Mark Casson

Mark Casson (born 1945) is a British economist and academic.

He is a professor of economics at the University of Reading in England.

Mark Casson is one of the founding members of the Reading School of International Business, a worldwide network of economists established in the 1970s at the University of Reading, England, which has been influential in changing public perceptions of the costs and benefits of multinational enterprises and foreign direct investment.

He is also the general editor of two book series, The Globalisation of the World Economy, and the Handbooks of Research Methods and Applications in the Social Sciences.

Internalisation theory explains very complex phenomena in terms of very simple principles.

Buckley and Casson use the theory to explain the emergence of multinational enterprise.

According to Adam Smith’s concept of the division of labour, market economies encourage individuals to specialise in producing a particular good or service which is sold for profit, and to use their income to purchase goods produced by other people.

There are limits to specialisation, however.

Because of market imperfections, there are certain goods and services that are difficult to sell.

In particular, an individual who acquires some knowledge that affords a profit opportunity will find it difficult to sell that knowledge to anyone else.

Other people will not believe that the knowledge is valuable unless they know what it is, and if they know what it is they have no need to buy it.

Firms that undertake R&D are in this position.

They find it difficult to license new technologies they have developed and therefore have to exploit their knowledge themselves.

To serve the global market they need to establish an international network of production plants and/or sales outlets.

Because they operate facilities in more than country, they become a multinational enterprise.

The foreign facilities are linked by common dependence on the R&D facility.

If different plants specialise in different parts of the production process then the plants will also be linked by international intermediate product flows.

These intermediate product flows will also be internal to the firm.

Internalisation theory can be extended to analyse other ways of exploiting knowledge, including licensing, subcontracting (outsourcing), and strategic alliances (joint ventures).

Before 1980, policy-makers paid little attention to entrepreneurship, but recently there has been an explosion of interest in the subject.

Much of this focuses on small firms and their potential for regional regeneration.

Owning and managing a small firm was not, however, the original meaning of the term ‘entrepreneur’.

According to Casson, entrepreneurship signifies the promotion of innovative high-risk projects that contribute to economic efficiency and growth.

Risky innovations can easily fail, however.

Casson argues that entrepreneurs must trade off the expected benefits of success against the expected costs of failure.

If there were simple rules for making these calculations, then politicians or planners could take innovation decisions.

But such decisions are more akin to medical diagnosis than to pure calculation.

Information is incomplete and decisions must be based on symptoms rather than facts.

Successful decisions depend on good judgement, in other words.

Different people observe different symptoms and may even interpret the same symptom differently, so consensus is impossible.

Under these conditions private entrepreneurs, who are confident in their own judgement and optimistic of success, step forward and commit their own funds (or those of family, friends and shareholders) to a project.

If their judgment is sound they make a profit and if it is not they lose.

He held the position of Head of Department from 1987until 1994 and is the institution's current Director of the Centre for Institutional Performance.

Together with Peter Buckley, he developed the internalisation theory of the multinational enterprise which is widely used to analyse the internationalisation of firms.

He also developed the modern economic theory of entrepreneurship through a synthesis of the ideas of Joseph Schumpeter, Friedrich Hayek and Frank Knight.

According to this theory, successful entrepreneurs demonstrate good judgement in making risky innovations, and are rewarded through either profits or salaries depending on whether they act as owners or managers of their firms.

His research led him to conclude that culture and institutions influence the performance of both individual entrepreneurs and large multinational corporations.

He developed a leader-follower theory of culture in which leaders set cultural norms which condition the way in which entrepreneurs and managers take decisions.

Historical research is the natural way to test such a theory, and his recent work has therefore focused on the application of institutional theory to business history and economic history.

This led him to undertake a major study of Victorian British entrepreneurship - the building of the railway system through private enterprise - which is the subject of one of his most recent books.