The end of national models? Future of comparative institutional analysis.

1. The end of national models? Future of comparative institutional analysis. David Marsden, LSE Changing Business, Innovation and Employment Systems University of Manchester workshop November 10 2006

2. The end of national models? Future of comparative institutional analysis. • Decline of the ‘national model’ • Build up from the micro-level • Diffusion by inherent advantages and by complementarity • Complementarity among HR practices • Clustering of HR practices across organisations • Contracting problems, solutions & external linkages • Illustration: coal mining and construction as sectoral systems.

3. Erosion of national models • G: significant: the exemplar of corporatism • German trends: works councils & bargaining coverage • Nearly 50% of West G employees no B/r Source: IAB Panel cited in Kohaut and Schnabel (2003)

4. Building up from micro-level • Not an individualistic agenda, but want to see what macro institutions interact with. • Evolutionary games: eg Hawk-Dove-Bourgeois (Maynard-Smith) • Illustrate how a territory rule can emerge from interaction without a central authority • Rule emergence can be boosted by institutional intervention

5. Building block 1: Evolutionary rules Pay-offs to ‘own strategy’ are shown in the rows. Key assumption: cost of serious injury (= -20) > gains of victory (= +10); long contest = -3) Based on Maynard Smith (1982).

6. Diffusion processes • Institutionalisation: mimetic / normative / coercive • Particularly interested in diffusion by mutual advantage, hence interest in: • Benefits and costs of rule observance • Complementarities among rules • Supporting institutions

7. BB 2: diffusion • Complementary institutions may shift curves to right • Eg. rules on training and skill content • Eg. Diffusion of job classification principles • Boost effectiveness & increase adaptability • Weakness is assumption of continuity

8. Discrete Complementarity • Discrete models • Q(A&B) >Q(A&B’) and >Q(A’&B) • Ditto for Q(A’&B’) • Matching process • Level of institutions (Amable et al: coop IR & l-t finance) • Level of practices (MacDuffie et al) • Mutual diffusion of complementary rules / practices Participative management AB’ AB Individual incentive Collective incentive A’B’ A’B Hierarchical control

9. Clustering of HR practices across organisations • HR flows • HR development • Managing performance • Adapting to change • Moral hazard problems • Solutions: substantive v procedural commitments • External dependencies

10. Organisational incentives Commitment building, fair procedures, diffuse job boundaries, broad rewards Focus on procedural regulation Focus on substantive outcomes ‘Efficiency wages’, compensating differentials, ‘transactional’ ethos Market incentives Approaches to regulating moral hazard in employment relationships • In search of complementarities: • Illustrate from HR literature • Agency, Psych contract, OJ, job design, expectancy, goal setting etc. • Institutional supports

11. An illustration at sub-national level • Dunlop’s analysis of HR practices & work rules in coal mining and construction • Many rules predate legal and TU regulation • Influence of technology and market organisation • Influence of contracting issues: defining performance, monitoring & fair rewards • Ideal is to go beyond Dunlop: WERS/REPONSE/IAB? • Search for sub-national and cross-national systems

12. An illustration of rule complementarities within sectoral IRS