How does a business grow?

The problem of enterprise growth is, on a macro level, a topic of economics, while on a micro level, it is clearly a topic of management. Although Peter Drucker published in 1954 in the book "the practice of management", the first relatively systematic "enterprise growth problem", and thus triggered the theoretical and practical circles to explore the problem of enterprise growth concerns, but unfortunately, Drucker did not make a more in-depth discussion in this field. Promote the formation and gradual improvement of this theory, is a British female economist called Edith Penrose (Edith Penrose). As one of the most representative scholars of modern enterprise growth theory, Edith Penrose firstly took enterprise growth as the research object and proposed that the power source of enterprise growth comes from the drive of various resources within the enterprise, thus creating a precedent of exploring the mechanism of enterprise growth from within the enterprise.In 1959, Penrose published the famous book "Theory of Enterprise Growth" (Editor's note: the Chinese version of the book was translated by Prof. Zhao Xiao, a columnist of the Journal). (Editor's note: the Chinese version of this book was translated by Prof. Zhao Xiao, a columnist of this magazine), since then, the theoretical exploration of the unique regularity and systematicity of enterprise growth has begun to become an important research topic in the field of management. The essence of enterprise growth is different from Adam Smith's view that specialization and division of labor triggered by the phenomenon of incremental compensation, which provides the necessary preconditions for the growth and expansion of enterprises, and thus believes that the growth of the enterprise is driven by external forces, Penrose for the first time analyzed the process of enterprise growth from the perspective of the purely internal causes, and emphasized the core role of the management capacity for enterprise growth. The source of growth is the unique collection of resources possessed by the enterprise. The ability of the enterprise to utilize this collection of resources determines the special opportunities that the enterprise is able to tap into, thus forming a variety of productive services to promote the growth of the enterprise. In particular, Penrose argues that the opportunities offered by such productive services can be independent of the size of the firm. In other words, small firms can have the same or even higher growth rates than large firms. There are two main connotations of business growth: one refers to a purely quantitative increase, e.g., growth in sales, production. The other refers to the "qualitative" change of the enterprise, such as: due to the expansion of production scale, the accumulation of knowledge and skills, as well as more refined professional division of labor led to the improvement of product quality, and ultimately triggered the change of the organizational structure and so on. This process of qualitative change is similar to the growth of natural organisms, where a series of complex changes within the organism ultimately leads to a constant change in size and external characteristics. The enterprise growth that Penrose focuses on is such a dynamic and complex process triggered by internal characteristics. The scale of the process is only an objective description of each stage of the growth process. Penrose first assumes that managers are keen on the expansion of profitable business, and thus the pursuit of profits by managers provides an important prerequisite for corporate growth and expansion. Subsequently, Penrose analyzes three constraints on firm growth: managerial ability, product and factor markets, and uncertainty and risk, which are related to the firm's internal conditions, external conditions, and a combination of both. According to Penrose, a firm is a combination of resources constructed within a certain managerial framework. The enterprise uses its management function to transform its own unique resources into a variety of services, which is the core driving force for the enterprise to break through the three constraints and ultimately realize growth. By analyzing the indivisibility and unevenness of resources as well as the limited nature of management capabilities, Penrose points out that there is always a portion of the resources in a firm that is not utilized, which leads to surplus productive services, which is the root cause of firm growth. She argues that the essence of enterprise growth is a series of dynamic evolutionary processes carried out by the resources possessed by the enterprise matched by managerial capabilities. The extension of the concept of entrepreneurship in this process, Penrose particularly emphasized the dynamic role of human beings, and the concept of "entrepreneurship" to extend the concept of entrepreneurship, a general reference to the enterprise can provide entrepreneurial services to all individuals or groups, regardless of the nature of the work performed by these people in the enterprise, regardless of the level of their positions. Entrepreneurial services, on the other hand, refer to all services that creatively match internal resources with external productive opportunities, thus contributing to the operation and development of the enterprise, such as proposing new strategies that help the enterprise grow, technological changes in products, repositioning of customer groups, and changes in management organization - which extends the concept of entrepreneur to the entire enterprise. The concept of the entrepreneur extends to the entire management of the firm. Penrose further categorizes entrepreneurs as "empire-builders" and "production-minded" entrepreneurs: the former are keen to achieve rapid expansion of production by acquiring and destroying competitors, and aspire to be the leader in their field. The former are interested in rapid expansion through acquisitions and crushing competitors, and aspire to be leaders in their field. The latter are interested in improving production processes, product quality, and reducing production costs. "Empire Builder entrepreneurs tend to be more aggressive and adventurous than Production Thinking entrepreneurs, and are often tasked with designing the future of their organization. They are often tasked with designing the company's future development blueprint, and are highly innovative, pushing for major changes in production technology and reorganization of the company's core business, which in turn leads to the company's expansion by leaps and bounds. The "Production Mindset" entrepreneurs are logical and tend to avoid risk and uncertainty, and they are keen to capture profits and promote the steady progress of all production activities. The "empire builder" type of entrepreneur is like the "captain" of the "ship", while the "productive thinking" entrepreneur is like the "captain" of the "ship", while the "productive thinking" entrepreneur is like the "captain" of the "ship", while the "productive thinking" entrepreneur is like the "captain" of the "ship". "The "captain" is responsible for setting the final destination of the ship, while the "helmsman" ensures the final destination of the ship. The "captain" is responsible for setting the final destination of the "ship", while the "helmsman" ensures that the "ship" sails along the right line. Leaders have an extraordinary influence on the development of a company, as Max Weber once mentioned: "The influence of a charismatic leader often stems from extraordinary insight and imagination". Undoubtedly, the growth of a company is also guided by the rationality of its managers, and the preferences, decisions, and judgment of the top management group often determine the difference in the speed of growth and expansion of a company. The role of top leaders in business growth is powerful, sometimes even decisive. Examples of this are commonplace: when people talk about Apple today, it is inevitably linked to its founder, Steve Jobs. Steve Jobs was Apple's rightful "savior," and his charismatic leadership and talent for innovation propelled the company to the top of its game. The secret of Jobs' success lies in utilizing his accumulated knowledge to continuously innovate technology in order to provide consumers with "unexpected" products, and to continuously tap into consumers' potential needs rather than just satisfying their existing needs. The outstanding enterprising spirit of such leaders, as well as their extraordinary management ability and knowledge innovation ability, make Apple's productive services and the new "production opportunities" contained in the environment constantly match each other, and the result is Apple's current strong market performance. Penrose's theory of enterprise growth puts forward the formation of creative thinking, entrepreneurial ambition of the powerful dynamic role of the enterprise in the environment of adaptive capacity and the ability to survive the important impact, emphasizes the management ability to enhance the accumulation of knowledge and experience inheritance **** the same role as the results. It is also believed that the human resources that have been improved in management practice along with the growth of the enterprise are the unique and valuable resources of the enterprise, which will lead to a great improvement in the enterprise's ability to deal with the uncertain information from the outside world and to cope with a series of complex decision-making problems. This series of dynamic imbalance process of constantly tapping the various resources of the enterprise itself, so that the reality of the enterprise can constantly release management resources, and through the extraordinary "enterprising" entrepreneurs creatively find and utilize a variety of production opportunities in the external environment. Ultimately, it guides the enterprise to break through various bottlenecks and carry out continuous growth and expansion.