependence of the
many sources of innovation.
