Ahrweiler/Gilbert/Pyka: Institutions matter but ...
many is considered to be burdened with an "old” institutional infrastruc-ture compared to the UK. Germanindustrial society contains nationally unified institutions such as largeindustrial corporations, bureaucraticorganisations, professional manage-ment, dual professional educationsystems, social security systems,labour unions and formal regulation,hierarchical co-ordination and ataylorised structure of work. As Hei-denreich states: "There are no signsthat Germany and other ContinentalEuropean economies will follow theBritish lead and will get rid of theirinstitutional structures developed overdecades. These particular institutionalsettings cannot be dismissed as the
old garbage of industrial society
” (Heiden-reich/Toepsch 1998: 14; own transla-tion).Compared to the UK, some require-ments of modern knowledge societies(see e.g. OECD 1996) are less likely tobe fulfilled by the institutional infra-structure in Germany. Focussing onknowledge creation, knowledge trans-fer and the commercialisation of knowledge, knowledge-based econo-mies require permanent access acrossborders between nations and firms asa pre-condition for economic action.This is needed to achieve, for example,quick commercialisation of scientificresults from basic research, easy access to finance for risk-intensiveprojects, the motivation of scientificentrepreneurs, and the availability of participative management skills. Tosatisfy project requirements, highly-qualified and flexible staff have to beable to migrate without the hindrancesresulting from firm and educationbarriers (for German difficulties in thisarea see Soskice 1997, EPOHITE 2000).Table 1 summarises the issues.The VoC literature would seem topredict that innovative industries,characterised by a high researchintensity, extensive capital needs, andhigh risk and uncertainty, would facedifficult development conditions inGermany and would be far less devel-oped than the UK's – and that this willstay as it is because institutionschange slowly, if at all. Compared tothe UK, the comparative advantage of Germany would be best maintained by concentrating its strength in the con- ventional industrial sectors.
Table 1- National institutional frameworks in Germany and the UK
regulative (coordinated sys-tem of wage bargaining;constraints on employeedismissals)liberal (decentralised wagebargaining; fewer barriers toemployee turnover)
stakeholder system (two tierboard system plus codetermi-nation rights for employees)shareholder system (minimallegal constraints on company organisation)
Skill formationand technol-ogy transfer
organised apprenticeshipsystem with substantial in- volvement from industry.Close links between industry and technical universities indesigning curriculum andresearchno formal apprenticeshipsystem for vocational skills.Links between universitiesand firms almost exclusively limited to R&D activities andR&D personnel
primarily bank-based withclose links to stakeholdersystem of corporate govern-ance; no hostile market forcorporate controlprimarily capital marketsystem, closely linked tomarket for corporate controland financial ownership andcontrol of firmsSource: Casper/Kettler 2001: 14