The Penrose Effect: "Excess" Expatriates in Multinational Enterprises

Goerzen, Anthony; Beamish, Paul W.
June 2007
Management International Review (MIR);2007 2nd Quarter, Vol. 47 Issue 2, p221
Academic Journal
• Penrose's (1959) theory of firm growth argues that firm knowledge and experience gives rise to "excess" resources which can be (re)deployed to explore and exploit productive opportunities leading, ultimately, to the achievement of firm goals. • We examine this key insight on organizational slack in the context of expatriate managers within multinational enterprises (MNEs). • Expatriates are not only a viable way of examining the Penrosian concept of slack but, as an unique element of MNE management, expatriates also provide an opportunity to develop new insights into international business theory. • Using a large sample of MNE subsidiaries, we found that when host country experience is comparatively low, subsidiaries with "excess" expatriate managers are more likely to experience inferior performance. Alternatively. expatriate slack is associated with a higher likelihood of superior performance in the context of comparatively high host country experience.


Related Articles

  • What Businesses Need to Know About Expanding Internationally. Ciccone, Rob // Industrial Maintenance & Plant Operation;Jun2011, Vol. 72 Issue 5, p24 

    In this article, the author offers tips on what businesses, particularly small business owners, need to know about expanding internationally. The author says that a business plan is more critical with unfamiliar markets and new concerns that come with doing business internationally. Also, doing...

  • Valentino Going Global. Nygaard, Sandra; Furukawa, Tsukasa // DNR: Daily News Record;1/10/2005, Vol. 35 Issue 2, p16 

    Looks at the global business strategy used by Valentino to extend its brand in both Asia and in the U.S. Characteristics of Asia's economy which made it fit for the expansion plan of Marzotto, parent company of Valentino; Percent of Valentino's annual sales which can be attributed to Asia;...

  • Global Leadership: Lead Locally for Global Impact. Ives, Gail // San Diego Business Journal;11/17/2014, Vol. 35 Issue 46, pA57 

    The article discusses the importance of global awareness and planning in the global growth of a business in the U.S. Particular focus is given to the ways to increase a business' viability and leadership as part of the global economy, including establishing a global strategy and accessing...

  • International opportunities abound, but how do you get started?  // Smart Business Columbus;May2011, Vol. 19 Issue 8, p17 

    The article presents guidelines for businesses to prepare in extending to an international territory. Bob Celata of PNC Bank Corp. explains that taking advantage of the growth of international opportunities requires companies to consult with their primary bank and identify if their banks can...

  • Build a plan to take on only what you can handle. Gray, Andi // Westchester County Business Journal;3/28/2005, Vol. 44 Issue 13, p12 

    Presents a question and answer advisory on expansion planning in business. Importance of a growth model to avoid risks in expanding a business; Recommended annual growth that is both achievable and profitable; Importance of offering something different from competitors.

  • Long-range rockets. Gome, Amanda // BRW;4/1/2004, Vol. 26 Issue 12, p56 

    Discusses the factors needed for businesses to growth and last. Emphasis on the need fro a strategy to find the key to achieving and maintaining sustainable growth; Importance of effective leadership, understanding of the industry and market evolution; Development of a professional management...

  • DEVELOPING A GLOBAL DIVERSIFICATION MEASURE. Kim, W. Chan // Management Science;Mar89, Vol. 35 Issue 3, p376 

    Previous measures, focusing on either the international market or product dimension of corporate diversification, have been unsatisfactory for analyzing global diversification since both dimensions constitute important elements of a firm's global diversification strategy. This study constructs a...

  • Managing the Costs of EXPATRIATION. BAKER, WILLIAM MAURICE; ROBERTS, F. DOUGLAS // Strategic Finance;May2006, Vol. 87 Issue 11, p35 

    The article discusses the costs of expatriation and the expansion of Fletcher Core, a manufacturer of snowboard equipment in Colorado. Fletcher Core decided to expand into Europe after analyzing the potential market with a geographic information system, which focused on upstream and downstream...

  • INTERORGANIZATIONAL EVOLUTION: PAIRWISE, POPULATION AND COMMUNITY EFFECTS ON CORPORATE INTERNATIONAL EXPANSION. Martin, Xavier; Swaminathan, Anand; Mitchell, Will // Academy of Management Best Papers Proceedings;1996, p234 

    We examine relative influences of pairwise (buyer), population (competitor) and community (non-competing supplier) foreign expansion effects on the occurrence and timing of international expansion by supplier firms. Empirically, a multilevel model including count and timing effects helps explain...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics