The Penrose Effect and Emerging Technologies : Fokker, or Flying Circus?
As noted by Penrose, one constraint on organizational growth is that new branches cannot be “blueprinted” with a list of job descriptions. Instead, they should be partially staffed with experienced personnel in order to transmit best practices and knowledge (“Penrosian blueprinting”). Synthesizing insights from learning curve theory, I argue that Penrosian blueprinting should be a particularly effective expansion strategy for organizations that use emerging technologies, which are characterized by steep learning curves. Using an extreme case of this strategy, the doubling in size of the Imperial German Air Service at the end of the First World War, I find that it was the Germans’ Penrosian blueprinting strategy rather than their technology which led to their superior performance versus opposing air forces in 1918. Given that this strategy draws talented members away from other branches of the organization, it may not be effective in all cases