Felix Sebastian Bethke An der Esche 17 53111 Bonn Tel. 0228/92689756 Varieties of Capitalism in Emerging Economies EXPOSE ZUR ERLANGUNG DES AKADEMISCHEN GRADES EINES DOKTORS DER PHILOSOPHIE (DR. PHIL) AN DER JOHANN WOLFGANG GOETHE – UNIVERSITÄT IN FRANKFURT AM MAIN Betreuer: Prof. Dr. Andreas Nölke Bonn, Juni 2008
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Felix Sebastian Bethke
An der Esche 17
53111 Bonn
Tel. 0228/92689756
Varieties of Capitalism in Emerging Economies
EXPOSE
ZUR ERLANGUNG DES AKADEMISCHEN GRADES
EINES DOKTORS DER PHILOSOPHIE (DR. PHIL)
AN DER JOHANN WOLFGANG GOETHE – UNIVERSITÄT
IN FRANKFURT AM MAIN
Betreuer: Prof. Dr. Andreas Nölke
Bonn, Juni 2008
2
Index
Index ............................................................................................................................... 2
2 State of Art ........................................................................................................... 4 2.1 Emerging Economies ............................................................................................. 4
tions are obligatory or reserved/competitive. Obligatory relations are coined by cooperation through
corporate networks or strategic alliance in research and development. The degree of coordination
via marketing boards as well as the amount of mergers and acquisition are relevant indicators within
this institutional sphere (Hall / Soskice 2001: 21-33).
Corporate Governance: This institutional subsystem deals with varieties regarding the internal
structuring of firms, i.e. corporate management, ownership, or the relevance of certain shareholders
and stakeholders. One key element will be the question which actor sets the regulatory framework
in this area. A distinction could be made between systems with insider control by management, em-
ployees and suppliers, and those with outsider control by shareholders (Maher / Andersson 1999) or
if ownership is concentrated among large block holders, such as families, banks, and corporations,
or dispersed among small shareholders within capital markets (Becht / Roel 1999). Finally, the role
of labor and political actors could be important factors influencing diversity of corporate gover-
nance (Roe 2003; Blair / Roe 1999).
Welfare State: The concept of the “Welfare State” defines the relation between the state and the
market in terms of supply of social protection and distribution policy. Differences among the degree
of social protection were found to shape employment patterns like employment rates or the duration
of unemployment. Important variables to analyze the level of social protection are, for example, the
degree of dismissal protection or the amount of unemployment compensation. Esping-Anderson
distinguishes between three types of welfare state. The liberal welfare states provide only low bene-
fits on a universal basis. The conservative welfare states make extensive transfer payments for par-
ticular social groups on the basis of employment and contributions. The social democratic welfare
states provide generous universal support (Esping-Andersen 1990).
These are the main analytical categories to be used to compare and classify successful emerging
economies.
18
4.4 Method of Analysis
On its own no method of analysis is superior to another. The choice of the most appropriate method
rather depends on features of the specific research design. The number of cases, the form of the
data, and the outcome to be explained influences the selection of the method.
The units of analysis in this study are nation states and their economic systems lead to the problem
of a medium number of cases. Analyzing a medium number of cases is difficult because there are
too many cases to conduct in-depth case studies but too few cases for (probabilistic) statistical me-
thods. On the one hand, qualitative case studies rely on extensive case knowledge that cannot be
accomplished by a single researcher for double-digit case numbers. On the other hand, statistical
methods require at least a triple-digit number of cases to avoid biased results. (Goldstone 2003: 42;
Hall 2003: 382; Ragin 2003: 6).
Qualitative Comparative Analysis
Qualitative Comparative Analysis (QCA) is a method developed by Charles Ragin (1987, 2000) to
solve the problem stated above.
The method is based on the binary logic of Boolean algebra. Each case is represented as a combina-
tion of causal and outcome conditions. The basic idea is that cases can be represented by formal
logical statements in which the independent variables (conditions) for each case, in combination,
are seen as logically implying the score on the dependent variable (outcome) for that case. These
combinations can be compared with each other and then logically simplified through a bottom-up
process of paired comparison (Ragin 1987).
The first step in a QCA is to identify the relevant causal conditions for the outcome variable. In this
study the relevant causal conditions are the institutional subsystems implied by the VoC-approach.
The subsystems have to be aggregated with indicators that determine the presence or absence of a
certain institutional form. For example, the subsystem welfare state would be analyzed regarding
the question if a generous welfare state is present or not. A high dismissal protection for employees
and long term contracts maybe indicators for the presence, while low forms of dismissal protection
for employees and short term contracts may indicate the absence of a generous welfare state.
The next step is to construct a truth table with data for selected cases regarding the causal condi-
tions and the outcome variable. Truth tables list the logically possible combinations of conditions
and the outcome associated with each combination.
19
Figure 3: Truth table with four causal conditions (A, B, C, D) and one outcome (Y)5
A truth table elaborates and formalizes the process of examining cases. It enables the researcher to
identify explicit connections between combinations of conditions and an outcome. Table 2 shows
that QCA is based on binary coding, having only two values (0;1 or Yes;No). This basic version of
QCA is called Crisp-Set-QCA. Once cases, conditions, and outcomes are properly assigned, the
Boolean algebra-techniques are used to identify the logic of the conditions under which outcomes
occur by stringing together equations representing each outcome. The next step is to simplify the
equation. Paths that differ by only the presence or absence of one attribute are treated as equivalent,
with the differing attribute removed from the path. For example if ABCD = Y and AbCD =Y the
equation could be simplified to ACD=Y since the presence or absence of B does not influence the
outcome.6 The goal of the logical minimization is to represent the information in the truth table re-
garding the different combinations of conditions that lead to a specific outcome (Ragin 1987: 104-
113).
5 Source: Rihoux/Ragin 2004. 6 It is common practice in QCA to use capital letters for the presence of a condition and small letters for the absence of a condition.
20
With the results of the simplification process one can identify necessary and/or sufficient conditions
regarding the dependent variable. A condition is necessary if it must be present for a certain out-
come to occur. A cause is sufficient if by itself it can produce a certain outcome.
⋅ Y = AC + Bc (No cause is either necessary or sufficient)
⋅ Y = AC + BC (C is necessary but not sufficient)
⋅ Y = AC (Both A and C are necessary but not sufficient)
⋅ Y = A + Bc (A is sufficient but not necessary)
⋅ Y = B (B is both necessary and sufficient)
Thus, it will probably not be possible to identify single necessary or sufficient conditions for the
outcome economic success. It may be possible to identify multiple combinations of conditions that
lead to economic success. One key feature of QCA is its capacity to identify multiple causation,
where a given outcome may be caused by different combinations of conditions. This is the main
reason why QCA seems to be the appropriate method of analysis for this study. Economic success
may be caused by not only one best institutional configuration, rather there are different causal
paths. Furthermore, the validity of different hypotheses within the VoC-Framework could be tested
in reference to emerging economies. Finally, QCA can also be used to construct typologies. The
goal of analysis here is to produce aggregate cluster by sorting cases into different combination of
scores (Ragin 1987: 154ff).
One of the major problems of Crisp-Set QCA studies is the binary coding of the variables.
Crisp-Sets only capture if a certain variable is present or not. Because of this limitation, the original
QCA method was enhanced by so-called “Fuzzy-Sets”. Fuzzy-Sets extend Crisp-Sets by permitting
membership scores between 0 and 1 (Ragin 2000). For example, when analyzing a country’s organ-
ization of wage bargaining, it is possible that qualitative judgment leads to the opinion that wage
bargaining in this country is neither entirely centralized nor entirely decentralized, but something in
between. Fuzzy-Sets enable the researcher to scale the membership score to express this “in be-
tween” judgment. A country may receive a score of 0.7 to reflect that most of the bargaining is cen-
tralized, though some processes are not.
21
Figure 4: Crisp Set vs. Fuzzy Sets7
The use of Fuzzy-Sets increases the complexity of a research study, but it leads to higher content
validity and results that are closer to reality.
4.5 Data Collection and Coding The data will be collected through a meta-analysis of case studies in the relevant research field. A
meta-analysis is basically a reanalysis of existing single case studies along a coherent set of dimen-
sions. The case studies are coded along the specified dimensions and then analyzed and compared
again. To apply the generated data to QCA the data has to be scaled to dichotomous and/or fuzzy
variables. Via qualitative judgment each variable has to be specified regarding its presence or ab-
sence in each selected case. To be included into the meta-analysis a case study has to match the
following criteria. First, it hast to examine economic institutions of an emerging economy. Second,
it has to allow the coding of variables specified in the research design. Third, it has to fulfill formal
scientific criteria.
7 Source: Rihoux/Ragin 2007.
22
5 Time Schedule
Examination and structuring of literature: The first step will be to analyze and structure the
state of art literature on economic growth, comparative social science in general and comparative
capitalism in specific. The goal is to capture the state of art and derive a more specific theoretical
framework out of this work.
04/2008 –
08/2008
Case Analysis: Tying to the preliminary theoretical work detailed case analysis is necessary
in order to estimate the data basis regarding institutional variables for different countries.
09/2008 –
12/2008 Case Selection: Case Selection will be done on behalf of economic performance indicators, as
well as available data and preliminary work for eligible countries.
01/2009 –
02/2009 Selection and operationalization of the independent variables: The next step will be to derive
the relevant independent variables (institutional subsystems) out of the theoretical framework
and case analysis. Furthermore, the institutional subsystems have to be operationalized, which
means to find valid indicators that are able to represent the variables.
03/2009 –
05/2009
Collection and Preparation of Data: This phase includes collecting, as well as checking, the
data for accuracy, entering the data into the computer, transforming the data, and developing and
documenting a database structure. In case of a QCA, the data has to be scaled to dichotomous
and/or fuzzy variables. Via qualitative judgment each indicator has to be specified regarding its
presence or absence in each selected country.
06 2009 –
09/2009
Data Analysis: Data analysis is the process summarizing data with the intent to extract useful
information. It basically means the combination of theoretical assumptions and empirical obser-
vations regarding the phenomena one wishes to explain. The chosen method of analysis in this
study is QCA, which usually means that the process of data analysis is not the final step of re-
search. In QCA data analysis often leads to contradictions, which forces the researcher to modify
the research design or take a more detailed look at the contradictory cases to solve/explain the
problem. In the end this iterative process hopefully concludes in a final model, which is able to
explain the phenomena one chose to analyze.
10/2009 –
02/2010
Summary and interpretation of the results: 03/2010 –
06/2010 Revision 07/2010
– 10/2011
Print and publication of the study 10/2010 –
12/2010
23
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