Varieties Of Capitalism Research Articles

Cooperative enterprise at scale: comparative capitalisms and the political economy of ownership

Abstract Under what conditions do cooperatively owned enterprises scale to stand alongside investor-owned firms? This article measures and attempts to explain large cooperatives’ variable prevalence across high-income capitalist democracies. Controlling for other known social, economic and geographic factors, statistical models confirm that state-mediated institutional arrangements, as operationalized through two comparative capitalism frameworks (Varieties of Capitalism and Welfare Regimes), are a significant factor in this variation. Cooperatives scale in a manner that complements arrangements in coordinated market economies, while exhibiting institutional incongruencies with those of liberal market economies and residual welfare states. Public policies which have variously enhanced or inhibited cooperatives’ ability to coordinate to scale are compared across four case countries (United States, France, Finland and New Zealand). Policy differences are shown to reflect the joint effect of state-mediated institutional arrangements alongside other control variables. They reveal how states privilege some ownership forms over others, suggesting a distinct political economy of ownership.

Moving beyond the dichotomy of Hall & Soskice (2001): the State’s Role in economic growth

Varieties of Capitalism (VoC) has broadened the prevalent understanding of market mechanisms, although some criticisms have been raised. Despite extensive research on VoC, few studies have empirically expanded the VoC framework and its relationship with economic growth. In this study, state involvement in the market is additionally considered as an axis, and the “third” type of market economy, in which the state influences the market, is empirically captured. Moreover, this study examines the nonlinearity and dynamic stability of the factors constituting VoC. In the expanded framework, state involvement is a significant positive contributor to economic growth even in developed countries, and it creates synergy when combined with labor relations. Labor protection is also confirmed to work positively for economic growth up to a certain level. This study reflects real economies and empirically supports the discourse on the state’s role in the market for economic growth.

Come In, We’re Open (and Flexible): Trade Openness, Labour Flexibility, and Varieties of Capitalism

AbstractFor decades now, scholars have questioned the influence that international trade has had on labour regimes across the globe. This article seeks to contribute to this body of literature by assessing the relationship between trade openness and labour flexibility across countries while controlling for institutional complementarities and industrial relations values included in the varieties of capitalism (VoC) literature. In parallel, the article’s empirical core assesses the relationship between labour flexibility and trade openness within OECD and Latin American countries. As the empirical sections will highlight, the paper’s examination of the cited bivariate relationship points to a policy convergence toward labour flexibility among OECD countries that were originally considered by the VoC framework. Conversely, in Latin America, the cited relationship exhibits diverging trajectories in policy outcomes, suggesting an influential impact of the ‘pink tide’ that swept across the region at the turn of the century.

In search of developmental capitalism institutions:

How can we explain that some emerging economies grow faster than others? What explains the sustainability of their growth? Not all types of capitalism in emerging markets contribute equally to sustainable growth rates that undergird development. Comparative capitalism research on European economies temporary growth models aims to more properly grasp change in the varieties of capitalism approach. Adoption of the growth models in emerging markets capitalism research requires attention to integration into the global economy and to political coalitions, and the need to deal with the methodological challenges, given high labor market informality and political instability. This article seeks to make sense of changes in the components of successive growth models throughout a path-dependent capitalist variety, expand the growth model analytical framework by testing elements alongside demand (and supply) based on a case study of Brazil, and explore coalitions in economic reform to identify growth model’s social blocs. The article’s results unveil challenges to the employment of existing concepts and analytical framework; the need to build bridges between growth models and the political economy of development; and an exploratory assessment of growth model contributions to Brazil's postwar development. Thereof, in the long term, interest shifts of economic elites between liberal and non-liberal economic regimes suggest a fragility of repeated attempts to form a durable developmental coalition, a process dynamic that frays state-permeated capitalism positive externalities. It concludes that both path dependent developmental institutions, which hinder change, and growth instability limit the possibilities of designing institutional reforms out of the middle-income trap.

Varieties of Capitalism, Environmental Risk and Readiness, and MNCs’ Environmental Performance

The environmental impacts of large multinational companies (MNCs) are attracting increasing scrutiny as the climate crisis intensifies. In this study, we extend prior research that has examined the role of country-level institutions on MNCs’ corporate environmental performance (CEP) by exploring interdependencies between home- and host-country conditions and between institutional and ecological country characteristics. Specifically, we theorize that multinational companies’ home-country Variety of Capitalism (VoC) affects their CEP by shaping firms’ comparative advantages in environmental performance, and by acting as an interpretive schema by which host-country conditions are evaluated and responded to. We test our theoretical propositions using a large sample of 3,994 MNCs headquartered in 72 countries over the time period 2009 to 2018 Findings show that MNCs’ environmental performance is shaped significantly by host-country characteristics, and that MNCs’ home-country VoC also significantly moderates the impacts of host-country influences on MNCs’ CEP. We find that firms’ home country variety of capitalism asymmetrically affects how home- and host-country institutional conditions influence CEP: for CME MNCs, home country institutional readiness complements firm CEP, but host-country institutional readiness substitutes for firm CEP, with the opposite being true for LME MNCs. Thus, add to debates regarding how varieties of capitalism influence forms of pro-social firm behavior by highlighting their asymmetric importance for home and host-country conditions.

Санкции – инструмент мировой политики (монография Л.Е. Гришаевой «Пульс санкций: российский исторический аспект»)

The object of this review is an interesting and politically relevant monographic study by Lidia Evgenievna Grishaeva «The Pulse of Sanctions: the Russian historical aspect». In the monograph, the author proves the politically motivated specifics of Western sanctions against the Russian Federation, an important task of which was to try to achieve competitive economic advantages. In this connection, the author reveals the problem of a cardinal contradiction in the position of the collective West, which publicly declares theses about the free market, but at the same time introduces illegal sanctions that do not correspond to the content and laws of the liberal market economy. At the same time, the author emphasizes that certain goals of causing economic damage to Russia were achieved, although the consequences of the sanctions were also ambiguous. The most original are the author's conclusions about the Russian policy of import substitution, the essence of which the author shows very convincingly, but critically noting that this policy did not fully achieve the originally set goals. The author's historical digression into the formation of the international financial system is very important. It is quite possible to share the author's thoughts about the importance of innovative development of the country, about the objective close relationship between the economy and politics, and ways out of the economic crisis. It is important that the author was able to write about it so clearly and openly. The monograph of L.E. Grishaeva is of interest both from the point of view of studying the history of the issue, and from the point of view of determining the modern role of Russia, understanding its place in the world political and economic system. Tracing the dynamics of the sanctions impact and the methods of their practical application, the author comes to a convincing conclusion about the fundamental ineffectiveness of sanctions measures, if initially the tasks of political transformations are set in the directions necessary for the West in relation to the countries that have become the object of sanctions policy. The monograph by L.E. Grishaeva is undoubtedly of scientific interest and can be used to study Russian history and politics of the XX-XXI centuries, various aspects of international relations, the history of the world economy, the processes of globalization, etc.

Collective bargaining’s contribution to employment skills and transitions: lessons from the Nordic countries

ABSTRACT Major shifts in employment patterns – across sectors, occupations and regions – are a constant feature of modern labour markets. These transitions can occur in more or less humane and efficient ways, depending on whether active policies are leveraged to support workers, employers and industries to adapt to change and take advantage of new opportunities. The imperative to better manage employment transitions is all the more pressing given the necessary shift towards a carbon-neutral, sustainable economy. The very high collective bargaining coverage in Nordic countries contributes to their active labour market policy, proper regulation of employment standards, high-quality investments in skills and innovation, integrated vocational planning, and comprehensive social solidarity. This article will identify how strong collective bargaining in Nordic countries enhances workforce skills, adaptability and innovation, and the lessons from this to improve the more laissez-faire transitions currently occurring in liberal market economies such as Australia.

Corporate social performance (CSP) in time of economic crisis

PurposeThis study aims to compare the different effects of the 2008 economic crisis on companies’ corporate social performance (CSP) in coordinated market economies (CMEs) and liberal market economies (LMEs).Design/methodology/approachThis paper mobilizes a pluralistic theoretical framework that borrows from neo-institutional and corporate governance theories to compare the impacts of the 2008 economic crisis on long-term CSP in an international context. Based on the longitudinal database of Vigeo Eiris (2004–2015), the panel was decomposed between two models of capitalism (LME and CME). For each model, this paper conducted a series of regressions, taking into account the longitudinal nature of the data using estimates based on generalized estimating equations (Liang and Zeger, 1986).FindingsThe paper shows that the economic crisis prompted companies operating in LMEs and CMEs to reorient their corporate social responsibility (CSR) practices in quite different ways during the four-year period that the crisis lasted, as well as the succeeding four-year post-crisis period. While CSR was perceived in LMEs as a threat during the crisis period because of the additional costs it generated, it offered CME companies a way of redefining how they relate to the rest of society, with their goal becoming the creation of greater shared value.Research limitations/implicationsThe results are dependent from the data, and specifically from the Vigeo Eiris database. It would be interesting to extrapol this kind of research with the use of other CSP/environmental, social and governance (ESG) databases as Morgan Stanley Capital International, Sustainalytics or RepRisk, to compare and conclude more globally on tendencies. Another limitation relates to the binary nature of Hall and Soskice’s (2001) typology, with its neo-institutionalist inspiration, that puts Continental European and social-democratic models of capitalism on the same plane.Practical implicationsThis study teaches managers, analysts and policymakers that CSR can be a powerful strategic lever capable of remedying the harmful effects that economic crises have in both LMEs and CMEs, notwithstanding the cultural, socio-economic and political differences between these models of capitalism. Economic and social crises must help companies to rethink and revisit their business models and CSR practices to subsequently implement sustainability strategies more in sync with the values forced upon them by the economic systems to which they belonged but also by all their stakeholders.Social implicationsFrom a managerial standpoint, this study allows practitioners to consider CSR as an opportunity to rethink their strategy and business models in a period of crisis, and no more a threat that could reduce the economic performance in increasing the costs, and thus, the cost of financing.Originality/valueAfter reading the literature on the topic, this paper clearly thinks about the high degree of contribution of the paper, as the topic is not so developed and that the study implies several contributions. First, from a theoretical level, the study differs from previous research studies insofar as it compares the impacts of the economic crisis on companies’ CSP in CMEs and LMEs using a theoretical framework that operationalizes both contractual and neo-institutional theories. Second, from a methodological standpoint, the approach using an ESG data provider known worldwide (Vigeo Eiris) has not been down yet. Third, on a managerial level, the present study teaches managers, analysts and policymakers that CSR can be a powerful strategic lever capable of remedying the harmful effects that economic crises have in both LMEs and CMEs, notwithstanding the cultural, socio-economic and political differences between these models of capitalism.

The Impacts of Oil Prices, Exchange Rate and COVID-19 Pandemic on BIST Petrochemical Market

Stock markets are developing with the economic growth of the countries in a liberal market economy. Petrochemicals is an indicator of the performance of the country's industry with high inter-industry linkage by providing input to several sectors, producing various outputs with a certain number of raw materials. The COVID-19 pandemic period has affected all markets worldwide and caused fluctuations in the index values of large firms in the petrochemical industry in Borsa Istanbul (BIST). This study analyzes the impact of the pandemic period and change in the oil prices and exchange rate on the petrochemical market in Turkey. The monthly data of petrochemical stock market index, exchange rate, oil prices are used in this time series analysis. A pandemic information index representing the COVID-19 pandemic was derived and included in the model. According to the results, it is observed that the most important determinant of the fluctuations on the BIST petrochemical index is the oil prices. While a shock in oil prices negatively affects the BIST petrochemical index, the petrochemical index responds positively to the shock in the pandemic index.

Cooperation for innovation in liberal market economies: STI and DUI innovation modes in SMEs in the United Kingdom

ABSTRACT This study focuses on the collaboration patterns that small firms hold with other agents within liberal market economies and identifies the collaborative drivers that in this context deliver a superior impact on innovation output measured by product and process innovations. To explore this research question, the study combines the literature on innovation systems with a growing literature on business innovation modes that studies whether businesses are driven by science and technology factors (STI), or experience-based factors such as learning-by-doing, by-using and by-interacting (DUI). In the UK liberal market economy, universities and research centres are expected to play a critical role for innovation well beyond the typical impact they produce in coordinated market economies. This hypothesis is largely verified through our empirical evidence. Methodologically, this research is developed through the application of propensity score matching in the context of the UK longitudinal small business survey (LSBS) for 2015.

Our Board, Our Rules: Nonconformity to Global Corporate Governance Norms

What drives organizational nonconformity to global corporate governance norms? Despite the prevalence of such norms and attendant conformity pressures, many firms do not adhere to them. We build on a political view of corporate governance to explore how different national institutional contexts and organizational conditions combine to produce over- and underconformity to global board independence norms. Using configurational analyses and data from banks in OECD countries, we identify multiple equifinal combinations of conditions associated with over- and underconformity. We also find that over- and underconformity have different drivers. We conjecture that while overconformity is associated with a shareholder–management coalition in liberal market economies, underconformity results from multiple complex combinations of national and organizational conditions that often include dominant blockholders, strong labor rights, and small organizational size. We leverage these findings to abduct theoretical insights on nonconformity to global corporate governance norms. Doing so sheds light on the role of power in conditioning the adoption of global practices and contributes to research on international corporate governance by informing discourse surrounding the globalization of markets.

Imposing versus Enacting Commitments for the Long‐Term Energy Transition: Perspectives from the Firm

Imposing versus Enacting Commitments for the Long‐Term Energy Transition: Perspectives from the Firm

In government we trust? Micro-business adaptation to climate change in four post-colonial and transitional economies of China

Public expectations of government influence private action for managing climate change risks. Institutional neglect or incompetence result in a loss of trust in public institutions, consequently discouraging the public from taking added responsibility for risk management. This has been explained in terms of social contract, but evidence suggests that a politics of distrust can reinforce alternative social drivers of action, rather than displacing action. This is empirically confirmed by the present study, which examines the tendencies for adopting private protective measures across a gradient of institutional trust. Surveys were conducted in four jurisdictions within China that operate under two different political-economic systems, namely, Hong Kong and Macao (liberal market economy), and Zhuhai and Sanya (socialist market economy). Structured interviews were conducted with 569 business operators to explore how their stated adaptation practice is related to institutional trust and social capital. We found that trust predicted action only in Sanya, which is characterized by a high level of public confidence in authorities. In places of lower institutional trust, social capital became a salient and powerful driver of action. The weakening of the social contracts in Hong Kong and Macao turned their people to alternative social mechanisms. We explain the results in terms of the development trajectories, socio-political norms and institutional settings of these jurisdictions. This study provides insights into how adaptation practice can be mediated by the consequences of a change in political leadership, policy, or governance arrangements that alters the relationship of trust.

Crisis and Complementarities: A Comparative Political Economy of Economic Policies after COVID-19

We examine economic policy responses to the COVID-19 induced economic collapse in Germany (a coordinated market economy) and the UK (a liberal market economy). The two countries responded to the symmetric economic shock with very similar furlough and business credit schemes to stabilize the demand and supply sides of the economy. However, since these policies fed into very different political-economic structures in both countries, they produced very different results. We attribute this divergence to the effect of “institutional complementarities,” the notion in Varieties of Capitalism that different elements of a system are mutually articulated and, therefore, mutually reinforcing beyond their initial contribution, or vice versa. Our results serve as a cautionary tale to policymakers that introducing policy elements developed in other institutional contexts is complex and challenge us to consider systematically the way in which institutional frameworks actively shape policy outcomes.

Elephant limps, but jaguar stumbles: Unpacking the divergence of state capitalism in Brazil and India through theories of capitalist diversity

While growth in India stayed relatively stable over the last decade, Brazil fell into deep recession and a fundamental political and economic crisis. Why did these two countries, despite their similarities, diverge so massively within only 10 years? Through a paired comparison, this article probes two alternative approaches to capitalist diversity to explain the divergence among two rising economic powers and ‘state capitalisms’. It finds that through the lens of a firm-centred supply-side approach, one largely sees institutional stability in both economies, while a focus on the demand side and respective growth models makes visible fundamental destabilization in Brazil. The fragility of domestic demand, the vulnerability of global economic integration and the erosion of key social coalitions, we contend, are key to unpack the divergence between Brazil and India. This study thereby not only sheds a new light on emerging market capitalism but also discusses further possibilities for the analysis of state capitalism within comparative political economy.

How Firms Communicate Their Social Roles through Corporate Social Responsibility, Corporate Citizenship, and Corporate Sustainability: An Institutional Comparative Analysis of Firms’ Social Reports

ABSTRACT Drawing on institutional theory and the varieties of capitalism framework, this content analysis investigated how firms communicate their social roles through the concepts of corporate social responsibility (CSR), corporate citizenship (CC), and corporate sustainability (CS) in their social reports. First, the salience of the six social themes of labor, business ethics, community, environment, business behavior, and economic responsibility were investigated, followed by cross-national differences in liberal market economies (LMEs: US, UK), coordinated market economies (CMEs: Germany, Japan), and state-led market economies (SLMEs: France and South Korea). Contrary to previous conceptualizations, the economic responsibility theme was more salient when CS was adopted in the titles of firms’ social reports than CSR, and the three non-economic social themes of business ethics, community, and business behavior were not less salient when CSR was adopted. Comparatively, CSR was less adopted in SLMEs, CC was more adopted in LMEs, and CS was less adopted in LMEs. Theoretically, firms’ social roles were distinctly communicated and institutionalized through CSR, CC, and CS, with clear comparative differences. Practically, firms can more strategically signal compliance to institutional conditions about firms’ social roles in different market economies, and influence how firms’ social roles are communicatively institutionalized, by considering these concepts.

Trade Liberalization and Labor Market Institutions

AbstractWhile the firm-level distributional consequences of market liberalization are well understood, previous studies have paid only limited attention to how variations in domestic institutions across countries affect the winners and losers from opening up to trade. We argue that the presence of coordinated wage-bargaining institutions, which impose a ceiling on wage increases, and state-subsidized vocational training, which creates a large supply of highly skilled workers, generate labor market frictions. Upward wage rigidity, in particular, helps smaller firms weather the rising competition and increasing labor costs triggered by trade liberalization. We test this hypothesis using a firm-level data set of European Union countries, which includes more than 800,000 manufacturing firms between 2003 and 2014. We find that, for productive firms, gains from trade are 20 percent larger in countries with liberal market economies than they are in coordinated market economies. Symmetrically, less productive firms in coordinated market economies experience significantly smaller revenue losses compared to liberal market economies. We show that both the presence of an institutionalized wage ceiling and the availability of subsidized vocational training are key mechanisms for reducing the reallocation of revenue from unproductive to productive firms in coordinated market economies compared to liberal market economies. In line with our theory, we find that wages and employment in liberalized industries increase differentially across both types of labor markets. Finally, we provide suggestive evidence that trade liberalization triggers a differential demand for redistribution at the individual level across different labor markets, which is in line with our firm-level analysis.

Business-government relations and national economic models: A review and future research directions in varieties of capitalism and beyond

This special issue complements and extends existing work in business history to show how the discipline can contribute to the Varieties of Capitalism (VoC) literature. The work in this collection delves deeper into our understanding of how VoC emerge and continue through the prism of business-government relations as the two principal actors in capitalist development. The focus of much of the existing canon on varieties of capitalism is centred on aggregated models of institutional environments. We take the cue from emerging work on the state and business in business history then to consider what this means for VoC, and to what end. In doing so, this collection bridges a number of different literatures, including those in business and economic history, economics, development studies, political economy and political science, to consider how ‘varieties of capitalism’ (VoC) shape, and are structured by, government-business relations over time.

Explaining economic growth in advanced capitalist democracies: varieties of capitalism and welfare production regimes

Why do some advanced capitalist democracies experience relatively higher economic growth rates? In this paper, it is argued that complementarities between varieties of coordination and systems of social protection can help explain differences in long-run economic performance. Testing the explanatory power of the original varieties of capitalism (VoC) model and the welfare production regime (WPR) model, the article finds that long-run economic growth is conditioned by the extent to which systems of social protection are complementary to varieties of coordination. Using time-series cross-section data on 17 OECD countries from 1974 to 2009, the article finds strong support for the hypothesis that coordinated market economies with decommodified welfare states achieve relatively higher economic growth rates in the long run. The WPR model moreover seems better at explaining economic growth compared with the classical VoC model. The welfare state is therefore argued to be crucial in understanding the economic effects of varieties of coordination.

Social and strategic innovation: extending the varieties of capitalism to asian countries

This article empirically analyzes how institutional context affects the nature of firms´ innovation—social and/or strategic—using the varieties of capitalism paradigm extended to include Asian economies. Because formal and informal institutional pressures shape the way firms behave in terms of risk-taking and opportunity-detection, it can be expected that institutional context influences the nature of innovation. An empirical analysis using a sample of 603 small- and medium-sized innovative enterprises is developed to provide a comprehensive view of how the institutional context in which a company operates determines the nature of firms´ innovation. A cross-country-cluster comparison is made using analysis of variance among Asian economies, coordinated market economies, liberal market economies, and mixed market economies. The results show that the high degree of public involvement and institutional support that characterize coordinated market economies and the normative pressures that characterize Asian economies fosters firms´ involvement with social innovation. These empirical findings support the theoretical arguments that point to institutional context as an important determinant of the nature of firms´ innovation.