The Varieties of Capitalism Paradigm: Explaining Germany’s Comparative Advantage?

182 Pages·2006·19.65 MB·English

by  Matthew M. C. Allen (auth.)

New Perspectives in German Studies
General Editors: Michael Butler is Emeritus Professor of Modern German
Literature at the University of Birmingham and Professor William E. Paterson
OBE is Professor of European and German Politics at the University of
Birmingham and Chairman of the German British Forum.
Over the last 20 years the concept of German studies has undergone major
transformation. The traditional mixture of language and literary studies, related
very closely to the discipline as practised in German universities, has expanded to
embrace history, politics, economics, and cultural studies. The conventional
boundaries between all these disciplines have become increasingly blurred, a
process which has been accelerated markedly since German unification in
1989-1990.
New Perspectives in German Studies, developed in conjunction with the
Institute for German Studies and the Department of German Studies at the
University of Birmingham, has been designed to respond precisely to this trend
of the interdisciplinary approach to the study of German and to cater for the
growing interest in Germany in the context of European integration. The books
in this series will focus on the modern periods, from 1750 to the present day.
Titles include
Matthew M. C. Allen
THE VARIETIES OF CAPITALISM PARADIGM
Explaining Germany's Comparative Advantage?
Peter Bleses and Martin Seeleib-Kaiser
THE DUAL TRANSFORMATION OF THE GERMAN WELFARE STATE
Michael Butler and Robert Evans (editors)
THE CHALLENGE OF GERMAN CULTURE
Essays Presented to Wilfried van der Will
Michael Butler, Malcom Pender, and]oy Charnley (editors)
THE MAKING OF MODERN SWITZERLAND 1848-1998
Paul Cooke and Andrew Plowman (editors)
GERMAN WRITERS AND THE POLITICS OF CULTURE
Dealing with the Stasi
Wolf-Dieter Eberwein and Karl Kaiser (editors)
GERMANY'S NEW FOREIGN POLICY
Decision-Making in an Interdependent World
Jonathan Grix
THE ROLE OF THE MASSES IN THE COLLAPSE OF THE GDR
Gunther Hellmann (editor)
GERMANY'S EU POLICY IN ASYLUM AND DEFENCE
De-Europeanization by Default?
Margarete Kohlenbach
WALTER BENJAMIN
Self-Reference and Religiosity
Charles Lees
PARTY POLITICS IN GERMANY
A Comparative Politics Approach
Hanns W. Maull
GERMANY'S UNCERTAIN POWER
Foreign Policy of the Berlin Republic
James Sloam
THE EUROPEAN POLICY OF THE GERMAN SOCIAL DEMOCRATS
Interpreting a Changing World
Ronald Speirs and John Breuilly (editors)
GERMANY'S TWO UNIFICATIONS
Anticipations, Experiences, Responses
Henning Tewes
GERMANY, CIVILIAN POWER AND THE NEW EUROPE
Enlarging Nato and the European Union
Maiken Umbach
GERMAN FEDERALISM
Past, Present, Future
New Perspectives in German Studies
Series Standing Oder ISBN 0-333-92430-4 hardcover
Series Standing Order ISBN 0-333-92434-7 paperback
(outside North America only)
You can receive future titles in this series as they are published by placing a standing order.
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The Varieties of Capitalism
Paradigm
Explaining Germany's
Comparative Advantage?
Matthew M. C. Allen
Lecturer in International Business
Manchester Metropolitan University Business School
* © Matthew M. C. Allen 2006
Softcover reprint of the hardcover 1st edition 2006
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ISBN 978-1-349-54462-2 ISBN 978-0-230-50793-7 (eBook)
DOI 10.1057/9780230507937
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managed and sustained forest sources.
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Library of Congress Cataloging-in-Publication Data
Allen, Matthew M. C., 1970-
The varieties of capitalism paradigm : explaining Germany's comparative
advantage? I Matthew M.C.Allen.
p. em.-(New perspectives in German studies)
Includes bibliographical references and index.
1. Corporations, German. 2. Capitalism-Germany. I. Title. II. Series.
HD2859.A45 2006
338.60943-dc22 2006041128
10 9 8 7 6 5 4 3 2 1
15 14 13 12 11 10 09 08 07 06
Transferred to Digital Printing 2011
To my parents
Contents
List of Illustrations viii
Preface X
Abbreviations xiii
1 Introduction 1
2 The Assumptions of the Different Approaches 11
3 Comparative Advantages in Co-ordinated and Liberal
Market Economies 45
4 Descriptive Evidence from Workplaces in Germany 72
5 The Effects of Institutions at the Establishment Level 96
6 Conclusion 138
References 155
Index 165
vii
List of Illustrations
Tables
2.1 Stylized portrayal of different approaches: key differences
and similarities 13
3.1 Revealed symmetric comparative advantages and
disadvantages for selected OECD countries, 1999 57
3.2 Revealed symmetric comparative advantages and
disadvantages for selected OECD countries, 1994 62
3.3 Odds ratios for selected OECD countries, 1999 67
3.4 Odds ratios for selected OECD countries, 1994 68
4.1 Coverage rates of works councils and sectoral
collective agreements in manufacturing sectors, 2000 80
4.2 Coverage rates of works councils and sectoral collective
agreements by establishment size, 2000 81
4.3 Percentage of employees and establishments
covered by both a works council and a sectoral
collective agreement by sector, 2000 83
4.4 Percentage of employees and establishments covered by
both a works council and a sectoral collective agreement
by establishment size, 2000 84
4.5 Conformity to the CME-type of company and
'overpayments' 85
4.6 Weighted average of the wage differential between
actual rates and levels in the collective
agreement, 2000 87
4.7 Weighted average export ratios for firms whose pay rates
are at or above those in the sectoral collective agreement 90
4.8 Profit-sharing schemes in establishments with a works
council and a sectoral collective agreement 92
5.1 Institutions and quit rates 100
5.2 Institutions and 'too many employees' lOS
5.3 Institutions and 'high employee turnover' 108
5.4 Institutions and the loss of skilled workers 111
5.5 Institutions and difficulties in recruiting skilled workers 114
5.6 Institutions and insufficient employees 117
5.7 Institutions and 'insufficiently motivated employees' 121
viii
List ofI llustrations ix
5.8 Institutions and too 'high wage costs' 124
5.9 Institutions and high profitability 130
Figures
3.1 Relevant and irrelevant cases for an assessment of necessity 52
3.2 Relevant cases used in conventional statistical techniques 52
Preface
Do differences in public policies between national political economies
fundamentally alter economic performance and social well-being? How
do institutional differences between countries condition the strategies
of companies? Which institutional differences are the most important?
Such questions have long been of interest in the fields of comparative
political economy, business, and economics. They have gained in
importance as a result of heightened competitive pressures associated
with 'globalization'. These pressures have forced businesses and business
scholars - broadly defined - to scrutinize more closely the institutional
environments in which companies operate
Whilst many business leaders and scholars have been quick to criticize
those non-market institutions that firms themselves would be unlikely
to set up as burdens, others, such as many of the contributors to the
2001 volume on the Varieties of Capitalism, defended such institutions as
sources of comparative advantage. In short, non-market institutions
could, it was argued, facilitate forms of co-operation between various
actors that were unlikely to happen in their absence. Such co-operation,
which is said to be distinct from that fostered by more market-based
political economies, is argued to be a prerequisite for success in certain
product markets. By contrast, companies operating in national political
economies that lack such non-market institutions are said to be success
ful in other markets in which the type of co-operation fostered by more
market-based systems is regarded as a sine qua non. Thus, the varieties of
capitalism paradigm focuses attention on institutions and comparative
advantage.
This book grew out of a desire to examine more closely a number of
aspects of that paradigm. First, the main claim of the varieties of capi
talism paradigm linking certain institutions to comparative advantage
in different product markets appears to have been inadequately
assessed within the existing literature. Second, the varieties of capital
ism paradigm seems to impose too rigid a view of institutions on com
panies and managers. In short, it appears to grant actors too small an
influence in shaping their institutional settings and, hence, outcomes.
This book, therefore, examines not only the spread of key institutions,
but also their possible effects on outcomes. Finally and relatedly, this
book was motivated by a desire to contribute to ongoing debates within
X