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Capacity of the Firm and the Economics of the Growth of Firms

In: The Economics of the Modern Construction Firm

Author

Listed:
  • Stephen L. Gruneberg

    (University College London)

  • Graham J. Ive

    (University College London)

Abstract

In the preceding chapter we discussed the meaning of capacity for industries in general and for construction sector industries in particular. The meaning of excess capacity in firms in the building materials industry is clear, and refers to under-utilisation of capital intensive plant. Its meaning and existence in construction industry firms is less clear. If it exists, it will be largely a matter of under-utilisation of the firm’s core staff. ‘For the most part, “excess capacity” is externalised by the contracting firm, appearing as unemployment of construction labour, under utilisation of hire firms’ plant; increased stocks, or reduced output, in the industries producing building inputs; (money) capital held liquid e.g. cash or short term deposits; and a flow of money-capital from construction to other sectors, channelled through both the banks and multi-industry firms’ (Ive, 1983, pp. 72–3)

Suggested Citation

  • Stephen L. Gruneberg & Graham J. Ive, 2000. "Capacity of the Firm and the Economics of the Growth of Firms," Palgrave Macmillan Books, in: The Economics of the Modern Construction Firm, chapter 8, pages 187-197, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-51043-2_8
    DOI: 10.1057/9780230510432_8
    as

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