A widespread rhetoric suggests that market-like rules dominate employment relationships, and particularly compensation, but empirical evidence is inconclusive. This research examines organisations’ compensation policies in clusters of European capitalist economies to test such a hypothesis. Four fuzzy clusters emerged from data, namely, Standard, Internalised, Competitive and Incentive, which illustrates a division between organisation- and market-based models. Collective pay rules characterise organisation-based model, and this is the predominant model in all countries except for the liberal market economies. Firms from different models of capitalism rely on internal labour market pay rules, suggesting that the scope of the liberal market system is narrow. Differences within clusters of capitalist economies suggest a role for agency and hidden labour market specificities in each grouping. The similarities of pay policies open room to identifying capitalist economies differently.
AbowdJMKramarzFMargolisDN (1999) High wage workers and high wage firms. Econometrica67(2): 251–333.
2.
AkerlofGA (1970) The market for "lemons": quality uncertainty and the market mechanism. The Quarterly Journal of Economics84(3): 488–500.
3.
AmableB (2003) The Diversity of Modern Capitalism. Oxford, UK: Oxford University Press.
4.
AmemiyaT (1984) Tobit models: a survey. Journal of Econometrics24(1–2): 3–61.
5.
AntonelliGCaliaPPGuidettiG (2012) Institutions, models of capitalism and inequality in income distribution: an empirical investigation. Socio-Economic Review17(3): 651–685.
6.
BakerGGibbsMHolmstromB (1994) The wage policy of a firm. The Quarterly Journal of Economics109(4): 921–955.
7.
BastosPMonteiroNPStraumeOR (2009) Firm heterogeneity and wages in unionised labour markets: Theory and evidence. Labour Economics16(4): 440–450.
8.
BezdekJC (1975) Mathematical model for systematics and taxonomy. In: EstrabrookG (ed) Proceedings of the International Conference on Numerical Taxonomy. San Francisco, CA: Freeman, Vol. 77, 143–166.
9.
BidwellMF Fernandez-MateoIBriscoeF.Fernandez-MateoI, et al (2013) The employment relationship and inequality: how and why changes in employment practices are reshaping rewards in organizations. Acta Medica Academica7(1): 61–121.
10.
BrewsterC (2004) European perspectives on human resource management. Human Resource Management Review14(4): 365–382.
11.
CaliendoMFedoretsASchröderCPreussMWittbrodtL (2017) The Short-Run Employment Effects of the German Minimum Wage Reform. Discussion Paper No. 11190. Bonn, Germany: IZA.
12.
CardosoARPortugalP (2005) Contractual Wages and the Wage Cushion Under Different Bargaining Settings. Journal of Labor Economics23(4): 875–902.
13.
CastroFSaltoMSteinerH (2013) The Gap between Public And Private Wages: New Evidence For the EU. Economic Papers No. 508. Brussels, Luxembourg: European Commission.
14.
CobbA (2015) How firms shape income inequality: stakeholder power, executive decision making, and the structuring of employment relationships. Academy of Management Review41(2): 324–348.
15.
CrouchC (2005) Dialogue on 'Institutional complementarity and political economy'. Socio-economic Review3(2): 359–382.
DavisMLaneJMccallBNestoriakENFreedmanMLaneJ, et al. (2009) Product market Competition and Human Resource Practices in the Retail Food Sector. Industrial Relations: A Journal of Economy and Society48(2): 350–371.
18.
Della TorreEPelagattiMSolariL (2015) Internal and external equity in compensation systems, organizational absenteeism and the role of explained inequalities. Human Relations68(3): 409–440.
19.
DoeringerPBPioreM (1971) Internal Labour Markets and Manpower Analysis. Lexington, MA: D. C. Heath.
20.
DølvikJEMarginsonPAlsosKArnholtzJMeardiGMüllerTTrygstadS (2018) Collective wage regulation in northern europe under strain: multiple drivers of change and differing responses. European Journal of Industrial Relations24(4): 321–339.
21.
Du CajuPLamoAPoelhekkeSKátayGNicolitsasD (2011) Inter-industry wage differentials in EU countries: what do cross-country time varying data add to the picture?. Journal of the European Economic Association8(2–3): 478–486.
GoergenMWoodGTBrewsterC, et al. (2012) Varieties of capitalism and investments in human capital. Industrial Relations: A Journal of Economy and Society51: 501–527.
24.
GuptaNConroySADeleryJE (2012) The many faces of pay variation. Human Resource Management Review22(2): 100–115.
25.
HallPASoskiceD (2001) Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford, UK: Oxford Economic Press.
26.
HanckéBRhodesMThatcherM (2007) Beyond varieties of capitalism. In: HanckéBRhodesMThatcherM (eds) Beyond Varieties of Capitalism: Conflict, Contradictions, and Complementarities in the European Economy. Oxford, UK: University Press, 1–16.
27.
HeyesJLewisPClarkI (2012) Varieties of capitalism, neoliberalism and the economic crisis of 2008-?. Industrial Relations Journal43(3): 222–241.
28.
JacobySM (2005) The Embedded Corporation: Corporate Governance and Employment Relations in Japan and the United States. Princeton, NJ: Princeton University Press.
29.
KruegerABSummersLH (1988) Efficiency wages and the inter-industry wage structure. Econometrica56(2): 259–293.
30.
LasierraJM (2007) Labour flexibility and job market segmentation in Spain: a perspective from the labour demand side. The International Journal of Human Resource Management18(10): 1858–1880.
31.
LazearEPShawKL (2006) The Structure of Wages: An International Comparison. Chicago: UCP.
López-AndreuM (2019) Employment institutions under liberalization pressures: analysing the effects of regulatory change on collective bargaining in Spain. British Journal of Industrial Relations57(2): 328–349.
34.
MorleyMJMinbaevaDMichaelovaS (2018) HRM in the transition states of central and Eastern Europe and the former soviet union. In: BrewsterCMayrhoferWFarndaleE (eds) A Handbook of Research on Comparative Human Resource Management. Chichester, UK: Edward Elgar, 2nd edition. Chap. 25, 469–486.
35.
OstermanPBurtonMD (2006) Ports and Ladders the nature and relevance of internal labour markets in a changing world. In: AckroydRThompsonSBattPTolbertPS (eds) The Oxford Handbook of Work and Organization. Oxford, UK: Oxford University Press, 425–445.
36.
PedriniG (2016) Varieties of capitalism in Europe: an inter-temporal comparison of HR policies. Personnel Review45(3): 480–504.
37.
PioreMJ (2002) Thirty years later: internal labor markets, flexibility and the new economy. Journal of Medical Genetics6(4): 271–279.
38.
PlasmanRRusinekMRycxF (2007) Wages and the bargaining regime under multi-level bargaining: Belgium, Denmark and Spain. European Journal of Industrial Relations13(2): 161–180.
39.
SgobbiF (2013) Wage policy patterns at the firm level: an analysis of medium and large italian firms. Portuguese Journal of Social Science12(3): 249–261.
40.
SimónH (2010) International differences in wage inequality: a new glance with european matched employer–employee data. British Journal of Industrial Relations48(2): 310–346.
41.
SulemanA (2015) A convex semi-nonnegative matrix factorisation approach to fuzzy c-means clustering. Fuzzy Sets and Systems270(C): 90–110.
42.
SulemanA (2017) Validation of archetypal analysis. In: 2017 IEEE International Conference on Fuzzy Systems (FUZZ-IEEE). Naples, Italy, 9–12 July 2017. DOI: 10.1109/FUZZ-IEEE.2017.8015385.
43.
SulemanFLagoaSSulemanA (2019) Patterns of employment relationships: the association between compensation policy and contractual arrangements. The International Journal of Human Resource Management30(7): 1136–1156.
44.
ThelenK (2014) Varieties of Liberalization and the New Politics of Social Solidarity. Cambridge, UK: Cambridge University Press.
45.
WalkerJTBrewsterCWoodG (2014) Diversity between and within varieties of capitalism: transnational survey evidence. Industrial and Corporate Change23(2): 493–533.
46.
WittMAJacksonG (2016) Varieties of capitalism and institutional comparative advantage: a test and reinterpretation. Journal of International Business Studies47: 778–806.
47.
WittMAKabbach de CastroLRAmaeshiKMahroumSBohleD, et al. (2018) Mapping the business systems of 61 major economies: a taxonomy and implications for varieties of capitalism and business systems research. Socio-Economic Review16(1): 5–38.
48.
WoodGTBrewsterCBrookesM (2014) Human Resource Management and the Institutional Perspective. London: Routledge.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
