IBUS2002 Chap.3 Comparing National Systems of Work and Management
Comparing National Systems of Work and Management
Institutions still matter
Despite globalisation, national economic systems remain significantly different, and those differences shape how human resource management is carried out. The Week 3 topic introduces national business systems and varieties of capitalism, and compares coordinated with liberal market economies.
The slides organise the comparison around five sets of relationships: industrial relations and wage setting, vocational training, corporate governance, relations between firms, and relations with employees. Four of the five bear directly on the HR regime.
Why systems persist
Three core concepts explain persistence.
Complementarity means institutions reinforce one another; path dependency means past choices constrain present options; comparative institutional advantage means each configuration supports different competitive strengths.
A Swedish multinational case shows the home system travelling with the firm through coaching-style management, open hierarchy and stable ownership, while also showing managers importing performance pay from Britain and America. The airline group case adds legal contrasts between the UK and Ireland and Spain on redundancy pay and the binding force of collective agreements.
The approach generalises, but it identifies where friction will arise.
Why the chapter recurs
National systems are the explanatory engine of the whole course. Home and host effects in Chapter 4, decentralisation in Chapter 5, staffing patterns by parent nationality in Chapter 6 and pay regulation in Chapter 7 all depend on the contrasts introduced here.
Learn the five spheres well enough to use them quickly, and you will have a structure for comparing any two countries an exam question names.
What this chapter covers
- 01
National business systems
- 02
Coordinated and liberal market economies
- 03
Five spheres of coordination
- 04
Complementarity, path dependency and comparative advantage
- 05
Home institutions inside a Swedish multinational
Worked example · free
Use the five spheres to compare two countries
- 2List the five spheres and say which shape HRM directly.
- 2State the contrast to look for in each sphere.
- 2Explain why complementarity makes the comparison predictive.
Key terms
- National business system
- A national business system is the set of institutions in a country that shapes how firms are financed, coordinated and staffed.
- Complementarity
- Complementarity is the mutual reinforcement of institutions in different spheres, so that each works better because of the others.
- Comparative institutional advantage
- Comparative institutional advantage is the competitive strength a country's institutional mix gives to particular kinds of business activity.
- Liberal market economy
- A liberal market economy is one in which firms coordinate mainly through markets and flexible employment rules, as the airline case describes the UK and Ireland.
- Coordinated market economy
- A coordinated market economy is one in which firms rely more on collective, non-market institutions such as sector bargaining and shared training.
Comparing National Systems of Work and Management FAQ
What are the five spheres in the varieties of capitalism approach?
The slides list industrial relations, vocational training and education, corporate governance, inter-firm relations and relations with employees. Four of these relate directly to the human resource management regime, which is why the approach suits comparative HRM.
Does the varieties of capitalism approach describe every country accurately?
No. The slides note that it probably generalises too much, yet it brings important differences in how work is organised to light. The airline case also places Spain in a separate Mediterranean-type category rather than forcing it into one of two types.
What did the Swedish case reveal about national systems?
Home institutions shaped management through coaching rather than supervision, willingness to bypass hierarchy, a search for agreement and stable ownership. At the same time, managers imported performance pay and high-potential development from British and American practice, which the case reads as reverse transfer.
How do UK and Spanish rules differ in the airline case?
In the UK and Ireland workers need two years of service before redundancy pay applies and union agreements are non-binding by default. In Spain payment applies on becoming permanent and collective agreements are legally binding and enforceable in court.
Exam move
Make a one-page table with the five spheres as rows and two columns, coordinated and liberal, filled with the contrast you would expect in each. Learn the three core concepts as a connected story: complementarity holds a system together, path dependency limits change, and comparative institutional advantage rewards staying put.
Practise applying them to a multinational moving a practice abroad, predicting where it will fit and where it will clash. Use the Swedish case to rehearse both a country of origin argument and a reverse transfer argument, and the airline case for concrete legal contrasts on redundancy and bargaining.
Write two Section A style answers in your own words, one explaining a core concept and one comparing two economy types, then check each for a definition, a mechanism and an implication.
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