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What is the relationship between institutional frameworks, public policy, and the governance of innovative competencies by firms? This chapter extends the varieties of capitalism theory to examine how different types of economy impede the governance of new technology firms. It argues that most new technologies attempt to create radical innovations by developing competencies along a widely diffused “Silicon Valley Model” surrounding the financing, staffing, and creation of employee incentives within firms. Liberal market economies, such as those found in the US and UK, provide strong institutional supports for the Silicon Valley Model, while coordinated market economies, such as Germany or Sweden, provide a series of constraints. A theoretical framework is developed to explore this argument. How public policy might impact competitiveness within new technology industries across the two types of economies is discussed.

The politics of migration in the three established countries of immigration, France, Germany, and the United Kingdom, are scrutinized in this chapter, with particular emphasis being placed on an analysis of employers, trade unions, and humanitarian NGOs in attempting to shape national and indirectly European migration policies. In addition, the effects of top-down Europeanization and national initiatives at shaping bottom-up Europeanization are explored. French migration policy has only recently rediscovered active labor recruitment due to relatively belated employer interest. In Germany, employers are most interested in highly skilled migrants both in the manufacturing and service sector, while in the UK, business calls for entry channels both for highly skilled and low-wage low-skill migration, preferably into the service sector. In all countries, NGOs struggle to make their voices heard, though French groups have been successful with direct action.

This is the second of three chapters on the role of economic interests, and of systems for representing those interests, in the politics of welfare state reform. They explore the linkages between national welfare states and national economies, and examine the processes through which economic actors press their interests on policy makers. Section 1 of Manow's chapter offers a critical account of contributions that predict the formation of new political coalitions along the cleavage line between those firms and workers that are forced to adjust to international market pressures and those that enjoy domestic shelter from globalized markets; a brief discussion is included of the relative importance of the electorate in current welfare reforms as compared with the role played by organized interests of capital and labour. Section 2 presents a transaction cost argument that seeks to identify one central logic linking production and protection in continental welfare states and coordinated market economies, respectively; the central argument is that generous welfare state programmes may enhance and not diminish international competitiveness and can be part of the comparative institutional advantage of an economy rather than solely contributing to its comparative cost disadvantage. Section 3 concludes by briefly discussing the implications of the argument presented in Sect. 2 for the present debate on the compensatory role of the welfare state in a globalized economy.

The varieties of capitalism approach focuses on explaining variation in industry specialization at the national level. However, much evidence from the field of economic geography suggests that industries tend to cluster within regional economies, and empirical evidence suggests that there are regions within coordinated market economies that have sustained clusters of radically innovative companies. Focusing on the successful wireless Internet and software cluster in Stockholm, Sweden, this chapter explores mechanisms by which alternative patterns of economic coordination may develop. The analysis focuses on the role of large companies, particularly in industries in which technical interdependencies between firms is strong in creating patterns of economic coordination that run counter to national models.

The dialectical complementarity of liberalism and corporatist governance in provincialized layers has brought forth internationally oriented companies promoting diversified quality production, credit rather than share issue finance, and a stakeholder model of corporate governance rather than shareholder capitalism. Such characteristics have recently been shaken by the impetus of Anglo-American shareholder value orientations in international ‘financialization’. Whereas changes that challenge established practices are indubitable, the pervasive phenomenon of recombination implying reassertion of domestic practices in new forms is also present: credit financing has gone up again; employee representatives have both modified and helped to implement shareholder value orientations; co-determination has, despite shocks, also proved helpful in the fashioning of changes. Financial and strategic-operative internationalization of enterprises are not clearly related to one another. Generally, recombination of opposed tendencies and characteristics again is the rule.

Do entrepreneurs everywhere share the same goals? Are entrepreneurship processes similar and equally collaborative? Or does the environment dictate all these aspects for entrepreneurship? This book looks into the levels of entrepreneurship and how they differ from each other by presenting a comparative study of the behaviour of entrepreneurs and entrepreneurship in the UK and in Japan. The former is associated with liberal market economies (LMEs) while the latter is associated with coordinated market economies (CMEs). The book will focus on high-tech manufacturing in order to examine the systematic differences in innovation and the processes of entrepreneurship. The findings of two original surveys and twenty-five case interviews for both countries are presented in order to examine the careers of the entrepreneurs; opportunity and business creation; founders; attitudes towards growth and risk; research, development, and innovation; competitive strategies; growth limitations, leadership and HRM, and collaborations.

Germany has long been categorized as an organized or coordinated market economy. Moreover, a key prediction of comparative institutional theory is that Germany should perform poorly in radically innovative industries such as biotechnology. In the mid 1990s, the German government launched a series of wide-ranging public policies with the aim of developing a world-class biotechnology industry. This chapter examines these policies and evaluates their success in creating a sustainable biotechnology industry in Germany. German policies have created a large industry, in terms of the number of companies launched, in a short period of time. However, empirical evidence suggests that this industry has not become sustainable, in terms of generating adequate venture capital finance for companies or generating an active labor market for scientists and managers working within the industry. These problems are linked to long-standing institutional arrangements in the areas of finance, corporate governance, and labor market regulation, suggesting that the ability of governments to circumvent national institutional frameworks may be limited.

This chapter provides a theoretical conclusion by answering some questions posed throughout the book: To what extent and how are GPNs shaped by national capitalisms and to what degree are they influenced by global markets and by international/global organizations? How do GPNs in the clothing industry impact on national capitalisms? Do they further strengthen a given economy's competitive advantage in a particular industry niche, or do they also undermine economic structures and disorganize or disrupt institutional arrangements? How does a dual theoretical focus on the comparative capitalism approach and the theory of global value chains/production networks improve our understanding of what drives network actors and the interrelationships within networks? The chapter points out how the answers go beyond the work of both Gereffi (various dates) and Dicken et al (2001), as well as ‘comparative capitalisms’ theory. Another section summarizes the findings on the supplier countries studied, showing both the nature of their comparative advantage and the limits thereto. The chapter concludes by pointing out the advantages and disadvantages of the VoC framework for the study of this global industry.

From a historical-institutionalist and firm-centered perspective, decisions on the division of labor between firms, associations, and the state in providing and financing skills are the core factor accounting for different skill formation systems. From this it follows that, alongside the degree of firm involvement in the provision of vocational training and the degree of public commitment to vocational training, four different skill formation systems can be distinguished: the liberal, the segmentalist, the collective, and the statist. Collective skill formation systems are the result of political struggles with regard to four neuralgic points of conflict: the division of labor between the state, employers, their associations, and individuals first on the provision and then on the financing of vocational education and training (VET); the relationship between firm autonomy and public oversight in the provision of training; and the linkages between VET and the general education system.

This last chapter sums up the basic message and draws some conclusions. Rather than opposing convergence and divergence, how supranational convergence breeds new local divergence should be explained. The impact of international developments is always mediated by local institutions and culture, and the latter may become more distinctive through the former. Previous processes of internationalization set the scene for the local fashioning of more recent processes. Recombination is the rule, and any national ‘model’ of any time is the result of earlier recombinations of opposed tendencies. The institutions associated with the South Germanic bedrock and coordinated market economies, specifically, are viable by recombination, as institutions invariably are. They should not be blamed for the handling of German unification — a unique phenomenon in the world — handled with a mixture of heroism and blunders, the latter mainly with respect to the distribution of the social security and employment policy financial burden.

This chapter explores how criminal justice systems are deeply affected by prevailing ideas about political economy—about the proper ways for states to organize and intervene in markets. Comparative studies of “varieties of capitalism” distinguish between “liberal market economies” such as the United States, and “coordinated market economies,” which describes most continental European nations. States with liberal-market policies play a smaller role in private markets than do those with coordinated-market policies, and this orientation is reflected in the administration of criminal justice systems as well. This chapter describes some aspects of U.S. law and practice, such as the law defining the right to defense counsel, that confirm the influence of economic ideology on how criminal process is both organized and justified.

The Dutch chapter demonstrates that social pacts are the standard operating procedure in times of crisis in the Netherlands. After the early Wassenaar agreement, pacts became the institutional alternative to state intervention. The chapter calculates that eleven of the thirty years since 1980 have been covered by pacts on wage moderation, and in non-pact years there has been a fair amount of coordination as well. By contrast with other weaker forms of social pacting studied in other chapters in this volume, this analysis confirms the picture of the Netherlands as a coordinated market economy of the corporatist variant, characterized by a high degree of mutual cooperation between unions and employers, and regular consultations with the government. But the chapter also reveals that coordination and consultation cannot be taken for granted, but are occasionally rewired to meet new conditions via conflict and tough bargaining over diverse interests.

Vocational training schemes have been at the core of strategies for skill provision in an industrial context—most especially in the “coordinated market economies” (CMEs) of Continental Europe. In this chapter, Anderson and Hassel suggest that significant variation exists across countries in the extent to which these schemes have successfully adapted to deindustrialization and the rise of the service economy. They argue that the key institutional feature explaining this variation is the role of the state, and in particular, the role of the vocational schools. In systems where training is largely financed and provided by firms, the skills acquired tend to be relatively specialized and specifically designed to meet the needs of existing firms. In contrast, in systems where the state, and specifically vocational schools, play a larger role, there is more scope for the provision of more general, transferable skills, and for the redesign of programs to adjust to changing needs within the economy. As a consequence, they argue, firm-based skills regimes have tended to be slower to adjust to the transition to services than school-based regimes or regimes that combine school- and firm-based training. Anderson and Hassel support their contention with a comparative institutional analysis of two important Continental CMEs—Germany and the Netherlands.

This chapter explains why the development of ‘market-based banking’ in Japan remained very low. Because of this, the banking sector of Japan was not damaged significantly by the international financial crisis. At first glance, this can be explained by institutional factors such the strict regulatory framework and the seniority-based remuneration system, which were suitable for the Japanese ‘group-based CME’. In the 1980s, however, Japanese banks and securities companies expanded international operations and launched investment banking in overseas market, avoiding the domestic regulations. After the bubble burst, they cut back international operations rapidly because banks had to focus on dealing with domestic non-performing loans and because securities companies could not afford to participate in the investment banking business with the continuing sluggish Japanese stock prices. This suggests that Japanese financial institutions were constrained less by regulation than the impact of the bubble bursting.

Chapter two approaches public service reform from the angle of comparative capitalism. It starts out by presenting the three varieties of capitalism (VoC) examined in the book, and extends the typological distinction to the analysis of change in the public utilities. A first section revisits the dichotomy developed by Hall and Soskice, contrasting liberal market economies (LMEs) and coordinated market economies (CMEs), and broadens its scope to include state-led market economies (SMEs) as a third type of capitalism. These types are situated with respect to two dimensions, the role of the state and interest organisation. Specified expectations about how these varieties of capitalism translate into varieties of reform are formulated. The chapter does also address the limits of a typological approach, notably when it comes to common trends such as privatisation, liberalisation and regulatory reform. The chapter rounds up with a discussion about how variation at the level of sectors can be integrated into the VoC framework, and why the postal sector is a particularly insightful case for analysis.

This chapter describes the shift of the German banking industry from the traditional bank-based financial capitalism to ‘market-based banking’, which took place from the late 1990s. German banks have long had high levels of market-based liabilities, but their borrowing has been from more stable wholesale markets, including via covered bonds. However, the rapid rise of market-based banking on the asset side of the balance sheet for German commercial and public sector banks, eager to expand in the context of cloistered national markets, explains the very high exposure of the German banking/financial system to the early stages of the financial crisis. German banks imported instability from the United States through the large-scale purchase of securitized loans. As a result, the German banking system was among the worst affected early in the international financial crisis yet the impact on total bank lending was limited.

Chapter nine broadens the scope of country comparison beyond the EU context and engages in international comparison of postal reform. Particular emphasis is put on the varying reform record in liberal market economies (LMEs), contrasting LME postal reform leaders and LME postal reform laggards. While New Zealand and Australia have taken the lead of the international postal reform movement, the situation in the United States and Canada has for a considerable period of time been characterised by reform deadlock. Interesting insights can furthermore be drawn from the contrasting reform experience in Asia, comparing change in the coordinated market economy (CME) in Japan and the state-led market economy (SME) in Singapore. The chapter rounds up with a section on postal reform in emerging market economies in the Latin American context, which illustrates that the reform recipes developed in mature market economies may not apply in a different context.

Chapter six examines the German reform path, which can best be described as negotiated change. It shows how dense patterns of interest organisation in the coordinated variant have influenced reform choices and outcomes, particularly where social considerations have been integrated into the emerging regulatory framework. The German example does however also illustrate that the implementation of social policy goals proves difficult where the independent regulatory agency mainly perceives its role as an economic regulator. As a result, postal corporatism in Germany has been in decline, yet no corrective regulatory measures have been taken. The postal network has been transformed massively through cutting back the number of in-house branches, while regulatory requirements concerning the frequency and quality of mail service provision have been upheld at constant levels.