Showing papers on "Coordinated market economy published in 2006"

Institutional coherence and macroeconomic performance

Abstract: Peter Hall and David Soskice suggest that institutional coherence is conducive to successful macroeconomic outcomes. Countries with corporate governance arrangements, industrial relations systems and other institutions that are congruent either with those of a coordinated market economy or with those of a liberal market economy are expected to perform better, while nations with less coherent institutional frameworks are expected to fare worse. I use a measure of institutional coherence devised by Peter Hall and Daniel Gingerich and another I develop here to assess the impact of institutional coherence on variation in economic growth and employment growth across 18 affluent countries over the period 1974–2000. The results offer little support for the institutional coherence hypothesis.

Organizational Diversity and Institutional Change: Evidence from Financial and Labour Markets in Japan

Abstract: Japan's economic success has been attributed largely to the nature of its national institutions, such as relational banking, lifetime employment, and relational contracting in intermediate product markets. These institutions were tightly linked to govern the Japanese economy, but more diverse patterns of organizing have become evident since the 1990s. For instance, in financial markets, venture capital funds and IPOs (initial public offerings) have appeared alongside relational banking to finance start-ups. In labour markets, non-standard forms of employment have come to be a significant alternative to the lifetime employment norm. It is clear that the Japanese business system is becoming more diverse within. But when, why and how has such organizational diversity come about in Japan? And is such diversity a sign of a gradual breakdown of the system, or has it become the very characteristic of the Japanese system? If it is the former, what is the process by which we should expect the emergence of a new system? If the latter, how much diversity can be sustained within a system? This paper addresses these questions with respect to specific empirical cases at the national and corporate levels. The paper begins by developing a framework linking institutional change and organizational diversity in Section 1. This section advances a model of institutional change in a specific direction, namely from CME (coordinated market economy) to LME (liberal market economy), and identifies organizational diversity as a feature of such change as well as of the new emergent system. It is argued that organizational diversity may increase with institutional change due to three logically separable factors. First, diversity increases in a move from CME to LME because LME, with less sunk cost in building coordination and collaboration, accommodates greater diversity within the system. Second, diversity increases also because the process of institutional change may afford different timing for individual actors to defect from the old institutions, dictating the extent to which 'layering' may persist. Third, organizational diversity is introduced due to different settlements that result from local contests between management and labour. Section 2 examines the timing and the extent of diversity in financial and labour markets at the economy-wide level. It identifies the late 1990s as the time when organizational diversity began to take off in the Japanese economy. In financial markets, venture capital in Japan experienced 'conversion' - shifting its goals and functions from being part of the Japanese institution of relational banking towards being more part of an equity-based finance system. New stock exchanges were created, but are layered and not directly threatening existing institutions of relational banking and stock exchanges for established public corporations. Nevertheless, the layering of the new stock exchanges and legal changes triggered a slow process of conversion in venture capital. In labour markets, Shunto is portrayed as a case of 'conversion', with its function changing from coordinated pay bargaining to a mechanism forlegitimizing pay restraint and dispersion. At the same time, contingent work was identified as a case of 'layering' onto the norm of lifetime employment. Although the Japanese economy had always had a dual labour market, legal changes and practices that fuelled the use of agency labour and on-site contracting in manufacturing threatens the norm of lifetime employment more fundamentally than in earlier periods. Nevertheless, unlike in financial markets, in which layering triggered conversion, layering and conversion in labour markets have been much more drawn out and interactive throughout the 1990s. Section 3 turns to varied responses to institutional pressures at the company level in two contrasting settings. The aim here is to compare and contrast the ways in which Softbank and NTT used the holding company structure to bring about organizational diversity. These cases highlight another reason for organizational diversity by focusing our attention on how company-level action impacts on national institutional change. The introduction of the pure holding company form faced experimentation, and is being adopted in different ways by various companies to satisfy their own ends. In particular, Softbank not only created a new institution in the form of Nasdaq Japan, but also adopted the pure holding company structure to overcome the absence of a realistic 'exit option' for venture capitalists. NTT also adopted the holding company structure but for a different reason, namely as a political compromise, and greater diversity in its internal labour markets, subverting the norm of lifetime employment, has been slowly introduced despite union resistance. In summary, this paper addresses the conference sub-theme of how different kinds of national institutions complement or conflict with each other, giving insight into various actors' strategies and their capacity to influence institutional change.

Job Stability, Mobility and Labour Market Restructuring. Evidence from German Microdata **

Abstract: The paper analyses the change of job stability and its determinants in the course of time by presenting some empirical evidence from Germany. Drawing upon event history data from the German Federal Labour Office insurance accounts and employing Cox Proportional Hazard Rate Models, we test six core hypotheses on labour market restructuring and its impacts on job stability. Our analysis suggests that during the transition to service society between the 1980s and the 1990s some kind of 'restructuring' of the German labour market has taken place that has simultaneously led to an increasing polarisation and to an increasing levelling out of individual employment chances and risks. Key words: Job Stability, Flexibility, Germany, Event History Analyses 1. Introduction There can be no doubt that fundamental social, economic, technological, and political changes have taken place during the last two decades. Those changes are often summarized, for example, in terms like "globalisation" (c.f. Reich 1992) or "individualisation" (c.f. Beck/Beck-Gernsheim 2002). It can be suggested that these changes have had a significant impact on employers' as well as employees' behaviour. Therefore, the transition from industrial to service economy1 and its impact on modern societies and individual employment histories has received considerable attention for at least 20 years. What seems to be indisputable is that all these fundamental changes caused an increasing demand for flexibility of both employers as well as employees. However, flexibility is a multi-dimensional phenomenon as we can see, for example, with regard to the flexibility of the allocation of labour within firms: On the one hand we can distinguish internal from external flexibility and on the other hand there are differences between quantitative and qualitative flexibility (c.f. Goudswaard/Nanteuil 2000); further on wage flexibility could be an additional dimension (c.f. OECD 1989). In addition the flexibility of labour market actors is determined by the institutional framework they are embedded in. As Hall and Soskice (2001) have pointed out we can distinguish "liberal market economies" and "coordinated market economies" as two ideal types of production regimes because of their fundamental differences in the institutional organisation for example in labour market regulation or educational systems. Whereas the United States are often described as the prototype of "liberal market economies" Germany is suggested to be the prototype of "coordinated market economies". However, due to global changes the traditional German system of "regulated flexibility" has become under pressure during the last two decades and there have been some efforts to de-regulate labour market institutions for example by lowering the dismissal protection in the mid-1980s. But not least because of the path dependencies of institutions the German labour market is still highly regulated compared to liberal market economies (Fuchs/Schettkat 2000). Thus, the paper tries to answer the following questions by analysing the evolution of job stability and its determinants: How have employers and employees in Germany adapted to fundamental changes that have occurred since the 1970s? How did the increasing demand for flexibility affect employment histories of men and women and how did job stability and labour market mobility processes as important outcomes of individual employment histories have changed in a coordinated market economy like Germany during the transition to service society? Based on a detailed theoretical argumentation section 2 will develop six hypotheses about the re-structuring of the labour market and the re-distribution of employment chances and risks in service society that should be tested in the course of he following analyses by presenting some empirical evidence from Germany. section 3 will introduce the data and methods that will be used in these investigations. …

A Tale of Two Federations: The Dynamics of Policy Reforms in Canada and Germany

Abstract: This paper investigates the impact of internationalization pressures on institutional aspects of policy reform in two domains (labour market policy and electricity market regulation) in Canada and Germany, as two ‘ most different’ systems, along both a public-private and a territorial axis (international/subnational). Canada’ s liberal market economy, interstate federalism and asymmetrical bilateral relationship with the U.S. under NAFTA contrasts with Germany’ s coordinated market economy, intrastate federalism and highly institutionalized EU regional integration context. The paper engages with the neo-institutionalist literature on path dependency and change. It confirms that institutions do mediate the pressures of internationalization but finds that institutional dynamics are more complex than is suggested by path dependency and punctuated equilibria approaches. Policy reforms result in hybrid institutional arrangements that combine layers of legacy with layers of cumulative change, as hypothesized in more re cent institutionalist thinking designed to overcome the juxtaposition of agency (rare, exogenouslydriven change) and structure (deterministic institutional paths.