Socio-Economic Review - recent issues

Dialectics of institutional change: the transformation of social insurance financing in Israel

Koreh, M., Shalev, M. — Fri, 18 Sep 2009 08:22:14 PDT

Social insurance financing is notoriously path-dependent, yet in Israel a series of unobtrusive changes ultimately led to the virtual elimination of employer contributions. This outcome is explained by combining insights into the politics and political economy of taxation with a theoretical approach to understanding institutional change which takes conflict seriously. Institutional arrangements typically emerge as settlements of inherently contradictory goals, and their foundational contradictions are not necessarily eliminated through processes of reproduction. Our case study illustrates how conflicting interests generate susceptibility to institutional change and shape its trajectories. While recent extensions to path-dependency theory suggest that institutions become vulnerable when returns decrease, we find that change may result from unbalanced returns (increasing for some while decreasing for others) or altered conditions which unleash repressed conflicts of interest. Further, in contrast to the expectation that institutional evolution follows a unidirectional path in which reversals are unlikely, we identify a dialectical trajectory which potentially includes the revival of seemingly foregone alternatives.

Recomposed institutions: smaller firms' strategies, shareholder-value orientation and bank relationships in Germany

Bluhm, K., Martens, B. — Fri, 18 Sep 2009 08:22:14 PDT

Small- and medium-sized enterprises (SMEs) are embedded differently in institutional spheres than large corporations. This influences how they are affected by institutional change. Based on our observations, scholars of the transforming German coordinated market economies are mostly focusing on large enterprises. In contrast, we explore how institutional change in the financing sector affects privately owned SMEs, especially those engaged in manufacturing. Additionally, we asked who is pushing SMEs towards a stronger shareholder-value orientation and how they respond to these changes. Although the direct impact of capital market actors on German SMEs is still limited, we find a diffusion of advanced management tools, which is linked in the literature to the shareholder-value concept, and a redefinition of firm–bank relationships without embracing the arms'-length, equity market-oriented mode of finance. These two features constitute a recomposition that includes institutional continuity as well as change.

The origin of corporate social responsibility: global forces or national legacies?

Gjolberg, M. — Fri, 18 Sep 2009 08:22:14 PDT

This paper explores the relative importance of global forces and national political-economic institutions for companies' willingness and ability to engage in corporate social responsibility (CSR). The globalist hypothesis postulates that a company's CSR efforts are a function of the dictates of the global market place: strong anti-globalization and anti-corporate sentiments generate a need for a positive reputation to obtain a ‘social license to operate’. The institutionalist hypothesis postulates that a company's CSR efforts are a function of institutional factors in the national political-economic system: companies based in political-economic systems with strong institutions for social embedding of the economy have comparative institutional advantages for success in CSR. The hypotheses are examined quantitatively by testing an index of national CSR performance against well-established political-economic indicators. The final analysis, based on qualitative comparative analysis (QCA), reveals causal heterogeneity and indicates two separate pathways leading to CSR success.

Ideals or compromises? The attitude-behaviour relationship in mothers' employment

Steiber, N., Haas, B. — Fri, 18 Sep 2009 08:22:14 PDT

This article addresses the marked variations in women's employment that exist within and across countries, with a specific focus on mothers of children below school-going age. Using comparative survey data for 26 countries, it investigates the determinants of maternal employment behaviour with women's attitudes as important predictors, alongside cost–benefit considerations and the influence of national context factors. Results show that mothers' personal care attitudes are significantly related to their paid work involvement. Yet, multilevel analyses reveal cross-country differences in the predictive power of such attitudes. Stressing that neither women's choices nor their attitudes can in fact be taken as expressions of what their personal ideals are, observed attitude–behaviour relations are interpreted as the result of two underlying processes—the selection of behaviours based on attitudes and the adaptation of attitudes to match the chosen behaviour.

Inequality measures as conventions: new interpretations of a classic operationalization problem

Kampelmann, S. — Fri, 18 Sep 2009 08:22:15 PDT

Various authors have identified a consensus among economists as to how inequality should be quantified, namely by implementing the ‘axiomatic approach to inequality measurement’. However, empirical studies have revealed that this method is often in contradiction with the attitudes of ordinary citizens towards inequality. It is thus a relevant question why the axiomatic approach still commands support in academic applications. This article adopts a historical perspective and presents evidence for our main hypothesis: the axiomatic approach can be interpreted as a result of conventions that allowed specialists to overcome the indeterminacy of the concept ‘inequality’. An unintended consequence of today's measurement conventions appears to be the crowding out of non-scientific representations.

DISCUSSION: A new labour economics?

Osterman, P., Auer, P., Gautie, J., Marsden, D. — Fri, 18 Sep 2009 08:22:15 PDT

At the 2008 SASE meeting in San José, Costa Rica, David Marsden organized a session on the prospects for a renewed institutional labour economics. The debate began with introductory remarks by Paul Osterman, who sketched out an argument that at the time was still in its very early stages. The introduction and the subsequent comments were found by the audience to be highly productive. After the session, the editors of Socio-Economic Review asked the participants to share their views with the readers of the journal. We are grateful to Paul Osterman for taking up the challenge and summarizing the state of his thinking in a brief draft of what has yet to be developed into a formal paper. We also thank the discussants who agreed to write up their comments on the basis of Osterman's intermediate draft.

The effect of public opinion on social policy generosity

Kenworthy, L. — Fri, 18 Sep 2009 08:22:15 PDT

Based on analysis of cross-country and over-time patterns in affluent countries in the late 1980s and the 1990s, Brooks and Manza contend that public opinion is a key cause of social policy generosity. A closer look at the evidence suggests reason for skepticism about this inference.

Four books on capitalism

Streeck, W. — Fri, 18 Sep 2009 08:22:15 PDT

Asset specificity, institutional complementarities and the variety of skill regimes in coordinated market economies

Busemeyer, M. R. — Wed, 24 Jun 2009 09:06:18 PDT

The concept of asset specificity has become very prominent in the literature on skill formation, welfare states and labour markets. Building on the varieties of capitalism (VoC) school, this paper points out three distinct shortcomings of this literature: first, the VoC approach does not fully account for the variation of skill regimes in coordinated market economies (CMEs); second, the VoC approach underestimates the importance of authoritative certification in determining the real portability of vocational skills; and third, the complementarities between skill formation and social policies are different from what is expected in the VoC contributions. I argue that the variation of skill regimes in CMEs covers not one, but two separate dimensions: firms' involvement in skill formation and the vocational specificity of the education system. On the basis of three case studies, I demonstrate the existence of three distinct skill regimes in CMEs: the segmentalist (firm-based) skill regime of Japan, the integrationist (school-based occupational) skill regime of Sweden and the differentiated (workplace-based occupational) skill regime of Germany.

Specificity versus replaceability: the relationship between skills and preferences for job security regulations

Emmenegger, P. — Wed, 24 Jun 2009 09:06:18 PDT

This article explores the relationship between skills and preferences for job security regulations. Two contrasting arguments are examined: the relative skill specificity thesis advanced by Iversen and Soskice [Iversen, T. and Soskice, D. (2001) ‘An Asset Theory of Social Policy Preferences’, American Political Science Review, 95, 875–893] and the replaceability thesis propounded by Goldthorpe [Goldthorpe, J. H. (2000) On Sociology. Numbers, Narratives, and the Integration of Research and Theory, New York, Oxford University Press]. Both arguments are based on the concept of asset specificity from transaction cost economics. However, they offer conflicting expectations. Iversen and Soskice expect employees with relatively specific skills to demand more job security regulations so as to increase the likelihood that there will be a return on investment. In contrast, Goldthorpe's reasoning implies that employees with very specific skills are difficult to replace. Consequently, they are less concerned about their job security than employees with few specific skills. Analysis of survey data lends support to Goldthorpe's replaceability thesis.

Taxation and the worlds of welfare

Prasad, M., Deng, Y. — Wed, 24 Jun 2009 09:06:18 PDT

We use Luxembourg Income Study (LIS) data to compare the progressivity of the tax structure in the USA and Europe. LIS data allow a comparison of tax rates that attempts to take different starting rates, thresholds and exemptions into account. Our study supports the argument others have made that the USA has more progressive taxes than the European countries. However, we find that Britain's tax structure is more regressive than those of the continental welfare states, making the mapping of tax structure onto the ‘three worlds of welfare’ imperfect. We also show that it is a mistake to assume that income and property taxes are always progressive: regressive examples of both are common in the data. But sales taxes are regressive wherever they are found, and we suggest that the proportion of tax revenue raised through sales taxes can serve as an index of overall progressivity in situations where the detailed data examined here are not available. We close by outlining several possible explanations for the inverse correlation between tax progressivity and welfare state effort.

Where do innovations come from? Transformations in the US economy, 1970-2006

Block, F., Keller, M. R. — Wed, 24 Jun 2009 09:06:18 PDT

This article seeks to reconnect to scholarship from the 1970s and 1980s that emphasized significant discontinuities in the development of the US economy. Drawing on a unique data set of prize-winning innovations between 1971 and 2006, we document three key changes in the US economy. The first is an expanding role of inter-organizational collaborations in producing award-winning innovations. The second is the diminishing role of the largest corporations as sources of innovation. The third is the expanded role of public institutions and public funding in the innovation process. This leads us to the surprising conclusion that the USA increasingly resembles a Developmental Network State in which government initiatives are critical in overcoming network failures and in providing critical funding for the innovation process.

Falling fertility rates: new challenges to the European welfare state

Vos, A. E. — Wed, 24 Jun 2009 09:06:18 PDT

One of the biggest issues currently plaguing many advanced industrialized countries is the persistence of below-replacement fertility rates (fewer than 2.1 children per woman). Decreasing fertility rates threaten economic growth, while government budgets have to accommodate more pension and health services, as the number of adults of working age who contribute to older generations' pensions diminishes. In addressing the dilemma of low fertility in Europe, we are inevitably confronted with a combination of institutional and human factors: while governments can attempt to put into place institutions and policies that will encourage childbirth (such as subsidies for children, family leave policies, and day care facilities), population reproduction is fundamentally a micro-level decision. The crux of the matter is that women and men must choose to have children; no number of institutional configurations will by themselves result in the birth of babies. Rather, it is the combination of systems of welfare provision, people's ability to provide for their well-being, and the choice of women and men to conceive children, that will likely result in increased fertility rates across Europe. This article examines several factors that influence the makeup of state, market, and family decisions, surveying literature in the field of work and family reconciliation and fertility decisions. The article concludes by highlighting several issues of societal polarization that are related to family policy and indicates avenues for future research on fertility and government policies.

On Suzanne Berger 'How We Compete: What Companies Around the World Are Doing to Make it in Today's Global Economy', New York, Doubleday, 2005: Panel at the SASE 2008 Annual Meeting, San Jose, Costa Rica

Streeck, W., Thelen, K., Whitford, J., Zeitlin, J., Berger, S. — Wed, 24 Jun 2009 09:06:18 PDT

Neil Fligstein Euroclash: The EU, European Identity and the Future of Europe. Oxford, Oxford University Press, 2008

Hay, C., Ross, G., Streeck, W. — Wed, 24 Jun 2009 09:06:18 PDT

Prize for best submitted article in 2008

Tue, 24 Mar 2009 10:29:02 PDT

Institutional embeddedness and the strategic leeway of actors: the case of the German therapeutical biotech industry

Lange, K. — Tue, 24 Mar 2009 10:29:02 PDT

This article aims at examining the strategic leeway of firms pursuing business strategies incompatible with the dominant institutional environment in a given market economy. In order to evaluate this question, we focus on the therapeutic biotech industry and draw a German–British comparison. Proponents of the varieties-of-capitalism (VoC) approach assume that German firms underperform in this industrial sector in comparison to British firms due to the institutional framework in which German firms operate; this framework is assumed to provide them with hardly any strategic latitude. The VoC approach is challenged by two alternative perspectives, in both of which it is believed that firms can have a high level of strategic leeway; in the first approach this is possible due to institutional heterogeneity within national market economies; and in the second approach, the above can be seen as the result of economic internationalization. Our empirical findings show that British firms are indeed more competitive in the therapeutical biotech industry, but only to a limited extent. German firms perform better than projected by the VoC approach because they operate in an institutionally heterogeneous environment and due to the impact of internationalization. Thus, we argue for the integration of these three perspectives in one explanatory approach.

Can new technology firms succeed in coordinated market economies? A response to Herrmann and Lange

Casper, S. — Tue, 24 Mar 2009 10:29:02 PDT

The contested institutionalization of policy paradigm shifts: the adoption of inflation targeting in Israel

Maman, D., Rosenhek, Z. — Tue, 24 Mar 2009 10:29:02 PDT

This article explores the political dynamics that have led to the adoption of inflation targeting in Israel, within the context of a broader process of policy paradigm shift. We consider inflation targeting as an institutional arrangement with far reaching consequences for the distribution of power between different state agencies. Therefore, like other processes of institutional change, its adoption is not the simple outcome of smooth processes of learning and acceptance of more rational and efficient practices. Rather, it is the result of political conflicts among state actors seeking to improve their positions in the political–economic field. On the basis of a detailed study of the political conflicts that emerged around the adoption of inflation targeting in Israel between the central bank and the Ministry of Finance, we illustrate the contested character of the institutionalization of the neo-liberal policy paradigm and highlight the actions of local political actors as a major mechanism through which worldwide diffusion of institutional practices takes place.

The downside of participatory-deliberative public administration

Baccaro, L., Papadakis, K. — Tue, 24 Mar 2009 10:29:02 PDT

This article provides an empirically grounded critique of ‘Participatory-Deliberative Public Administration’, based on an in-depth study of three participatory fora in South Africa: the National Economic Development and Labour Council, the Child Labour Intersectoral Group and the South African National AIDS Council. Drawing freely on Habermas' Between Facts and Norms, the article argues that coordination through deliberation is unlikely to occur in formal settings, where discourses are mostly about the accommodation of existing interests, and is more likely to be found in the informal public sphere, where the preferences of citizens are still malleable and where it is possible for civil society groups to build communicative power by articulating moral arguments that motivate and mobilize the public. This form of power can then be used by civil society groups to counterbalance other forms of (non-communicative) power that impinge on the formal decision-making sphere.

The global construction of development models: the US, Japan and the East Asian miracle

Taniguchi, R., Babb, S. — Tue, 24 Mar 2009 10:29:02 PDT

During the heyday of the ‘Washington Consensus’ in the 1980s and 1990s, the Japanese government became an increasingly vocal critic of its market-liberalizing prescriptions. Drawing on documents produced by the Japanese development bureaucracy, this paper analyses the origins of the Washington–Tokyo controversy, and suggests that it provides new insights into the nature of models of economic development. Such models are based on post hoc social constructs—interpretations of past events forged in part by development experts, but also by states, which can play a major role in selecting, interpreting and packaging development facts. Washington's ‘Anglo-Saxon’ model and Tokyo's ‘East Asian’ model were based on distinct interpretations of development facts, but were not as far apart as they seemed on the surface. We conclude that although development models may draw on local materials, they are also very much global products, constructed in the context of transnational networks and organizational fields.

Flexicurity and welfare reform: a review

Viebrock, E., Clasen, J. — Tue, 24 Mar 2009 10:29:02 PDT

The notion of ‘flexicurity’ has recently become a buzzword in European labour market reform. It promises to deliver a magic formula to overcome the tensions between labour market flexibility on the one hand and social security on the other hand by offering ‘the best of both worlds’. This article gives a state-of-the-art review on flexicurity. The development of the concept is set against the background of changed economic circumstances in the last two decades. The components of flexicurity are presented in more detail, followed by a review of ‘real worlds of flexicurity’ in selected European countries, with Denmark and the Netherlands as the most prominent examples. The third section considers the transferability of flexicurity policies across borders. Finally, we concentrate on collective actors involved in promoting the idea of flexicurity at European, supra-national and national levels. We conclude with a discussion of some tensions within and criticisms of the concept.

Old ideas in modern times: Is Keynes obsolete? Panel at the SASE 2008 Annual Meeting, San Jose, Costa Rica

Duran, C. R., Gourevitch, P., Hicks, A., Milberg, W. — Tue, 24 Mar 2009 10:29:03 PDT

Nina Bandelj From Communists to Foreign Capitalists: The Social Foundations of Foreign Direct Investment in Postsocialist Europe. Princeton and Oxford, Princeton University Press, 2008

Spillman, L. P., Kahancova, M., King, L. — Tue, 24 Mar 2009 10:29:03 PDT

Markets and knowledge: a review of Robert Shiller's The Subprime Solution and George Soros's The New Paradigm for Financial Markets

Major, A. — Tue, 24 Mar 2009 10:29:03 PDT