chapter  3
The Growth of Firms
Pages 38

This chapter is concerned with a more detailed examination of the process of change, and attention is therefore focused on the firm which is the decisionmaking unit. Structural change has been associated with the varying fortunes of individual firms. In declining industries, firms which have failed to adapt themselves and move into new growth areas have declined and often passed out of existence. In expanding industries, existing firms have been able to increase in size, and capacity in the industry has also been expanded by the birth of entirely new firms and by the extension of the activities of firms whose main interests lie in other fields. Little needs to be said about the unsuccessful firm which finds itself in a declining market and, because of its failure to adapt to changing circumstances, ultimately ceases to exist. Our concern is rather with those firms that make a more positive contribution to structural change, that is, with the way in which the successful firm adapts itself to changing circumstances.