Globalization and the German model of capitalism – erosion or survival?

Abstract

The German business system has been regarded as a particularly tightly coupled system, with embeddedness of even multinational companies (MNCs) in their home base as particularly deep. A study of the impact of companies' changing internationalization, if not globalization, strategies is therefore especially suited to test competing claims about their effects on the German business system. Are we experiencing an erosion of this system, an adaptation in a largely path-dependent way, or even a greater specialization and stronger crystallization of the German business system? To investigate these questions, the paper examines a small number of German MNCs in their domestic and international context. More particularly, the work focuses on whether and how their emergent globalization activities affect the reproduction or erosion of the three institutional complexes which shape the factors of production: the financial system; the innovation system; and the industrial relations system. The paper concludes that a new type of transformation--hybridization--is emerging. It is regarded as a consequence of German companies' growing integration into a global economic system.

Collective and individual voice: convergence in Europe?

“…Unions have retained a central position in the polity, thanks also to strong institutional mediation and mobilization capacity (Turner, 2004: 6); this is similarly the case in Sweden (Lindeberg et al, 2004). Nonetheless, external pressures -including challenges posed by employers in the context of globalization -makes such institutional support vulnerable in these countries (Lane, 2000;Lindeberg et al, 2004: 282;Turner, 2004: 7). Indeed, union density declined in Germany through the late 1980s and 1990s, although this in part reflects a function of Figure 2 Institutional complementarity in different settings Notes: c.f.…”

“…Public discussion of 'labour market reform' in Germany has nevertheless increasingly centred on a supposed need to remove 'rigidities'. Employers call for works councils to be allowed to make agreements without union approval (Lane, 2000;Singe and Croucher, 2005), thereby seeking to disarticulate key elements of the IR system. Lindeberg et al (2004: 282) suggest that, in Sweden, the employers' confederation SAF has set the terms of public discussion with similar arguments since the 1990s.…”

Convergence versus Divergence: Testing Varieties of Capitalism Perspective on the Globalization of Business Practices

“…On the one hand, there is an opinion that the CG powers of subsidiaries are small and even diminishing (see Kiel et al, 2006 for details). On the other, some publications maintain that German subsidiaries abroad in many cases are 'no longer of the "transplant" type' as they are encouraged to take more responsibilities in order to 'maximize the exploitation of local idiosyncrasies' and 'make efforts to become recognized as local by the adopted region' (Lane, 2000).…”

US Multi-Nationals and the German Industrial Relations System

“…USbased MNCs' activities have recently attracted considerable interest, often located within the general discussion of 'convergence' and 'divergence' of business practices (see for example Streeck 1997 andLane 2000 for two different views on the issue in relation to Germany). Some research has concentrated on companies' employment practices and their consequences in Europe or Germany (for example Gooderham et al 1999;Edwards/Ferner 2002).…”