Outline and assess Penrose's 'Theory of the Growth of the Firm'

Traditional theories of the firm were based around models that assumed a static industry, where thee firm is assumed to be a profit maximiser and in its simplest terms, has an industry equilibrium at a profit-maximizing level of prices and quantities. There have been several objections to the traditional theory, which has pushed for several economists to come up with a new theory, which may correct some of the problems found inherently within the original …

…traditional theory. As the Chicago school would put it 'there is no need to replace a more simplistic theory with a more realistic one if the realistic one offers no better an answer'. Where in reality the new theory offers no better an answer than that of the traditional theory. References 1.<Tab/>P. Devine, N. Lee, R.M. Jones and W.J. Tyson, An Introduction to Industrial Economics (Allen and Unwin)