The analysis illuminates howWrm-level HR practices interact with, and are
reinforced by, societal institutions as evidenced through the roles of social actors.
Also, unlike many comparative studies of HRM, it seeks to test an interesting set
of theoretical principles, extending our knowledge of the functioning of the open-
ended employment relationship to a cross-national setting. However, by accepting
a rational choice framework, where worker and employer exercise free choice,
Marsden has very little to say about situations where a worker is not free to reject
a situation where the risk of employer opportunism is high. Very little is oVered to
explain patterns of labor market inequality, the undervaluation of women’s work,
or the poor conditions associated with secondary labor markets.^5 There may be
an opportunity, therefore, for adapting Marsden’s theoretical framework to
incorporate notions of power imbalance between worker and employer, although
this would then clearly depart from the equilibrium notions at the core of
his work.
Like Marsden, Hall and Soskice’s varieties of capitalism approach begins with a
consideration of the incentive structures of theWrm and the employment relation-
ship (mainly following Milgrom and Roberts 1992 ). They identify two ideal types
of institutional arrangements, in whichWrms resolve coordination problems in
alternative ways—termed liberal and coordinated market economies. But where
Marsden emphasizes institutions as providing a supporting role to the strategic
decisions ofWrms, for Hall and Soskice institutions act as an interlocking system of
collective rules and networks (‘socialising agencies’): in their words, ‘In any
national economy, Wrms will gravitate toward the mode of coordination for
which there is institutional support’ ( 2001 : 9 ) and, similarly, ‘institutions oVer
Wrms a particular set of opportunities; and companies can be expected to gravitate
toward strategies that take advantage of these opportunities’ (ibid.: 15 ). As such,
their approach is radically diVerent from theWeld of HRM, whereWrm strategy is
typically viewed as relatively unconstrained by national institutions. In particular,
as Culpepper has noted, the varieties of capitalism approach can make ‘grim
reading’ for public policy makers since it implies that where certain preferred
Wrm strategies are not compatible with a given institutional framework, it is better
to stick with alternative strategies that are compatible, ‘even if that means aban-
doning goals that could improve both the competitiveness ofWrms and the wages
of workers’ ( 2001 : 275 ).
But by granting stronger agency to institutions, the varieties of capitalism
approach can illuminateWrm strategy with regard to HRM. For example, with
respect to training decisions, the varieties of capitalism approach argues thatWrms
(^5) Marsden does recognize this limitation and points to the work of economists in specifying the
way employers in low wage labor markets act with a degree of monopsony in setting wage rates and,
perhaps more importantly, opting to run with high levels of vacancies, thus generating higher
workloads for employees ( 1999 :231 2).
82 damian grimshaw and jill rubery