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One Political Economy, One Competitive Strategy?Comparing Pharmaceutical Firms in Germany, Italy, and the UK$
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Andrea M. Herrmann

Print publication date: 2008

Print ISBN-13: 9780199543434

Published to Oxford Scholarship Online: January 2009

DOI: 10.1093/acprof:oso/9780199543434.001.0001

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Linking Labour‐Market Institutions, Employee Skills, and Competitive Strategies

Linking Labour‐Market Institutions, Employee Skills, and Competitive Strategies

(p.103) 5 Linking Labour‐Market Institutions, Employee Skills, and Competitive Strategies
One Political Economy, One Competitive Strategy?

Andrea M. Herrmann (Contributor Webpage)

Oxford University Press

This chapter investigates how firms can compete despite comparative disadvantages of national labour-market institutions. It first analyses whether pharmaceutical firms in Germany, Italy, and the UK require employees with different types of skills to pursue strategies of radical product innovation, incremental product innovation, and product imitation, respectively. Since quantitative analyses of employees' skill profiles show this to be the case, the chapter goes on to ask how firms can acquire the necessary skill types if their availability is limited by unfavourable labour-market institutions. Illustrating how firms hire employees from abroad and on the basis of atypical contracts, the chapter identifies international labour markets and contracts as functional equivalents to national labour-market institutions. It concludes with reflections on how these findings contribute to the resource-based view and the competitiveness literature, and illustrates that a Schumpeterian perception of firms as creative entrepreneurs can help to explain how firms compete despite comparative institutional disadvantages.

Keywords:   skills, innovation strategies, comparative disadvantages, functional equivalents, atypical contracts, resource-based view, competitiveness literature, Schumpeter

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