Penrose's Enterprise Growth Theory on China's Enterprise Development

Abstract

This paper uses the theory of deductive method to analyze the issues of Enterprise Development. First Penrose's Enterprise Growth Theory is briefly introduced and then an in-depth analysis of Penrose Effect is made. The theoretical expansion of Penrose Effect is also discussed. Finally inspirations brought by Penrose's Enterprise Growth Theory are summarized. Penrose Effect tells us that the fast-growing of the enterprise at one time is often accompanied by the slowing down of the enterprise growth during the next period. It is put forward in the paper that after a period of relatively slow growth stage, fast growth stage will arrive, which has supplemented the theory of Penrose Effect. Five inspirations have also been put forward on the development of Chinese enterprise growth: predicting scientifically the enterprise growth based on Penrose's Enterprise Growth Theory; creating diversified enterprise resource; concerning on the new resources of the enterprise; searching for the best point for resources replacement and utilizing diversification strategy with caution, which have offered the theoretical guidance for Chinese enterprises to develop rapidly.