Thus the incentives to expand are two-fold: first, to put retained profits to good use; second, and more important to Penrose’s analysis, to put unapplied knowledge to work. The first reason assumes resources as universal (liquid, readily transferred); the second that their value is context-specific. The drive to apply the second springs from their having little alternative or comparable use, while the retained profits are liquid and might be used to invest in quite different activities. Penrose’s division of knowledge types clarifies the strategist’s task and room for maneuver.
