The Effects of the National Setting on Employment Practice: The Case of Downsizing

Abstract

This paper uses evidence from a large database on companies from 16 European countries, to highlight patterns in their employment practices and reconcile these with classifications of systems of corporate governance and employment relations. It also analyses whether there are differences in employment practices for firms that have been recently involved in mergers and acquisitions. The observed country effects fit in relatively well with the predictions of the juridico-political theories: the political orientation of the national governments and the quality of law fare relatively well in explaining these country effects. Theories of regulation that point to the interconnected nature of these variables explain further differences in employment practices. The merger effects are less clear-cut. However, again, recent regulationist thinking, which suggests the uneven nature of systemic evolution, seems relevant in this context.

Keywords: capitalist systems, corporate governance systems, employment practices, mergers and acquisitions

JEL Classification: G34, M12, M51, P1