February 18, 2010

Entrepreneurship and the Varieties of Capitalism

  • Johan van der Walt

Key materials
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Since the fall of the Soviet Union, a new and interesting strand in the new comparative political economy has developed, the Varieties of Capitalism literature. This literature has gained widespread attention in the fields of economics, business, law, political science, and sociology.

The case developed here follows a line argument that highlights a fundamental oversight within the Varieties of Capitalism literature: No attention is paid to the varieties of firms. Because the Varieties of Capitalism literature assumes that the strategic preferences of firms are a function of their institutional environment and that institutions are spread more or less evenly across the firms within the same national political economy, variation in firms have been deemed more or less irrelevant (Allen, 2006). All firms are presumed to adhere to the ideal type of firm for the political economy in question (Allen, 2006).

This paper contributes to this discussion by arguing that the absence of an analytical framework that accounts for the differences between firms in the Varieties of Capitalism paradigm warrants some more consideration. It argues that variation in firms can be explained as a function of the diverse modes of action chosen by entrepreneurs through the acquisition, combination, and recombination of resources in the economy to exploit profit opportunities.