LIMITS TO A FIRM'S RATE OF GROWTH: The Richardsonian view and its contemporary empirical significance
In a special issue of Oxford Economic Papers in 1964 two notable papers, by Leyland (1964) and Richardson (1964), on the growth of the firm were published. They were the product of an enquiry into 'Business Policy in an Expanding Economy' which had been undertaken by the Oxford Economic Research Group under the chairmanship of George Richardson. Richardson's own contribution The limits to a firm's rate of growth' is an elegant piece. It is an example of 'grounded theory'. 1 Thus his starting point was the empirical evidence from the enquiry which illuminated perceived constraints upon a firm's growth rate. Based on evidence from interviews with sixteen businessmen over three years, he identified four principal constraints: (1) labour or physical inputs; (2) finance; (3) lack of suitable investment opportunities; and (4) lack of sufficient managerial capacity. His evaluation of the potential significance of each of these constraints was not theoretical (i .e. not based merely on a priori reasoning) but, rather, empirical. He simply asked: 'What did the respondents report?' His unqualified conclusion was: 'A very striking number of our guests expressed the view without hesitation that the availability of suitable management had been, and was, the operative check on their expansion' (Richardson 1964: 10). He went on to elucidate the meaning of a managerial limit to expansion of the firm .