Coordinated Market Economies Research Articles

The institutional dimension of the inequality–corruption nexus: A varieties of capitalism assessment

AbstractAre unequal societies prone to the abuse of economic power to influence political decisions for private gains? We investigate how changes in inequality affect changes in corruption, controlling for comparative political economy factors. Our varieties of capitalism (VoC) approach explains corruption trends from an institutional viewpoint: liberal market economies (LMEs) exhibit lower corruption despite having high inequality. Coordinated market economies exhibit lower inequality but higher corruption, while state‐led non‐liberal economies have low inequality despite showing a range of degrees of corruption. Resource exporting economies show high corruption as well as inequality, akin to developing countries despite having higher national incomes. The relationship between changes in inequality and corruption diverges between the different VoC: strongly positive in coordinated and state‐led market economies, of an unclear sign in resource‐exporting economies, weak in resource‐poor developing countries, and downright negative in LMEs. Institutions are thus critical mediators of the socioeconomics of corruption.

How does market competition affect the reporting of sustainability practices? Insights from the UK and Germany

PurposeThis study tests the proprietary cost of reporting sustainability practices. It explores how market competition impacts the reporting of corporate sustainability information. Further, it examines whether the influence of market competition on sustainability reporting is affected by firm size.Design/methodology/approachIt uses two samples of the UK FTSE 350 and German Frankfurt CDAX nonfinancial firms from 2010 to 2023. The sustainability reporting scores for UK and German firms are their Environmental, Social and Governance (ESG) disclosure scores based on the Bloomberg disclosure index. The Herfindahl–Hirschman index has been utilized to measure a firm’s degree of market competition.FindingsThe results reveal that reporting sustainability practices is a negative function of the degree of market competition. Specifically, companies in highly competitive industries disclose less information about their sustainability practices, suggesting that firms view sustainability reporting as a potential source of competitive disadvantage and, therefore, choose to limit such disclosures to maintain a strategic advantage over rivals. Further, the findings reveal a negative impact of market competition on sustainability reporting among small firms. However, this effect is weak or absent among medium and large firms. The results are more observable in the liberal market economy (i.e. the UK) than in the coordinated market economy (i.e. Germany).Practical implicationsIt provides implications for policymakers and market participants to advocate for more significant policies that promote transparency and encourage companies to report their sustainability practices and performance, especially companies in highly competitive industries.Originality/valueIt provides the first evidence of how market competition influences corporate sustainability reporting, adding a deeper insight into another non-financial dimension of sustainability reporting. Likewise, it reflects the varying priorities of companies of different sizes in managing both competition and sustainability reporting. Besides, it is the first to explore this nexus in two distinct jurisdictions: the UK and Germany.

Strategic coupling beyond borders: Germany’s extraterritorial agency in Namibia’s green hydrogen industry

Abstract Amidst increasing geopolitical threats, geo-economic competition, and climate change concerns, this article reflects on why and how states alter strategic coupling processes abroad. Scrutinizing Germany’s involvement in Namibia’s green hydrogen industry, we conceptualize the decarbonization rationale as a state project that drives extraterritorial agency. Extraterritorial institutions accompany private enterprises with public institutional support, thus leading to three mechanisms through which extraterritorial agency shapes strategic coupling dynamics abroad: extraterritorial de-risking, extraterritorial asset creation, and market creation. We show that, even in liberal and coordinated market economies, states develop extraterritorial strategies to align global production networks with their strategic goals.

Partial organization and economic coordination: The gradual re-organization of Finnish corporatism

Comparative political economy (CPE) scholarship has drawn various insights from organization theory throughout its existence. Organization theory has made more progress than CPE to explicate the organizational processes behind institutional change. In this paper, we draw on theory of partial organization to describe, interpret, and explain change in the coordination of one Coordinated Market Economy: Finland. We show that Finnish corporatism has become gradually re-organized during the last three decades. We argue that the structural and membership dynamics of partial organization explain some key patterns as well as the shape and timing of institutional change in the face of a changing constellation of economic interests. We argue that theory of partial organization complements the interest-based and institutional explanations of change in economic coordination.

Disaggregating the liberal market economies: Institutions and HRM

It has been argued that the different ways human resource management is conducted in different countries can be at least partly explained by theories of comparative capitalisms. Earlier work has highlighted much diversity between coordinated market economies, but the liberal markets are commonly assumed to represent a more coherent category. This article scrutinizes the latter assumption more closely by examining differences between the liberal market economies in their approaches to HRM. The authors find that the USA displays greater centralization in human resource management practices, higher turnover rates and less delegation to employees, than in the UK and Australia; this being associated with differences in institutional realities. The study highlights how, under a broad institutional archetype, specific systemic features may exert strong effects on specific HRM practices and challenges assumptions of close institutional coupling in the most advanced economies.

Liberal and illiberal industrial policy in the EU: the political economy of building the EV battery value chain in Sweden and Hungary

In the context of an increasingly ambitious European Union (EU) industrial policy and the transition to electromobility, the main objective of the article is to uncover the interaction between the supranational level and domestic policies through examining the buildup of the electric vehicle (EV) battery value chain in illiberal Hungary and liberal Sweden. The study analyses these diverse cases through the lenses of comparative political economy. How do European industrial policy objectives translate into national policies under widely different political conditions? How do the different translations impact on the original objectives of EU policy? Through using a structured-focused comparison, the paper argues that the building of the EV battery industry implies the entrenchment of existing models of capitalism in both cases. Liberal democracy is only compatible with the coordinated market economy model of Sweden, while in Hungary the illiberal regime and the dependent market economy model reinforce one another in face of growing public recognition of the disadvantages of dependency—misallocation of resources, environmental damage, and limits to upgrading. EU strategic objectives are served only by the Swedish model, while the Hungarian model leads to deepening institutional cleavages within the EU and implies growing dependence on Russia and China.

The difference that the institutional environment makes: Leveraging coordination to balance platform dominance, mutuality and autonomy in geographically fragmented hospitality labour markets

It has been argued that digital platform firms leverage their position at spatial bottlenecks in such a fashion so as to allow operations in local labour markets while at the same time insulating themselves from the regulatory provisions that govern those local markets. This is not necessarily a stable condition, but as long as platform firms exert power, they may shift the social relationships that platforms embody in their favour: domination trumps mutuality and autonomy. However, this does not have to be so. Depending on the context, opportunities for breaking out of this mould exist. Specifically, we focus on the institutional context provided by coordinated market economies to argue that, depending on pre-existing forms of cooperation, platforms can be designed and applied in a manner that enables the building and maintenance of trust through an emphasis on mutuality and autonomy rather than inevitably drifting towards the pole of domination. Using the example of the hospitality industry and focusing on training and certification in geographically fragmented labour markets, we set out to explore the possible role of the institutional setting in shaping platform use as recruitment needs are to be resolved.

Unlocking sustainable governance: The role of women at the corporate apex

AbstractThis study explores the intra‐organizational antecedents of sustainable governance by examining the impact of female presence at the corporate apex. Drawing upon the upper echelon theory, we investigate whether women in top positions influence sustainable governance practices. Our research focuses on a sample of companies operating within two distinct market economies: liberal market economies (LMEs) and coordinated market economies (CMEs). The United States, represented by the S&P100, and the United Kingdom, represented by the FTSE100, serve as examples of LMEs. Conversely, Germany (DAX30), France (CAC40), Spain (IBEX35), and Switzerland (SMI) are illustrative of CMEs. Analyzing archival data spanning from 2010 to 2019, we confirm that the presence of a critical mass of women on the board of directors significantly increases the likelihood of establishing a sustainability committee within organizations. This relationship holds true across both LMEs and CMEs, highlighting the universal importance of gender diversity in driving sustainable governance initiatives. Interestingly, we observe that the impact of women with structural power on sustainability committee formation is specific to LMEs, suggesting the context‐dependent nature of female leadership in sustainable governance.

What types of social policies does business want? Examining German employer associations’ positions toward labor-protective and labor-activating social policies

AbstractStudies inspired by the varieties of capitalism (VoC) approach suggest that in coordinated market economies, some employer associations support public social policies to encourage the workforce to invest in company and industry-specific skills (VoC thesis). Yet the VoC thesis remains disputed. We present and assess an alternative thesis that builds on employers’ interest in the protection of labor supply (labor supply thesis). We test the labor supply thesis using a systematic content analysis of 370 press releases issued from 2002 to 2017 and find evidence of moderate employer support for more labor-activating social policies and less labor-protective social policies. Moreover, the analysis shows a decline in preference heterogeneity, with the positions of the four German employer associations converging toward the end of the period analyzed. Our findings have theoretical and methodological implications: First, they point to the relevance of labor supply as a source of employers’ social policy preferences. Second, they point to the need for a more systematic measurement of employer policy positions to be able to compare positions accurately.

한국 기업의 ESG 심화를 위한 NGO의 과제

This paper examines the role NGOs play for strenthening ESG in Korean business enterprises. In a global polycrisis, ESG is imperative for companies to adhere to carbon neutrality for future survival. I compare shareholder capitalism and stakeholder capitalism within the analytic framework of political representation system and interest intermediation system. Shareholder capitalism is grounded on free market economy where the state incorporates different group interests based on social pluralism. It is, by and large, characterized by local constituencies within the presidential system. In contrast, stakeholder capitalism runs on coordinated market economy where the relationship between the state and society can be seen as social corporatism. It is usually marked by proportional representation under the parliamentary system. This is one of the reasons why Anglo-Saxon shareholder capitalism needs ESG unlike the European stakeholder capitalism with ESG already embedded. There is a limit to ESG propelled by Korean companies. The most important reason is the fact that business enterprises are not ready to adopt stakeholder capitalism. Although Korean NGOs fall behind business enterprises in many capacities including resources and organization, the latters need to be monitored by the former that enlightens civil society for the understanding of the advantages of stakeholder capitalism. In conclusion, I propose a “critical cooperation” between NGOs and business enterprises for consolidating ESG.

Signalling through accountability reporting for family firms: Does the institutional environment matter?

ABSTRACT This study investigates three possible explanations of the link between Corporate Social Responsibility (CSR) expenditures and future financial performance for family firms: (i) CSR is an investment leading to better future financial performance, (ii) it is a form of firms’ charity, or (iii) it is undertaken when anticipating stronger future financial performance. It also examines whether the institutional environments have effects on this association. We show that family firms in coordinated market economies are characterised by stronger stakeholder relationship and CSR expenditures are undertaken in the current period to legitimate the business operations, as CSR will be financially rewarded in the future. However, firms in liberal market economies are motived by shareholder view to protect investors’ interests and avoid uncertainty and risks, and CSR expenditures are undertaken by linking them to anticipated future corporate performance, hereby corporate accountability reporting can assist outsiders to infer insiders’ private information about future financial prospects.

Skill redefinition and classification, capitalism, and labour process theory of work: evidence from Thailand

Skill redefinition and classification, capitalism, and labour process theory of work: evidence from Thailand

Institutional constellations and policy instruments for offshore wind power around the North sea

This paper analyses how institutional constellations and their associated mode of risk allocation are reflected in the choice of policy instruments for the promotion of offshore wind power. Using the Varieties of Capitalism framework we expect that governments in Liberal Market Economies (LME) tend to use policy instruments that privatise investments and risk-taking, while those in Coordinated Market Economies (CME) use policy instruments that facilitate investments and shared risk-taking in the earlier, more riskful phase of technological development. We test our expectations through a longitudinal comparative analysis of the use of policy instruments and the deployment of offshore wind power in Denmark, the United Kingdom, Germany and the Netherlands between 1990 and 2020.Our results confirm the market oriented nature of policy instruments employed by the LME case of the United Kingdom throughout, while we witness initially lower levels of market orientation among the CME cases of Germany, Denmark and the Netherlands. Though the market orientation of Germany's policy instruments declined half way to build up domestic momentum, we generally see an increased use of market oriented policy instruments over time by the CME. Putting the trajectories together we witness an overall convergence in the use of policy instruments which we attribute to the liberalisation of the energy sector in the EU as well as to policy-learning effects. The results have generic relevance and can also be used to inform future national strategies and policies for deploying new low-carbon technologies, such as electrolysis for green hydrogen, which face similar risks and challenges.

A comparative study of eight European countries: how life course events affect female migrant labour market integration under the perspective of welfare and production regimes

AbstractThis article analyses how life course events including education, citizenship, marriage status and having children would affect female migrant labour market integration. This is put in terms of employment status and job quality under the perspective of welfare and production regimes. To investigate different institutional effects, countries representative of these regimes’ typologies, such as the UK and Ireland for liberal market economies/liberal welfare states, Denmark, Finland, Norway and Sweden for coordinated market economies (CME)/social democratic welfare states, alongside Germany and France for CME/conservative welfare states, were employed. European Social Survey data are adopted within a linear probability model, alongside a nested model aggregating life course events. Through these, migrant penalty is analysed regarding labour market outcomes with respect to natives. Among the life course events, education and citizenship acquisition showed a particularly strong impact on migrant penalty, while marriage and having a child did not significantly affect migrant penalty.

Corporate social responsibility and comparative capitalism frameworks: Evidence from the United States, Poland, and Italy

AbstractUsing the varieties of capitalism perspective and institutional theory as frameworks, we analyze cross‐cultural differences between firms' corporate social responsibility (CSR) approaches. We investigate three countries with different institutional settings: the United States, representing a liberal market economy; Italy, representing a coordinated market economy; and Poland, an example of a dependent market economy. We examine the differences in their CSR stances, operationalized through Porter and Kramer's concept of the four CSR categories: good citizenship, mitigating harm from the value chain, transforming value chain activities, and strategic philanthropy, based on data from 269 questionnaires administered to managers attending executive seminars at the authors' universities. Focusing on stakeholder engagement activities (SEAs) across the three economies, we show that companies in all three countries engage in the four categories of CSR activities. However, using a series of tests and rankings on means and standard deviations, followed by the subsequent analysis of variance, we argue that SEAs are emphasized more in American than in Polish and Italian companies, with the latter two countries showing more subtle differences despite some institutional similarities. Our results shed light on how different capitalistic models are associated with different CSR approaches, allowing policy‐makers and practitioners to better tackle CSR objectives in different countries.

East Asian Varieties of Capitalism and Socio-Economic Inequality: South Korea and Hong Kong Compared

This article examines the deepening of socio-economic inequality manifested as dualisation in South Korea and deregulation in Hong Kong. It explains the extreme manifestations of inequality by reference to the nature of economic co-ordination, organised labour power and societal corporatism, and the politics of democratisation. It finds that South Korea’s legacy of state-orchestrated co-ordinated market economy favoured the retention of a manufacturing core despite globalisation. However, the neo-liberal inclinations of the state and big business groups led to the marginalisation of less privileged firms and workers. These inclinations reinforced the defensiveness of the small but strong labour organisations, preventing effective societal corporatism. These phenomena are fully understandable only with reference to the country’s conservative democratisation that divided the liberal and left political forces. The geo-political legacy also induced identity conflicts that overshadowed socio-economic issues. By contrast, Hong Kong’s liberal market economy coupled with the absence of security concern had allowed a radical de-industrialisation in the 1990s and wholesale casualisation in the 2000s. Divided by identity politics, organised labour was unable to challenge the trend. The same conflicts also led pro-China labour organisations to side with business interests in the post-1997 electoral autocracy and prevented the introduction of more fundamental reforms.

Exploring the Mirror versus Substitute Dichotomy in Social and Environmental Disclosure

Much of the debate over how the institutional context can shape corporate social responsibility (CSR) is focused on the dichotomy between liberal and coordinated markets drawn from Varieties of Capitalism. CSR in liberal market economies (LMEs) is seen as a substitute for institutional voids and relies on market incentives, while in coordinated market economies (CMEs), such practices are seen as a mirror of their institutional strengths and rely on stakeholders' networks. Recently, this view has been criticized for its neglect of developing countries since their CSR practices may not fit properly into this LME-CME dichotomy. We add to this debate by comparing the social and environmental disclosure practices of 86 companies from eight different countries: Australia, Brazil, Canada, Germany, India, South Africa, South Korea, and the United Kingdom. We show how institutional characteristics have different effects on social and environmental disclosure, depending on the context in which companies are operating. We show that social and environmental disclosure in LME countries is driven by market forces and is shareholder-oriented, while in CME countries, it is driven by regulatory provisions. Regarding developing countries, the inclusion of different institutional features may be required to better explain companies' social and environmental disclosure practices

Corporate social responsibility disclosure: a topic-based approach

In this study, we investigate the potential differences in topic-specific corporate social responsibility (CSR) disclosure between companies located in liberal market economies (LMEs) and coordinated market economies (CMEs). We also examine the potential convergence of the reporting practices that characterise these two economies over time. We analyse a sample of 5,939 CSR reports issued by European and U.S. firms over 2008–2019. We use textual analysis to examine how explicitly such reports address specific CSR topics. Following Matten and Moon (2008), we focus on three thematic areas: ‘human resources’, ‘environmental protection’, and ‘society at large’. Each area comprises three distinct topics. Our results show that companies operating in LMEs report more explicitly on these thematic areas, with one exception: those operating in CMEs report more explicitly on parental policies. Additionally, the reporting practices of companies operating in these two types of economies converge for most of the topics under study. For the disclosure of parental leave policies, biodiversity, and waste, no distinct trend is observable.

The power of the economic outlook: An ideational explanation of the distinct pattern of Finnish wage setting within the Nordic context

Industrial relations scholars are paying increasing attention to the role of ideas in explaining shifts in bargaining systems and wage policies. This article contributes to this growing body of literature by conducting a meso-level analysis of the uses and impacts of ideas in wage regulation policy processes in coordinated market economies. Through our in-depth case study of the Finnish policy process leading to the Competitiveness Pact of 2016, we argue that certain ideas – which we call the ‘economic outlook’ – prescribed and legitimized exhausting institutional resources in wage regulation and enabled temporary consensus among divergent interests regarding wage policy. The economic outlook linked and enabled compromises between wage policy and wage regulation interests and effectively solidified a commitment to an uncertain policy process. The case study suggests that an ideational analysis of policy processes can offer explanations for shifts in wage policy and regulation that deviate from macro-level regime shifts. While all Nordic countries have faced similar economic and institutional reform pressures, Finland’s readoption of centralized bargaining shows that national policy ideas can drive distinct industrial relations patterns within the Nordic context.

Contesting the politics of neoliberal resilience: regional labour market resilience from a workers’ perspective

ABSTRACT The concept of resilience has been captured by a neoliberal discourse displacing responsibility to individuals and regions. This article specifically examines the regional labour market resilience of workers and other regional stakeholders relating to an ongoing economic restructuring process of deindustrialization and redundancies in Anglesey, North West Wales, in the UK. Using 11 years of longitudinal qualitative research, we provide an empirical narrative that applies a labour market resilience framework (challenge, context, responses and outcomes) from a workers’ perspective. It connects the empirical findings from this critical case study to broader generalizability for regional studies and regional policy implications. Regarding generalizability to regional studies theory, the labour market resilience of workers is impacted at different but interlinking levels: the global systemic level of neo-liberal capitalism; the national country level of institutional varieties of capitalism (liberal market economies versus coordinated market economies); and regional variations across countries.