Varieties of Capitalism and Innovative Enterprise

Abstract

In their well-known contribution to the “varieties of capitalism” debate, Peter Hall and David Soskice (2001, Ch. 1) highlight the distinction between a “coordinated market economy” as exemplified by Germany and a “liberal market economy” as exemplified by the United States. Under the heading, “Liberal Market Economies: The American Case”, Hall and Soskice (2001, p. 27), argue:Liberal market economies can secure levels of overall economic performance as high as those of coordinated market economies, but they do so quite differently. In LMEs, firms rely more heavily on market relations to resolve the coordination problems that firms in CMEs address more often via forms of non-market coordination that entail collaboration and strategic interaction. In each of the major spheres of firm endeavor, competitive markets are more robust and there is less institutional support for non-market forms of coordination.