former, companies obtain a large proportion of their finance from the stock
market; company law prescribes that directors are primarily or exclusively
responsible to the interests of shareholders; there are few restraints on
takeovers; and executive rewards commonly reflect performance as measured
by share price. The consequence is a bias towards ‘short-termism’ (Hutton,
1995), with company policy driven by the need to maximise short-term indi-
cators of ‘shareholder value’. The alternative model is one in which a higher
proportion of company finance is drawn from institutional investors with a
long-term commitment to the firm’s success; hostile takeovers face many
obstacles; management is permitted, or expected, to take account of a wide
range of ‘stakeholder’ interests; and corporate governance systems reflect this
plurality of interests (for example, through the existence of supervisory
boards). This dichotomy between ‘stock-market’ and ‘welfare’ capitalism (Dore,
2000), like all simple classificatory schemes, neglects far wider patterns of
national diversity in property regimes; but it highlights real contrasts in the
imperatives confronting managements, contrasts with very important implica-
tions for industrial relations.
The production regimeThe term ‘production regime’ refers to the system of organisation of work and
workers – which embraces a wide range of themes central to other chapters in
this volume. Elements of this regime include the division of labour within the
work process, the nature and quality of skills, the ways in which tasks are allo-
cated to different individuals and groups, the hierarchy of pay and the opera-
tion of promotion ladders (Marsden, 1999). Here, it has become common
practice to draw a contrast between the low skill levels and rigid division of
labour associated with standardised mass production, and the more polyvalent
skills required in some alternative production systems. Much recent literature
sums up this contrast under the labels ‘Fordism’ (the model of assembly-line
production developed by Henry Ford in his car factories) and ‘post-Fordism’ (for
a critical discussion of this dichotomy see Hyman, 1991). Closely related are two
central issues for the management of labour: does the employer control perfor-
mance though close supervision and strict discipline, or seek to encourage ini-
tiative and responsibility by cultivating trust (Streeck, 1987)? And are employees
treated as disposable resources, to be discarded when costs have to be cut, or do
they enjoy a long-term status within the firm (as, at least in theory, with the
traditional principle of ‘lifetime employment’ in large Japanese companies)?
Within any country, production regimes can vary between firms, partly
reflecting the requirements of different industries and services, but also in line
with employers’ strategic choices. To take another familiar distinction, there is
a ‘low road’ and a ‘high road’ to competitive success: firms may attempt to
compete on the basis of low cost or of high quality. Even within companies,
different categories of worker (or even individuals) may be subject to different
414 International Human Resource Management