9.2 Different Institutional Settings
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Organizations worldwide are confronted with diVerent environmental con-
straints. These may be the result of fundamental diVerences between countries
(Gospel and Pendleton 2003 ) or between regions. ‘Anglo-Saxon’ countries such as
the USA are less institutionalized with respect to employment relationships,
including industrial relations and HR issues, than ‘Rhineland’ countries such as
Germany, France, and the Netherlands. For example, in the Netherlands, institu-
tional mechanisms include the inXuence of the ‘social partners’ (including the
trade unions and works councils) and of labor legislation relating to works
councils, conditions of employment, collective bargaining,Xexible employment,
and security. At national level, the social partners and government reach agree-
ments on how toWght unemployment, how to reduce the number of people
entitled to disability beneWts, and so on (e.g. Paauwe and Boselie 2003 ). Several
items in PfeVer’s ( 1994 ) well-known list of ‘best practices’ are institutionalized in
Rhineland settings. For example, employee beneWts—one can think of health care
insurance, pension schemes, and security with respect to unemployment and
disability—are almost completely collectively determined in the Netherlands
(Visser and Hemerijck 1997 ). DiVerences between the environmental constraints
that companies face can also be a consequence of sectoral diVerences (Peccei
et al. 2005 ): for example, diVerences between traditional manufacturing and
knowledge-intensive services.
Within Europe, there are diVerences between regional groupings (for example
the ‘Nordic cluster’ of Norway, Denmark, Sweden, and Finland, the ‘Germanic
cluster’ of Germany, Switzerland, and Austria, and the ‘Latin European cluster’
of Italy, Spain, Portugal, France, and Belgium) as well as diVerences among
nations (Brewster 2004 : 365 ). This has led a number of European academics to
make a plea for a more contextual perspective on HRM models in order to
correct for, and counteract, the universalistic nature of US-based HRM
approaches (e.g. Brewster 2004 ). Those subscribing to this stream of analysis
assume that US approaches cannot be applied in European settings and that,
therefore, each institutional setting requires its own unique HRM model (Brew-
ster 2004 : 367 ). However, we strongly believe it is more useful to develop an
approach, as in theWeld of comparative IR (e.g. Kochan et al. 1984 ; Poole 1986 ),
that suits, and can be adapted to, diVerent institutional settings. This approach
implies that we need to reWne the analysis of HRM in order to take account of
the shaping of HR practices in diVerent institutional settings. This reWnement
can be built on new institutionalism (DiMaggio and Powell 1983 ; Scott and
Meyer 1994 ). But before we elaborate this point, we will discuss traditional
strategic HRM approaches.
168 jaap paauwe and paul boselie