Mark Casson is a British economist, an academic and professor of economics at the University of Reading. He previously served as Head of the Department of Economics from 1987 to 1994 and is currently the Director of the Centre for Institutions and Economic History. He researched mentoring and academic development at the University of Reading. Casson co-developed the internalization theory of the multinational enterprise with Peter Buckley, a framework in international business studies to explain the international expansion of firms. He has also written on the economic theory of entrepreneurship, drawing on ideas associated with economists including Joseph Schumpeter, Friedrich Hayek, and Frank Knight.
Career Casson’s research examines how institutions and culture influence entrepreneurial activity and the performance of multinational firms. He developed a leader-follower theory of culture, proposing that leaders establish cultural norms that shape the decision-making processes of entrepreneurs and managers. To test this theory, he applied institutional theory to business history and economic history. This approach led him to conduct a study on Victorian-era British entrepreneurship, specifically focusing on the construction of the railway system through private enterprise, which is the subject of one of his most recent books. Casson is a founding member of the Reading School of International Business, a group of scholars associated with the University of Reading who contributed to the development of modern theories of multinational enterprises. Casson also serves as the general editor of two book series: The Globalization of the World Economy and Handbooks of Research Methods and Applications in the Social Sciences.
Internalization theory Casson also co-developed the internalization theory of the multinational enterprise with Peter Buckley, which explains why firms internalize certain transactions rather than relying on markets when knowledge or other assets are difficult to trade. The framework has become influential in the study of multinational corporations and foreign direct investment. According to this framework, market imperfections make certain goods and services 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. In this context, the transfer of proprietary knowledge can be challenging because potential buyers may not be able to accurately value the information without it being fully disclosed. 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 markets, they need to establish an international network of production plants and/or sales outlets. Because they operate facilities in more than one country, they become a multinational enterprise. The foreign facilities are linked by common dependence on the R&D facility. If different plants specialize 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. Internalization theory can be extended to analyze other ways of exploiting knowledge, including licensing, subcontracting (outsourcing), and strategic alliances (joint ventures).
Economic theory of entrepreneurship Casson developed an economic theory of entrepreneurship that emphasizes the role of judgment under uncertainty in coordinating resources and identifying opportunities. His work synthesizes ideas from economists such as Richard Cantillon, Frank Knight, Joseph Schumpeter, Friedrich Hayek, and Israel Kirzner. 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. In effect they bet against the sceptics who do not invest. Because the skeptics stay out, successful entrepreneurs may well achieve a monopoly position until opinions change and imitators appear. Casson develops this approach in several directions, including formal models of entrepreneurship that demonstrate its contribution to economic performance and allow that contribution to be measured.
… excerpt ends here. Continue reading the full article.
