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Peng and Heath (1996)Management > Comparative Management > Lectures > Independent Research > Peng and Heath
Peng and Heath (1996) - The growth of the firm in planned economies in transitionA typical state-owned firm lacks the discretion and ability to efficiently allocate resources, as it has no knowledge of the market economy. Firms grow when "the excess capacity in currently underutilised resources can be utilised more productively". There are three growth strategies:
A growing firm must also overcome growing transaction problems and bureaucratic costs "which are the hierarchical equivalent to transaction costs". Bureaucratic costs stem from a loss of control, which means a firm's growth is limited by its capability to deal with bureaucratic costs. A feature of network-based growth strategy is Interorganisational relationships. They are important to maintain, such as joint ventures and strategic alliances. Their hybrid nature means they are notorious for failing as partners do not know how to communicate with each other.
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