Convergence versus Divergence: Testing Varieties of Capitalism Perspective on the Globalization of Business Practices

Abstract

This paper analyses links between intra-organizational adaptation and institutional variation across countries. Using the varieties of capitalism viewpoint, we examine strategic options open to multinational firms operating simultaneously in liberal market economies and coordinated market economies. A holistic perspective is achieved by implementing an original ‘index of institutional impact.’ Data are drawn from a survey of the subsidiaries of German firms in the UK in 2007. The results suggest that pressure towards accepting local practices for multinational firms varies across the dimensions in which firms resolve coordination problems, inciting speedy convergence in some, but allowing for maintaining distinctive practices in other.