Does international expansion constrain growth? Business groups, internationalization, institutional distance, and the Penrose effect

Purpose This paper aims to use the institutional and information-processing perspectives to explore their association with between internationalization and the Penrose effect phenomenon for business groups (BGs). Design/methodology/approach The authors use ordinary least squares regression models to test arguments about data pertaining to 101 Taiwanese BGs’ foreign direct investments. Findings The results indicate that greater levels of depth and scope in the process of internationalization during one period may negatively affect rates of growth in the following period. The results further demonstrate that institutional distance moderates the relationship. Research limitations/implications Using the perspective of information-processing demands, the authors provide alternate explanations regarding the relationship between the process of internationalization (depth, scope and rhythm) and the Penrose effect. Originality/value Owners and managers should focus on both the depth and the scope of internationalization. BGs are likely to incur high dynamic adjustment costs, which then limit the rate of BGs’ growth. Managers should balance international market uncertainty with current managerial resources when determining how deeply and broadly to expand internationally and where to enter. In addition, as recent major panel studies suggest, management capabilities and practices can improve significantly, which has a positive effect on firm growth and performance. This does require the careful development and acquisition of the managerial resources needed for internationalization.

Particles with Negative Energies in Nonrelativistic and Relativistic Cases

States of particles with negative energies are considered for the nonrelativistic and relativistic cases. In the nonrelativistic case it is shown that the decay close to the attracting center can lead to the situation similar to the Penrose effect for a rotating black hole when the energy of one of the fragments is larger than the energy of the initial body. This is known as the Oberth effect in the theory of the rocket movement. The realizations of the Penrose effect in the non-relativistic case in collisions near the attracting body and in the evaporation of stars from star clusters are indicated. In the relativistic case similar to the well known Penrose process in the ergosphere of the rotating black hole it is shown that the same situation as in ergosphere of the black hole occurs in rotating coordinate system in Minkowski space-time out of the static limit due to existence of negative energies. In relativistic cases differently from the nonrelativistic ones, the mass of the fragment can be larger than the mass of the decaying body. Negative energies for particles are possible in the relativistic case in cosmology of the expanding space when the coordinate system is used with a nondiagonal term in metrical tensor of the space-time. Friedmann metrics for three cases: open, close and quasieuclidian, are analyzed. The De Sitter space-time is shortly discussed.

The Penrose Effect and its acceleration by the war on drugs: a crisis of untranslated neuroscience and untreated addiction and mental illness

In 1939, British psychiatrist Lionel Penrose described an inverse relationship between mental health treatment infrastructure and criminal incarcerations. This relationship, later termed the ‘Penrose Effect’, has proven remarkably predictive of modern trends which have manifested as reciprocal components, referred to as ‘deinstitutionalization’ and ‘mass incarceration’. In this review, we consider how a third dynamic—the criminalization of addiction via the ‘War on Drugs’, although unanticipated by Penrose, has likely amplified the Penrose Effect over the last 30 years, with devastating social, economic, and healthcare consequences. We discuss how synergy been the Penrose Effect and the War on Drugs has been mediated by, and reflects, a fundamental neurobiological connection between the brain diseases of mental illness and addiction. This neuroscience of dual diagnosis, also not anticipated by Penrose, is still not being adequately translated into improving clinical training, practice, or research, to treat patients across the mental illness-addictions comorbidity spectrum. This failure in translation, and the ongoing fragmentation and collapse of behavioral healthcare, has worsened the epidemic of untreated mental illness and addictions, while driving unsustainable government investment into mass incarceration and high-cost medical care that profits too exclusively on injuries and multi-organ diseases resulting from untreated addictions. Reversing the fragmentation and decline of behavioral healthcare with decisive action to co-integrate mental health and addiction training, care, and research—may be key to ending criminalization of mental illness and addiction, and refocusing the healthcare system on keeping the population healthy at the lowest possible cost.

How does top management team composition matter for continual growth? Reinvestigating Penrose’s growth theory through the lens of upper echelons theory

Purpose Penrose’s argument regarding the managerial constraint on continual expansion over two consecutive periods is termed the “Penrose effect,” a relatively less investigated premise in Penrose’s growth theory. The purpose of this paper is to empirically re-examine the Penrose effect from the perspective of upper echelons theory and investigated how top management team (TMT) composition influences the continual growth of a firm. Design/methodology/approach This study empirically tested the hypotheses based on a sample of listed manufacturing firms operating in Taiwan, a newly industrialized economy in the Asia–Pacific region. Moderated hierarchical regression analyses were applied to test hypotheses. Findings The empirical results suggest that low TMT diversity (in terms of educational, functional and team tenure diversity) is likely to engender a situation in which the Penrose effect might occur. Additionally, the results indicate that the proportion of functional executives plays a significant role in influencing the growth trend over two consecutive periods and may soften the impact of the Penrose effect. Practical implications This paper suggests that appropriate structuring of TMTs and appropriate management of their members’ backgrounds and team tenure diversity can help firms overcome the Penrose effect and grow continually. Furthermore, the proportion of functional executives in a TMT is influential. Originality/value This paper uniquely contributes to the theoretical and empirical development of Penrose’s growth theory, upper echelons theory and resource-based view concerning managerial resources.