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La Théorie de la Régulation au fil du temps

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Robert Boyer

Chapitre 5. Mondialisation et intégration européenne

5.2. Varieties of Capitalism Revisited: Globalisation and comparative institutional advantage

Bob Hancké

Texte intégral

1Globalisation has reopened an old debate in the social sciences: how much will the economic and industrial systems of different countries converge on a single standard? Or will differences between national production regimes persist? And, if so, how and why would these systems converge or diverge?

  • 248 Berger & Dore, 1996.

2Orthodox economics leaves little doubt about the answers to these questions: international market competition will force factor prices to converge over the long-term, and as a result, the most efficient way of producing goods and providing services will, through natural selection, as it were, become adopted everywhere. As a result, differences between national production regimes will disappear248.

3Yet precisely such a convergence appears not to be taking place. In the United States, labour relations are still primarily a (human resources) management affair, capital is obtained in a highly liquid, deregulated capital market, and training is primarily firm-specific. In Germany, on the other hand, the labour relations system as well as the dual training system is governed by strong employers associations, labour unions and works councils, while close ties between banks and firms offer the former close monitoring possibilities.

  • 249 Amable, Barré & Boyer 1997 ; Casper 1999.

4More importantly, research on innovation suggests that the relative specialisation of Germany and the USA in different markets not only was and still is very complementary – meaning that the US is strong in areas where Germany is not and vice versa – but that this relative specialisation has in fact increased since the mid-1980s249.

5The debate on convergence versus divergence may therefore simply be asking the wrong question. What is needed is not so much a theory of “lack-of-convergence”, but a fundamentally different theory which explains patterns of divergence.

Comparative institutional advantage

6Anyone familiar with institutional transfer and the adoption of so-called best practice knows that companies cannot just import what they consider to be the most optimal element in one area to solve a particular problem they have there. The national institutional frameworks that companies are embedded in are not just mere collections of unrelated institutions governing economic action, but are linked in highly systemic ways, whereby the constituent elements reinforce one another.

  • 250 Milgrom & Roberts 1992.

7This idea of complementarities250 is a methodological building block for understanding comparative institutional advantages, since, in contrast to conventional marginalist approaches, it actually understands systems in (what are called in technical terms) super-modular ways, i.e. where the constituent elements are linked in discrete structures. The system of stable financing arrangements in Germany, for example, underpins the training system, by assuring that investment in workers is paid off over the long term. This, in turn, is supported by the works council structure in the companies who police the training arrangements and the labour unions who negotiate skills and training. Unions also set wages at industry level, which reinforces cooperation between companies. This, then, becomes a sanctioning tool for industry associations in areas such standard-setting and technology transfer. In short, all the elements work together towards – and, it could be argued, actually rely on each other for – an efficient system.

  • 251 Amable et al. 1997.

8Particular product market and innovation strategies require particular configurations of such institutional arrangements251 (see Soskice, 1999 for systematic treatments of this point). Without the training system, Mercedes would be unable to build the cars it wanted and the German machine tool industry would not have been the success it was. Conversely, the deregulated labour market is a crucial condition for the emergence of high-tech sectors in Anglo-Saxon economies, since they allow for flexible adjustment of skills and skill requirements as well as reward systems and incentive structures of scientists and engineers. In sum, as a result of the institutional configurations that countries are endowed with, and of their influence on company strategies, national economies follow very different adjustment trajectories.

Institutions and innovation dynamics

  • 252 Porter 1990.

9This approach, which could be called a theory of comparative institutional advantage, offers an analytical framework for analysing a wide range of empirical phenomena. For example, Porter252 distinguished clear differences between the trade balances of market economies such as the USA and the UK on the one hand, and a different type of market economies, including Germany, Sweden and Switzerland, on the other. The first are, according to Porter, superior in new high-tech industries such as bio-technology and software, and in international services such as consulting, advertising or investment banking. The others, in contrast, are very strong in established industries such as machine tools, the chemical industry or luxury cars.

  • 253 Soskice 1999.

10These differences in the innovation paths can be explained as a result of the different institutional requirements of radical and incremental innovation253. Radical innovation refers to products, services and organisational processes that do not build on already existing forms of knowledge, but that consist of a sharp break with experiences and knowledge acquired in the past. This type of innovation requires relatively deregulated labour markets so that contracts can be shifted around rapidly and major contributions to commercial breakthroughs can be rewarded with high bonuses, while capital markets have to be sufficiently open so that venture capital is freely available.

11The term incremental innovation covers the cumulative development and improvement of “mature”, established products and production processes. The type of cumulative knowledge at the basis of this innovation strategy, is offered by long-term labour contracts, stable career patterns and industry-wide wage bargaining systems (to prevent poaching). Moreover, training is secured through stable links between companies and their providers of capital. In contrast to radical innovations, which are primarily found in the “liberal” market economies of the Anglo-Saxon type, incremental innovations are the hallmark of the “co-ordinated” market economies of the German type.

12This theory not only explains the static differences between countries, but also helps understand how national economies have evolved over the last decade. Whereas naive interpretations of globalisation assert an increased convergence of innovation systems and production regimes, a perspective based on comparative institutional advantage suggests that increased trade will – as Ricardo argued two hundred years ago – lead to increased specialisation, on the basis of the differential comparative (institutional) advantage.

  • 254 Casper et al. 1999.

13Figure 1a, and figure 1b present data from the European Patent Office (EPO) on patents in Germany and the USA. These data give the ratio of that country’s patents in the sector (numerator) and the world average in that sector (denominator). The USA and Germany have fundamentally different profiles. In the USA, innovation follows the predicted path of radical innovation: e.g. biotechnology, semiconductors, software, and telecommunications. In areas of incremental innovation, such as machine tools, consumer goods and environmental technology, however, the USA perform comparatively weakly. The German innovation system, as it can be read in these data, is almost a mirror image of the American: patents in incremental innovation dominate, while radical innovation is rather weak254.

14Furthermore, the evolution of relative patent specialisation demonstrates that the innovation patterns of both countries have become more differentiated: the German strength in sectors characterised by incremental innovation has increased since the mid-1980s, while the share of patents reflecting radical innovation has decreased. The inverse is true for the United States.

Figure 1a. Specialisation index of European Patent Office (EPO) patents of German origin in relation to the average distribution at the EPO for the periods 1993 to 1994 and 1983 to 1984.

  • 255 Ernst & Young 1998.
  • 256 Casper et al. 1999.

15However, as a recent report255 has argued, over the last few years the German biotechnology sector has grown rapidly, up to the point where it seems poised to dethrone the until then strongest country, the UK. The software sector too has witnessed dramatic growth: SAP is the largest business software house in Europe and Debts (Daimler-Benz Information Services) as well as Siemens also belong to the largest European software companies256. At first sight these developments appear to contradict the thesis of relative specialisation. A finer analysis suggests, however, that the picture is more complicated.

  • 257 Casper 1999.

16 Both in software and bio-tech new market segments have emerged alongside the radical innovation segments. In the bio-tech sector, for example, platform technologies are distinguished from therapeutics257. Research in therapeutics is characterised by almost permanent shifts in technology, often involving radical changes in the entire research department. Moreover, the difficulties in testing, the long-term nature of drug approval and the high R&D costs, make financial risk extremely high in this segment. As a result, the deregulated institutional arrangements in the labour and capital markets that characterise the liberal market economies are the most appropriate for this business line in bio-tech.

Figure 1b. Specialisation index of European Patent Office (EPO) patents of United States origin in relation to the average distribution at the EPO for the periods 1993 to 1994 and 1983 to 1984.

17By comparison, platform technologies – e.g. the development of tools for therapeutics research – rely considerably more on cumulative knowledge, almost always a result of long tenure within firms. Since total debacles are almost excluded, regulatory hurdles small and commercialisation possibilities high, the financial risk is much lower. Long-term contracts, typical for the German labour market, provide the human resources conditions for cumulative knowledge, while the relative lack of venture capital does not pose problems for financing research into new products.

18A large part of the German bio-tech industry indeed is, as the theory of comparative institutional advantages predicts, located in the segment of platform technologies, while therapeutics is the most important area of specialisation in the UK.

  • 258 Lehrer 1998 ; Casper et al. 1999.

19A similar development has taken place in software. Business software, with an emphasis on customisation, technical support and adaptation of programs has emerged as an important market alongside the standardised software258. While German firms appear to dominate the former, the latter is controlled by US firms.

Conclusion

20How can we understand the persistent differences between the innovation systems of different countries? In contrast to orthodox economic theories, who predict a convergence of the production regimes in different countries toward a single (or limited number of) best practice model(s), this contribution has emphasised the diversity of adjustment trajectories of advanced capitalist economies. Because of different institutional framework conditions, different national systems have different comparative advantages, which determine in which industries and product markets national economies specialise.

21Institutional convergence is not only undesirable – since it would reduce product diversity – it is probably also impossible. It would entail a complete deconstruction of the German (or French, or Swedish, or Swiss) production and innovation system, including the labour relations, training and financial system. Yet all these “sub-systems” are intimately linked, and a partial deregulation of the labour market (say, by dismantling the collective bargaining system without touching the training system) is therefore likely to lead to very little substantial change or to total deregulation. Piecemeal adaptation is very hard.

  • 259 Coriat & Weinstein 1999.

22Two questions for future research follow from this analysis. The first is to elaborate, both formally and empirically, the tightness of fit between the different constituent elements of national institutional frameworks. Is it possible to model the “systemic” nature of institutions that is at the basis of the theory of comparative advantage? And do deviations from those models follow systematically different paths in the different countries? The second is to understand the adjustment paths of the different countries. Will, for example, the financial crisis that Japan has been going through, lead to a return to the previous situation, radically change the nature of the Japanese production regime because one of the central building blocks of the system is collapsing, or will institutional adjustment (have to) be consistent with more or less stable existing institutions? Answering these questions will allow us to see how institutions are linked and if indeed institutions are structured hierarchically259.

Bibliographie

Bibliography

Amable Bruno, Barré Rémi & Robert Boyer, 1997, Les Systèmes d’innovation à l’ère de la globalisation, Paris, Economica.

Berger Suzanne & Ronald Dore, 1996, National Diversity and Global Capitalism, Ithaca, Cornell University Press.

Casper Steven, 1999, National Institutional Frameworks and High-Technology Innovation in Germany: the case of biotechnology, Wissenschaftszentrum Berlin, WZB Discussion paper FS I, p. 99-306.

Casper Steven, Lehrer Mark & David Soskice, 1999, « Can high-technology industries prosper in Germany? Institutional frameworks and the evolution of the German software and biotechnology industries », Industry and Innovation, 6/1, p. 5-24.

Coriat Benjamin & Olivier Weinstein, 1999, Organisations et institutions dans la génération de l’innovation (manuscript), Paris, CREI.

Ernst &Young, 1998, Aufbruchstimmung 1998: First German Biotechnology Survey, Munich, Ernst & Young.

Lehrer Mark, 1998, Die Entstehung und Entwicklung von Innovationsmärkten: Eine Fallstudie über die deutsche Software-Industrie (manuscript), Berlin, Wissenschaftszentrum Berlin.

Milgrom Paul & John Roberts, 1992, Economics, Organisation and Management, Englewood Cliffs, Prentice Hall.

Porter Michael, 1990, The Competitive Advantage of Nations, New York, The Free Press.

Soskice David, 1999, « Divergent production regimes. Coordinated and uncoordinated market economies in the 1980s and 1990s », in Herbert Kitschelt, Peter Lange, Gary Marks & John Stephens (eds), Continuity and Change in Contemporary Capitalism, Cambridge, Cambridge University Press, p. 101-134.

Notes

248 Berger & Dore, 1996.

249 Amable, Barré & Boyer 1997 ; Casper 1999.

250 Milgrom & Roberts 1992.

251 Amable et al. 1997.

252 Porter 1990.

253 Soskice 1999.

254 Casper et al. 1999.

255 Ernst & Young 1998.

256 Casper et al. 1999.

257 Casper 1999.

258 Lehrer 1998 ; Casper et al. 1999.

259 Coriat & Weinstein 1999.

Table des illustrations

Légende Figure 1a. Specialisation index of European Patent Office (EPO) patents of German origin in relation to the average distribution at the EPO for the periods 1993 to 1994 and 1983 to 1984.
URL http://books.openedition.org/emsha/docannexe/image/305/img-1.png
Fichier image/, 32k
Légende Figure 1b. Specialisation index of European Patent Office (EPO) patents of United States origin in relation to the average distribution at the EPO for the periods 1993 to 1994 and 1983 to 1984.
URL http://books.openedition.org/emsha/docannexe/image/305/img-2.png
Fichier image/, 31k

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WZB, Berlin

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