Acquisitive and organic growth in Penrose’s theory: A replication and extension of Lockett, Wiklund, Davidsson, Girma (2011)

We replicate Lockett, Wiklund, Davidsson, and Girma's (2011) study, which draws on Penrose's theory to explain how organic and acquisitive growth interact, using data from 144,705 Dutch firms (2011-2019). Our results confirm their finding that past organic growth negatively affects subsequent organic growth. However, whereas they reported a positive relationship, we find that past acquisitive growth initially reduces subsequent organic growth. Extending their framework reveals that this effect turns positive over time, particularly for moderately related acquisitions and among high-growth firms. Our findings align with Penrose's theory while offering a more nuanced understanding of when acquisitive growth enhances organic growth.