Varieties Of Capitalism Framework Research Articles

From Silicon Valley to the Levant: Innovation in the Eastern Mediterranean

AbstractMarket economies in the eastern Mediterranean are not counted among ideal‐typical innovators. But this picture may be changing. This article explores the emerging innovation systems in the eastern Mediterranean by examining recent data and the literatures on varieties of capitalism and innovation systems. Through the cases of Cyprus, Israel, and Turkey, the study argues that the varieties of capitalism framework, by focusing on performance at the macro level, disregards the subnational performance of these outlier markets, which have promising regional or local innovation systems. Fostering cooperation among these emerging innovation systems could become a valuable instrument for overcoming deeply rooted conflicts in the eastern Mediterranean, which has turned into a “crisis zone” due to recent energy discoveries.

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.

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.

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.

Unorthodoxy in Hungary: an illiberal success story?

ABSTRACT This paper offers a political economy perspective of Hungary under the Orbán regime (2010–18). What specific variety of capitalism emerged from the series of centralising measures pertaining to property, banking, fiscal management and the division among various policy fields? We provide a functional overview of the Hungarian model of the market applying the varieties of capitalism framework. How far did it all succeed? The two hypotheses to be tested are (a) that incremental change translated into a new quality in 2010–18; and (b) that it were the uniquely favourable external conditions rather than institutional and policy innovations that explain less than exceptional outcomes.

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.

Defining and Regulating Zero Hours Work: Lessons from a Liberal Market Economy

The apparent rise in precarious work has received increased attention in a number of countries in recent decades. However, studies highlight the difficulties of both defining and capturing the extent of precarious work. In this paper, we report on a study of zero hours contracts in Ireland and drawing on the varieties of capitalism framework, examine the lessons for both LMEs and CMEs. The study found that zero hours contracts, as defined by Irish legislation, were not common; however, evidence of ‘If and When’ contracts emerged during the course of the research. We outline our key findings showing how information garnered from qualitative research provided nuanced insights on the reality of precarious work, which was not captured in the national data set. This is important for measuring the extent of precarious work in future studies.

The Unexpected Survival of Employer Collective Action in the United Kingdom

Recent research within employment relations has identified how employer collective organizations continue to thrive in countries featuring different institutional characteristics. In the UK, we identify 447 membership-based Employer Organizations (EOs) active within employment relations and human resource management. The volume of organizations identified prompts our research question: what explains the changing role and activities of UK EOs?Country-level studies of EOs continuation use a range of theoretical frameworks to analyze how these organizations have adapted to institutional and economic change, but the most effective mode of analysis is debated. Our contribution is to apply Schmitter and Streeck’s identification of logics driving the behaviour of employer collective organizations, previously applied to coordinated market economies as defined by the Varieties of Capitalism framework, to the UK’s liberal market economy. The article explores the extent to which liberalization prompted new behaviour within UK EOs.Some studies argue that EOs in coordinated market economies adapt by prioritizing logics driving influence over those linked to membership. We explore how the UK’s changing political economy spurred evolution in the application of logics and find that the opposite happened. EOs once used participation within collective bargaining agreements and the governance of tripartite bodies to prioritize the logic of influence but these institutions decayed. It might have been expected that such decay would have caused a withering of EOs but they reconstituted themselves instead. The declining salience of the logic of influence prompted employer bodies to focus to a greater degree on the logic of membership by offering a broader range of member-focused services. Our findings indicate that employer collective bodies can react to liberalization with adaptation, not extinction. We also argue that our methodology could shed light on EOs behaviour in North America.

A plea for varieties of entrepreneurship

Research into the link between national institutions and entrepreneurship is characterized by three shortcomings: First, clear-cut concepts of institutions are rare. Second, a parsimonious understanding of how a few core institutions influence entrepreneurship is missing. Third, scholars often ignore that incrementally innovative ventures constitute a distinct (and under-researched) type of entrepreneurship next to the (over-researched) form of radically innovative, high-growth or high-tech entrepreneurship. By addressing these three shortcomings, the Varieties-of-Capitalism (VoC) literature can explain how a core group of distinct national institutions facilitate the development of different types of entrepreneurship between countries. In particular, the VoC framework illustrates the comparative institutional advantage that continental European economies offer to incrementally innovative ventures. Applications of the VoC reasoning to entrepreneurship studies would thus allow researchers to, first, perform focused rather than eclectic analyses of institutional influences on entrepreneurship. Second, it would pave the way for research into institutionally induced equifinality. Third, entrepreneurship research could move away from its wishful ideology displaying radically innovative entrepreneurship as the most desirable form of entrepreneurship. As a consequence, policymakers could target entrepreneurial support measures more specifically to their economy’s institutional environment.

Expanding the framework of the varieties of capitalism: Turkey as a hierarchical market economy

This article both extends the debate on the varieties of capitalism theory beyond the existing literature to solve the ambiguous position of the variety of capitalism that is found in Turkey and brings a novel approach to the studies of the political economy of Turkey by adopting a firm-centred position using the varieties of capitalism framework. Based on a qualitative comparison with the dependent market economies (DMEs), mixed market economies (MMEs) and hierarchical market economies (HMEs), this article claims that Turkey is a hierarchical market economy with four characteristic features that are also found in Latin American economies. These core features are the dominance of the family-owned diversified business groups, state-regimented and weak industrial relations, low skills and the influence of MNCs.

Varieties of capitalism in Europe: an inter-temporal comparison of HR policies

Purpose– The purpose of this paper is to analyse the attitude of European firms towards human resource management (HRM) configuration and HRM practices on a country-level basis. Assuming the persistent relevance of institutional framework, the paper investigates the applicability of the varieties of capitalism (VoC) theory to these domains in European countries and their evolution between 1999 and 2005.Design/methodology/approach– The paper selects and groups together variables that are related to both HRM configuration and HRM practices using data coming from the survey performed in 2005 by the Cranfield Network on International HRM. Then, a hierarchical cluster analysis among 16 European countries is performed. Relevant varieties are obtained through the combined application of two stopping rules.Findings– Evidence shows that the evolution of HR policies over time is in line with an extended VoC approach that divides Europe in four VoC. One of these varieties (the “State” model), however, is not validated after a robustness check.Practical implications– For HR managers, the implementation of common personnel policies within the same variety of capitalism could represent a potential fertile ground for beneficial interactions and mutual learning among HR functions. In particular, the classification suggested in the paper does matter if an intervention on HRM practices is accompanied by a change in the participation of the HR department to the decision-making process and/or in the delegation of responsibilities between the HR department and the line management.Originality/value– The authors’ results contribute to the debate on the relationship between HRM and institutional context in two ways. First, they show that an extended VoC framework can explain the differentiation among European countries with regard to HRM domains. Notably, the correlation between the structure of the HR function and the intensity of HRM practices generates a clusterization of European countries based on at least three models of capitalism. Second, it emerges from the analysis that a substantial shift occurred with respect to the previous wave of the survey together with an increase of similarities between countries.

Jingle bells and struggling GIPS: Comparing the Baltic and the southern euro zone’s crisis experience using the varieties of capitalism framework

This article compares the experience of the Baltic countries and the eurozone’s southern members, the GIPS (Greece, Italy, Portugal, Spain), in terms of the run-up to the Great Recession and the eurozone crisis, responses during the downturn, and the subsequent recovery (or lack thereof). It discusses numerous apparent similarities in terms of the build-up of macroeconomic vulnerabilities and the content of anti-crisis strategies pursued as well as the substantially different results of these policies. This article applies the VoC (Varieties of Capitalism) approach. To this end, it presents theoretical expectations regarding different varieties’ vulnerability to macroeconomic imbalances, preferences regarding anti-crisis policy as well as the likely outcome of the internal devaluation strategy. The article finds the VoC approach largely useful, although it is more helpful in accounting for the nature of reaction to the crisis and the outcomes of anti-crisis policy, while less so in explaining the initial accumulation of vulnerabilities.

Online sustainability communication practices of European seaports

Although ports have a direct and substantial impact on the social and physical environments in which they operate, studies on corporate sustainability focussing on ports are scant. This study investigates the under-researched topic of sustainability communication practices in the European seaport sector. Its purpose is to analyse to what extent, if any, are there differences in these practices. It seeks to capture the influence of national institutions and some port specific characteristics in sustainability reporting. Using content analysis, we analysed the extent and content of corporate sustainability information disclosed in the websites of 186 European seaports. We used an institutional theory framework, the Varieties of Capitalism approach, as lens of analysis. Multivariate ordinal regressions were used to analyse the influence of national institutions on disclosure. We found that sustainability communication varies from country to country not entirely in accordance with the Varieties of Capitalism framework. Despite the majority of ports identified by our study having already included corporate sustainability topics in their online communication practices, we conclude that there is still much work to be done.

Institutions and diversification: Related versus unrelated diversification in a varieties of capitalism framework

The varieties of capitalism literature has drawn little attention to industrial renewal and diversification, while the related diversification literature has neglected the institutional dimension of industrial change. Bringing together both literatures, the paper proposes that institutions have an impact on the direction of the diversification process, in particular on whether countries gain a comparative advantage in new sectors that are close or far from what is already part of their existing industrial structure. We investigate the diversification process in 23 developed countries by means of detailed product trade data in the period 1995–2010. Our results show that relatedness is a stronger driver of diversification into new products in coordinated market economies, while liberal market economies show a higher probability to move in more unrelated industries: their overarching institutional framework gives countries more freedom to make a jump in their industrial evolution. In particular, we found that the role of relatedness as driver of diversification into new sectors is stronger in the presence of institutions that focus more on ‘non-market’ coordination in the domains of labor relations, corporate governance relations, product market relations, and inter-firm relations.

National institutional antecedents to corporate environmental performance

Understanding what drives firms towards environmentally sound manufacturing practices is important. While we have learned in recent years about firm-level drivers of corporate environmental performance (CEP), we know little about country-level antecedents. Our objective is to investigate the extent to which firm-level variation in CEP is explained by country-level differences. We develop hypotheses building on the Varieties of Capitalism framework and find—using data on 2724 firms in 42 different countries—that CEP is driven by the degree of market freedom of a firm's home country, the non-governmental organizations active in the country and its freedom of the press.

What Explains Immigrant-Native Gaps in European Labor Markets: The Role of Institutions

The role of institutions in immigrant integration remains underexplored in spite of its essential significance for integration policies. This paper adopts the Varieties of Capitalism framework to study the institutional determinants of Immigrant-Native gaps in host labor markets. Using the EU LFS we first measure immigrant-native gaps in labor force participation, unemployment, low-skilled employment and temporary employment. We distinguish the gaps that can be explained by immigrant-native differences in characteristics from those that cannot be explained by such differences, as these require different integration policy approaches. In the second stage we measure the effects of institutional and contextual variables on explained and unexplained immigrant-native gaps. Our findings confirm that institutional contexts play a significant role in immigrant integration, and highlight the importance of tailoring policy approaches with regard to the causes of immigrant-native gaps.

Labour as a transnational actor, and labour’s national diversity as a systematic frame of contemporary competitive transnationality

This paper argues that one strong and still largely uncontested theoretical heritage of mainstream approaches to capitalist diversity, and particularly the varieties of capitalism framework, is the binding of labour’s agency to national institutions and (cultural and ‘mental’) ‘paths’. This has been the main paradigm within political and trade union debates, too, especially in Germany, where the proposal to strengthen ‘typical German institutional advantages’ (namely co-determination) in the face of European and global competition is widespread. After a critical presentation of these approaches, the article proposes, following empirical findings and relying on concepts from the transnational migration literature and the debate in geography on scaling, to analyse local-oriented action by labour as itself being a specific form by which labour’s transnationality is constructed. However, in the cases presented, this specific form of construction turns out to be a competitive one, with ideological frames of cultural and mental divisions in Europe and beyond in systematic use.

Variegated Capitalism, Chinese Style: Regional Models, Multi-scalar Constructions

Zhang J. and Peck J. Variegated capitalism, Chinese style: regional models, multi-scalar constructions, Regional Studies. The paper explores tensions between the varieties of capitalism framework and the heterogeneous particularities of the Chinese case. Rather than forcing the Chinese model into analytical boxes derived, primarily, from analyses of European and North American capitalism, this complex formation more appropriately can be understood to exist in a ‘triangular’ relationship with the two conventional poles of varieties scholarship, the US-style ‘liberal market’ economy and the German-style ‘coordinated market’ economy. Furthermore, the substantial degree of internal (regional) heterogeneity evident in the Chinese case calls into question those models of capitalism that focus narrowly on institutional coherence at the national scale. Illustrating this point, a range of ‘sub-models’ of Chinese capitalism is examined: regional styles of capitalist development that remain distinct from one another, and deeply networked into a range of global production networks, and ‘offshore’ economies, just as they remain, to some degree, distinctively Chinese.