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Institutional Complementarities - Coggle Diagram
Institutional Complementarities
Coordinated Market Economies (Germany)
Exchange of Information
The financial system provides companies with access to finance that's not entirely dependent on publicly available financial data or current returns
Presence of dense networks linking the managers & tech personnel inside a company to counterparts in other firms for sharing of reliable info
Access to "private" or "inside" info about the operation of the company
Firms can share info with third parties in a position to monitor the firm and sanction it for misleading them
Germany
info is available to investors through close relationships cultivated by companies with major suppliers and clients
info is available through knowledge secured from extensive networks of cross-shareholding
info is available through joint membership in active industry associations that gather information
Monitoring of Behavior
The internal structure of the firm reinforces the systems of network monitoring
Germany
top managers rarely have a capacity for unilateral action
top managers must secure agreement for major decisions from supervisory boards
structural bias toward consensus decision-making encourages the sharing of info
develops reputations for providing reliable info, facilitating network monitoring
Managerial incentives reinforce the operation of business networks
Long-term employment contracts & premium placed on a manager's ability to secure consensus for his projects
less focus on profitability
Cooperation with a Capacity for Deliberation
Cultivate inter-company relations that facilitate the diffusion of new technology across the economy.
Germany
relationships are supported by a number of institutions
business associations work with public officials
determine where firm competencies can be improved
orchestrate publicly subsidized programs
cannot rely as heavily on the movement of scientific/engineering personnel across companies for tech transfer
access to private info helps them ensure that the design of the programs is effective
Sanctioning of Defection from Cooperative Endeavor
Firms employ production strategies that rely on a highly skilled labor force
Given substantial work autonomy
Encouraged to share the information it acquires
Germany
sets wages through industry-level bargains between trade unions & employer associations that follow a leading settlement
equalizes wages and equivalent skill across an industry
makes it difficult for firms to poach workers
assurance to workers that they are receiving the highest feasible rates of pay in return for the deep commitment the are making to firms
Depend on education and training systems capable of providing workers with high industry/firm-specific skills
Germany
relies on industry-wide employer associations & trade unions to supervise a publicly subsidized training system
pressures major firms to take on apprentices & monitors their participation
negotiates industry-wide skill categories & training protocols with firms in each sector
workers assured that apprenticeship will result in lucrative employmet
firms assured that workers will acquire usable skills and will not be poached
Liberal Market Economies (USA)
Sanctioning
based, for the most part, on standard market relationships and enforceable formal contracts
USA
relations are also mediated by designed to prevent companies from colluding to control prices or markets
Monitoring of Behavior
rely heavily on the market relationship between individual worker and employer to organize relations with their labor force
Top management normally has unilateral control over the firm
Firms are not obligated to establish representative bodies for employees such as works councils
coordination is more difficult to secure so LMEs depend more heavily on macroeconomic policy and market competition to control wages and inflation
Exchange of Information
encourage firms to be attentive to current earnings and the price of their shares on equity markets.
inside information is only accessible if monitorable, e.g. by venture capitalists
finance available on publicly assessable information, all risks, reputations if publicly assessable
lacks the close-knit corporate networks capable of providing investors with inside information about the progress of companies
Education and Training Systems
generally complementary to these highly fluid labor markets
Vocational training is normally provided by institutions offering formal education that focuses on general skills
high levels of general education lower the cost of training; substantial in-house training is then offered for the marketable
skills that employees have incentives to learn