In an era where the world is more connected than ever, the word ‘globalisation’ is constantly being used to understand the changes in societies and in employment relations, i.e. by one economy being connected to the world it will influence its employment relation practices.
A third approach, Varieties of capitalism (VOC), was created as an evolving theory from the criticisms of those two previous approaches. This essay is an overall evaluation of VOC. Can it be criticised? Yes… in my opinion.
II. Evaluating VOC
VOC is a firm-centric approach used for the understanding/comparison of employment relations in different countries (Bamber, Lansbury & Wailes, 2011). It disagrees with the simple globalization by proving that a simple convergence is not possible due to different institutions arrangements and history. Additionally it also goes a step further than the simple view of institutional since it explains the reasons behind the differences. With the firm at the centre of the analysis, traditionally VOC is divided in two main forms of capitalism:
- Liberal market economies
- and Coordinated market economies
Although it is important to have a general understanding of the differences in forms of capitalism a academic/researcher should not draw into conclusions from generalisations since he/she might overlook important differences, thus no matter how many clusters are created a more detailed analysis and comparison will always be necessary. In this case, the VOC approach of the textbook has the advantage of specifying a number of variables for comparison (Bamber, Lansbury & Wailes, 2011, p19):
- Industrial relations
- Vocational training and education
- Corporate governance
- Inter-firm relations
- Relations with its own employees
Conversely, the traditional VOC can as well be criticised by being too deterministic and too focused on national institutions. The first case is due to its firm-centric approach where VOC can overlook the role of social actors (having them too dependent on institutional context), where in fact workers and the state can also shape institutions. In the second case it is mainly due to the assumption of closed economies, where in fact international pressures can indeed affect institutions within a certain economy (e.g. multinational firms). To overcome those criticisms it is necessary to approach VOC with an historical factor, where there is the need to investigate: 1) the effect of the role of the state and labour movement within institutions and 2) trade and international framework agreements.
As mentioned, this approach can be considered as more analytical since it tries to explain the reasons behind the different employment relations while comparing different countries, i.e. it tries to investigate 1) why similar countries might have different outcomes and 2) why dissimilar countries might have the same outcomes. In fact, by trying to explain the root-causes of similarities and differences between economies VOC can become a valuable study while comparing with other approaches.
VOC is an evolving theory for the understanding of employment relations, it can be seen as a more adequate solution while comparing with simple globalization and institutional mainly because (Bamber, Lansbury & Wailes, 2011):
- it does not only focus on differences but also explains the commonalities within countries with different institutional arrangements;
- it does not treat institutions as independent variables, i.e. institutions by themselves also change;
- and it also tries to understand why the same institutional arrangements in different countries can produce different outcomes.
Finally, as mentioned, VOC can also be connected to chronological events, i.e. history matters, which can be good indicators to predict the future. Nonetheless answers can not be seen as given since rarely history repeats itself. There are always different factors, conditions and contexts behind every single change and therefore different reasons for differences among countries. But event if history would repeat itself this approach does no gives a guide for future directions. What should we do with the information collected?
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