Varieties Of Capitalism Approach Research Articles

Post-Keynesian Financialised growth models as an alternative to Varieties of Capitalism: (in)stability, institutions and taxonomic method

This article evaluates the potential of the Post-Keynesian literature on growth models to gain influence over the Varieties of Capitalism approach within Comparative Political Economy. It shows that the future analytical strength of the latter approach depends, primarily, on the ability to consolidate macroeconomic principles consistent with a dynamic reality. On the other hand, Post-Keynesian macroeconomic foundations allow financialised growth models to capture the importance of power struggles in long-term growth as well as to integrate crises as recurrent and inherent phenomena to capitalist economies. That said, Post-Keynesian challenge to become a beacon within CPE lies on moving beyond country-based analyses towards the construction of a systematic association between, on the one hand, the institutional aspects shared between countries and, on the other hand, their classification on growth models.

A tale of housing cycles and fiscal policy, not competitiveness. Growth drivers in Southern Europe

ABSTRACT Southern European countries are widely considered a distinct type of capitalism, but they have experienced a varied growth performance, both over time and across countries. This paper investigates the growth drivers in southern Europe since the mid-1990s. We consider a broad set of potential growth drivers derived from the literature on Mediterranean capitalism and Comparative Political Economy more broadly. On the demand side, these include the role of house prices (as the main financial variable; highlighted in parts of the growth models approach); the ‘financial curse’ hypothesis (which posits that financial inflows caused house price booms and crowded out manufacturing activities); and Keynesian arguments on the impact of fiscal policy. On the supply side, these encompass the cost competitiveness argument (consistent with mainstream economics and the Varieties of Capitalism approach), research-led technological change; and neo-structuralist arguments regarding the productive capacity. We find strong evidence for the growth contributions of house prices and fiscal policy. While these findings are generally supportive of extant analysis of these economies as finance-led rather than export-led, they call for a more serious integration of house prices in growth model analysis and for a more systematic analysis of the growth impact of fiscal policy.

Hidden Threats and Overlooked Solutions: Unnoticed Risks and Firm Action in Latin America

Work on institutional distance has documented a number of challenges that multinational corporations face when they begin operations in distant countries. Although it has also focused principally on how socio-political risks generated by the difficulties can be mitigated by political ties, the manners in which local firms address these problems has been overlooked. At the same time, scholars in this field have not fully documented the array of socio-political challenges firms face. The field of international business needs theories that go beyond those based on new institutional economics to discover new sources of risk and how they are mitigated. I argue that the varieties of capitalism approach provides the proper framework for undertaking this type of work. I use this approach to examine how an Argentine multilatina developed a network organizational structure that effectively mitigated these risks in inter-firm relations and finance in Argentina and failed to mitigate such risks in the areas of inter-firm relations and employee relations in Brazil. I also coin the term indigenous assets to describe the type of knowledge MNEs need to acquire before entering new countries. This article concludes by explaining the relevance of its findings for theory and praxis.

Governance Trends among New EU Member States: Is There Institutional Convergence?

The main objective of this paper is to explore the institutional convergence of Central and Eastern European Union member countries as a possible consequence of both the transfer of selected Western formal institutions to those countries and the adoption of acquis communautaire. This issue dates back to the beginning of the 1990s when the predominant expectation was that the successful formal institutions in Western countries would yield the same results in transition countries. In the meantime, mainly because of informal constraints, this has shown to be a misconception in most cases. The methodology used in the paper is twofold. First, by means of descriptive statistics, and using the varieties of capitalism approach, we show that, when analysing institutional quality using the Worldwide Governance Indicators (WGI), there are two divergent groups of EU countries. The first group consists of Liberal, Nordic, and Continental countries, and the second consists of Mediterranean and CEE member states that are further divided into liberal and coordinated market economies. Second, based on the calculation of the σ- and unconditional β-convergence of governance trends in the period 1996–2019, we empirically confirm that there are also variations within the CEE countries as well as within the specific dimensions of governance.

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 flexibilisation? The working lives of information and communications technology professionals in the United Kingdom and Germany

AbstractOne feature of ‘flexibilisation’ concerns the growth of more individualised employment arrangements and career trajectories less connected to employing organisations. Informed by the Varieties of Capitalism approach, which emphasises the embeddedness of employment practices within discrete types of capitalist market economy, and based on rich qualitative data from interviews with 32 self‐employed and directly employed ICT professionals in the United Kingdom and Germany, we investigate comparative variation in their experience of flexibilisation. The research findings not only indicate some commonality, particularly in respect of perceptions of independence, but also highlight notable differences with regard to work pressures and insecurity. The paper advances theory by characterising two discrete varieties of flexibilisation, a ‘liberalised’ form evident in the United Kingdom and a more ‘regulated’ type apparent in Germany, contributing to a better understanding of comparative differences in flexibilisation.

Varieties of Capitalism and labour market opportunities for the youth

In this study, we examine the extent to which socio-economic institutions shape young people’s perceptions of labour market opportunity structures and their employment attitudes (i.e. skills and retraining). Building on the varieties of capitalism approach, we expect young people (aged 18–35) in coordinated market economies (CMEs) with encompassing welfare states to regard firm- and industry-specific skills as more important than their peers in liberal market economies (LMEs). To assess this proposition, we draw on original survey data and compare young people’s employment attitudes in five European countries: the United Kingdom (UK), which represents a typical liberal market economy, and Austria, Denmark, Germany and Switzerland as representatives of coordinated market economies. To what extent do different training regimes in CMEs and LMEs shape individual attitudes towards skill formation? The empirical analysis shows that young people’s attitudes with regard to the specificity of skills and the willingness to undertake retraining differ systematically between CME and LME countries and supports our argument that the specific socio-economic institutions matter.

Varying degrees of boundarylessness? The careers of self-employed and directly employed ICT professionals in the UK and Germany

Despite growing interest in the influence of social and institutional settings on the nature of career trajectories, research into comparative differences in boundaryless careers is scarce. Informed by the Varieties of Capitalism approach, which emphasizes the embeddedness of employment practices within discrete types of capitalist market economy, and based on rich qualitative data from in-depth interviews with 32 self-employed and directly employed information and communications (ICT) professionals based in the UK and Germany, we investigate variation in their experience of, and attitudes towards, boundaryless careers. The research findings provide scant evidence that ICT professionals embrace boundaryless careers, despite working in a sector where positive engagement with boundarylessness, if it is going to be found anywhere, should be evident. The findings also point to cross-national differences; directly employed ICT professionals based in Germany are more concerned about the insecurity than their UK-based counterparts. In highlighting the complex and subtle influences on how boundaryless careers are experienced and understood, the research builds on existing work which both attests to the importance of context in influencing boundarylessness and its consequences and questions an overly crude distinction between ‘bounded’ and ‘boundaryless’ careers, to emphasize the value of an approach which is concerned with understanding comparative variation in the degree of career boundarylessness.

Skill Specificity of Upper-Secondary Training Occupations and the Gender Pay Gap

Gender disparities in wages are still fairly large. On average, women earn less than men from the beginning of their careers. This article investigates whether young men and women with vocational education and training receive different returns for occupation-specific and general skills, a topic that has hitherto received little attention. Theoretically, we draw on a culturalist approach, as well as on the varieties of capitalism approach. The analyses are based on a combination of detailed occupation-level data on the specificity of training occupations and individual-level data from the Swiss Labour Force Survey on the incomes of upper-secondary vocational diploma holders. The results of multilevel regression models show that men’s and women’s incomes are affected by a complex interplay between gender and skill endowment. Occupation-specific vocational skills only secure a high income early in the careers of men who trained in male-typed or gender-neutral occupations. Women profit from a high proportion of general knowledge in their training. Furthermore, we find evidence for a general devaluation of female-typed skills. In sum, the findings suggest that employers’ discriminatory remuneration practices, a general devaluation of female-typed skills and young people’s rational skill investment decisions contribute jointly to the gender gap in income.

Useful drawers or oversimplification? Realm and aptitude of the Varieties of Capitalism approach in international comparison of investment patterns in vocational adult education

ABSTRACT In international comparative research on adult education, typologies such as the ‘Varieties of Capitalism’ approach are applied frequently to justify country-based research designs, or to frame research results. However, the advantage of typologies in reducing institutional complexity becomes a drawback when it comes to explain variations between countries. This contribution argues that the realm of such typologies is limited in its power to explain cross-country differences in participation and the institutionalisation of adult education, due to specific mechanisms that connect the macro and micro levels. We demonstrate this by analysing investment patterns of vocational adult education (V-AET) in seven selected countries (France, Germany, Lithuania, Latvia, Norway, Spain, UK). We first generate country descriptions of financial modes of V-AET from the institutional perspective using a document analysis and then analyse investment patterns in V-AET from the individual perspective by a secondary analysis with monitoring data. Referring our results back to the Varieties-of-Capitalism-Approach and extracted country-specific information, we show that in-depth analyses of country features are necessary to ‘bridge’ between assumptions of ‘grand typologies’ and monitoring results, to answer specific research questions and guide evidence-based policy decisions on the setup of V-AET in different countries.

Institutional misalignment and cost of doing business abroad: a varieties of capitalism approach

Cost of Doing Business Abroad (CDBA) and the variety of causes leading to this phenomenon have remained an important research stream in International Business. In this paper, we set forth a new perspective on the CDBA by incorporating institutional misalignment between the home and the host country as a component of the CDBA. Through the lens of Varieties of Capitalism from political economics, we develop an integrated set of propositions to describe why and how institutional misalignment can create additional cost for multinational enterprises (MNEs). Specifically, we discuss how the differences in institutional configurations between the home and the host country create institutional misalignment. Furthermore, we theorise why institutional misalignment is inevitable as MNEs cross national borders and how this creates additional economic as well as social costs for MNEs.

Institutional misalignment and cost of doing business abroad: a Varieties of Capitalism approach

Cost of Doing Business Abroad (CDBA) and the variety of causes leading to this phenomenon have remained an important research stream in International Business. In this paper, we set forth a new perspective on the CDBA by incorporating institutional misalignment between the home and the host country as a component of the CDBA. Through the lens of Varieties of Capitalism from political economics, we develop an integrated set of propositions to describe why and how institutional misalignment can create additional cost for multinational enterprises (MNEs). Specifically, we discuss how the differences in institutional configurations between the home and the host country create institutional misalignment. Furthermore, we theorise why institutional misalignment is inevitable as MNEs cross national borders and how this creates additional economic as well as social costs for MNEs.

Still Seeking Coordination? Assessing German Employers’ Interests in the Digitalized Social Market Economy

AbstractDo German employers in metal and electrical (M+E) sector stillwantto support core institutions of a coordinated market economy, andare capableof doing so? Based on evidence collected in a series of expert interviews conducted in 2017 and 2018 with employers’ associations, we argue that social partnership, collective bargaining, and strategic coordination via organizations are still part of the preferredmodus operandiof these employers. Moreover, we argue that new forms of associational membership that enable firm-based, yet often collective, solutions, which have stabilized rather than eroded the organizational capacity of employers’ associations. As such, we provide supportive evidence for several core premises associated with the Varieties of Capitalism approach. Yet we also identify trends toward more flexibilization, decentralization, and systemic volatility in this system, as many small and medium-sized enterprises, especially in East Germany, remain without any associational membership.

Business Against Markets: Employer Resistance to Collective Bargaining Liberalization During the Eurozone Crisis

Employer organizations have been presented as strong promoters of the liberalization of industrial relations in Europe. This article, in contrast, argues that the preferences of employers vis-à-vis liberalization are heterogeneous and documents how employer organizations in Spain, Italy, and Portugal have resisted state-led reforms to liberalize collective bargaining during the Euro crisis. It shows that the dominance of small firms in the economies of these countries make employer organizations supportive of selective aspects of sectoral bargaining and state regulation. Encompassing sectoral bargaining is important for small firms for three reasons: it limits industrial conflict, reduces transaction costs related to wage-bargaining, and ensures that member firms are not undercut by rivals offering lower wages and employment conditions. Furthermore, the maintenance of sectoral bargaining and its extension to whole sectors by the state is a matter of survival for employer organizations. The article presents rationales for employer opposition to liberalization that differ from the varieties of capitalism approach.

Varieties of capitalism and renewable energy in emerging and developing economies

ABSTRACT To better understand renewable energy uptake in emergingeconomies, we develop a typology of capitalism for 54 middle-income countries and use Qualitative Comparative Analysis (QCA) to test the Varieties of Capitalism (VoC) theory to illustrate which type of capitalism produced successful or unsuccessful renewables projects in these states. We find that even when the VoC approach is properly specified for developing states, it only explains about 44% of the outcome. Despite this, four causal pathways of combined economic institutions from the VoC theory were found to be sufficient for explaining this phenomenon, but liberal institutions performed poorly in each case.

Environmental strategy in the global banking industry within the varieties of capitalism approach: The moderating role of gender diversity and board members with specific skills

AbstractThis research sets out to analyse environmental disclosure in the banking industry by considering the varieties of capitalism framework. This approach is concerned with the way companies interact strategically to resolve coordination issues arising from their operations, and it is supported by prior research. This is a fruitful perspective for exploring the association between country‐level factors and disclosure by firms, such as environmental reporting. This research is based on an international sample of countries operating in coordinated market economies (CMEs) and liberal market economies (LMEs). The results obtained show that financial institutions operating in CME countries are involved in more environmental matters than banks domiciled in LME countries. As regards the moderating variables, the evidence shows that women on the boards of banks in CME countries encourage the reporting of environmental information, as predicted. Nonetheless, and contrary to our expectations, members with specific skills on boards within CME cultures do not favour greater disclosure of environmental information compared with those on boards of banks operating in LME contexts.

The strength and weaknesses of the varieties of capitalism approach: the case of Central and Eastern Europe

Abstract The purpose of the article is to characterize selected theoretical and methodological advantages, controversies, and limitations of the varieties of capitalism (VoC) approach in application to Central and Eastern European (CEE) countries. It indicates the reasons for the usefulness of such an approach for the study of postcommunist capitalism in the region. The application of the VoC is considered as going beyond the dominant approaches to systemic changes in CEE in the 1990s, such as the strategy of neoliberal economic reforms and the “transitology” prevailing among political scientists and sociologists who referred to democratic patterns of change in Southern Europe. After a decade of reforms, due to different trajectories of development in the countries of the region, such interpretations lose their explanatory power. Other ways of analyzing transformations in CEE have become needed. The need for new theoretical inspirations has also been strengthened by the European Union (EU) accession of the same postcommunist countries. The accession has generated a search for a new language of description and analyses of institutional changes in all the countries of the enlarged Union. In this context, the VoC approach seems to fill the theoretical vacuum left by the end of the “transition” debate in the political research on CEE and provides a major post-transition research agenda and has also built a bridge between discourses which were previously separated in the political economy, neo-institutional approaches, economic sociology, and political sciences. The key advantages of the VoC approach are presented, which made these perspectives influential among researchers of institutional changes in postcommunist countries. The theoretical and analytical framework, classifications, typologies, clusters, indexes, indicators, and so on are tested and widely applied as well. Selected weaknesses and limitations of the VoC approach in the application to CEE are also analyzed. Their manifestation is the confusion associated with the use of various classifications of models of capitalism and the functionalistic character of the VoC focusing on explaining the results, but not the causes of the institution’s activities, as well on institutional determinism diminishing the significant role of the social factors of change.

Staying in the Loop: Formal Feedback Mechanisms Connecting Vocational Training to the World of Work in Europe

Context: Vocational education and training (VET) is expected to be designed for creating learning outcomes which meet the needs for skills and competences in the labour market. Hence, identifying current and upcoming skill requirements and ensuring that these requirements are incorporated into education has long been the subject of academic and policy discussion. Governance processes keeping VET systems up-to-date have been more recently addressed as `feedback mechanisms'. The term broadly summarizes the interplay of institutions, actors and processes which allows the continuous renewal of VET provision (i.e. by creating new qualifications or updating curricula). The aim of the paper is to enhance the understanding of cross-national variations in formally institutionalised `feedback mechanisms' between VET and the labour market.Method: The research builds on a comparative analysis of case studies in 15 European countries. The paper presents examples for four different `formal feedback mechanisms' in Germany, France, England, and Austria.Results: Four main types of formal mechanism have been identified: 1) The liberal model explained by VET in England and Higher VET in Austria; 2) The statist model explained by school-based VET in Austria; 3) the participatory model explained by VET in France and 4) the coordinated model explained by apprenticeship training in Germany and Austria.Conclusions: Existing approaches in the economic sociology of labour markets, the varieties of capitalism approach as well as comparative research on welfare states are useful in predicting whether particular VET systems are likely to be predominant. However, they do not provide an alternative in describing differences in VET systems which the concept of formal feedback mechanism does. Moreover, by analysing formal feedback mechanisms, it is possible to demarcate where a VET sub-system ends and another VET sub-systems begins. In this sense research presented here also asks for new standards for comparative VET research as it suggests that entities to be compared are not countries' overall VET systems, but their potential sub-systems. 

Labour law violations as innovations in Central Eastern European countries

The paper analyses secondary data from Czech, Hungarian, Polish, and Slovak (Central Eastern European Countries – CEECs) labor inspectorate reports to argue that the prevalence and patterns of labor law violations should be understood as a result of adaptations/innovations undertaken by firms in CEECs that use them to strategically lower labor law costs and make employment conditions more flexible. The paper is informed by dependent market economy theory from the varieties of capitalism approach. The main comparative advantage of dependent market economies lies in low labor costs. The spread and pattern of violations suggest that firms use labor law violations in a creative way to enhance their competitive advantage. It is enabled by an ineffective labor standards monitoring system. The possibility to circumvent and violate specific employment regulations to lower labor costs should be treated as an element of the institutional comparative advantage of CEECs. The paper also suggests that governments in CEECs partially promote labor law violations through “drift policies”.

Adapting a Lean Production Program to National Institutions in Latin America: Danone in Argentina and Brazil

Abstract This article argues that national institutions identified in the varieties of capitalism approach have a significant impact on the degree of fidelity and extensiveness of best practices adapted by geocentric multinational corporations in host countries in emerging markets. To illustrate this argument it shows how differences in national institutions between Brazil and Argentina caused Danone to adapt a lean production in radically different ways in each of these countries. Both of the programs implemented had low degrees of fidelity and extensiveness to the original best practice. This article contends that in Argentina strong labor laws and the ability of unions to negotiate significant salary increases combined with a desire of workers to have individual pride in their jobs caused Danone to empower them individually instead of creating teams as foreseen in this company's original lean production program. In Brazil the weakness of unions combined with labor laws that promote employee turnover and the desire of workers to improve their salaries caused this company neither to empower workers nor create teams. Instead, it motivated workers by providing them the previously unavailable opportunity to become a manager.