will only collaborate eVectively in vocational training schemes if institutions
(operationalized through the state, employer associations, and unions) can provide
the necessary coordinating functions of information circulation, deliberation
(where collective discussions among social actors are encouraged), monitoring,
and sanctioning. In their absence, whatever its intentions and objectives, an
individualWrm will not commit to large investments in transferable worker skills
for fear of poaching byWrms that do not make such investments, and workers will
not participate unless they have a credible assurance that new skills will be
appropriately remunerated. Moreover, because this approach stresses institutional
complementarities—where a given type of coordination in one institutional sphere
is complemented by coordination rules in other spheres (Aoki 1994 ; see, also,
Amable 2003 )—the analysis can be extended to include the character of corporate
governance (especially regarding the types ofWnance of theWrm, the exercise of
control, and the objectives ofWnance providers), the legal conditions for employ-
ment protection, and the institutions of industrial relations (especially the content
and coverage of collective bargaining and the roles of works councils, unions, and
employer associations). The approach thus presents a considerable challenge to the
Weld of HRM to recast theWrm through the lens of how an interlocking web of
institutions enables or constrains particular strategic choices. Prescriptions for
Wrms to implement an HCWS bundle of HRM policies would be contingent
upon whether or not thisWts with the character of a country’s corporate govern-
ance system (can Wrms access capital with terms independent of short-term
Xuctuations in proWtability?), the system of vocational training (can employees
be certain of highly reputable, certiWed training?), and the industrial relations
system (can social actors discourage poaching through monitoring and sanction-
ing devices?).
The approach has nevertheless been criticized for an overly functionalist and
static view of a country’s interlocking set of institutions—a weakness that to a great
extent reXects the incorporation of mainstream economists’ notions of rational
choice and equilibrium into the analysis. With a focus on ‘rules of the game,’
country institutions are presented as establishing equilibrium ‘solutions’ to coord-
ination problems. Such an approach contrasts with that of historical institution-
alists where the focus is on the shifting balances of power and resources and on how
the multiple institutional processes at various levels interact in ways that often do
notWt together in a coherent whole, creating opportunities for actors to trigger
changes (Pierson and Skocpol 2002 ). Also, while a country systems approach is
useful for highlighting broad country diVerences, it glosses over important
diVerences within countries, especially concerning the extent to which the major
institutional framework covers the diversity of forms of employment relationships
and all groups of workers across labor market segments.
economics and hrm 83