ABSTRACT
The neoclassical theory of the firm focused on resource allocation at market level. Transaction cost economics led an extension of the neoclassical research programme into problems of hierarchical or administrative resource allocation. An alternative set of theories emerged to fill this gap, explaining economics of the firm through the passage of the time. These are, most notably, the Penrosian Theory of the Growth of the Firm (1959), and the Cyert, March and Simonian Behavioural Theory of the Firm (1963). The process-oriented theories of the firm have not gained much acceptance and coverage in the scientific community until recent decades. The process theories of the firm have been incorporated into strategy theorising and research, in particular, the resource-based approach, so extensively that it seems highly difficult to understand the resource-based approach to strategy, which is getting dominance in the field of strategic management in the recent decade, without the process theories of the firm.
