Revisiting varieties of capitalism: an empirical analysis of the institutional determinants of innovation in Germany

Abstract

This paper applies the varieties of capitalism (VoC) theory of innovation to a country-case study: Germany. Drawing on a firm-level data set, the article measures the joint impact of a set of coordinated institutions—regarding the four institutional arenas highlighted by VoC—on incremental, radical, process innovation and imitations. Furthermore, to properly assess the effect of institutions, the probability to innovate is calculated across industries, export status and firm sizes. Evidence from logit modelling points to the crucial role of the selected group of institutions for all types of innovation, suggesting that the main road to innovation in Germany is a non-market corporate strategy, and that the VoC approach might be renewed.