From Institutional Change to Experimentalist Institutions

Institutionalist theory has shown how work and employment relations are shaped by national contexts. Recent developments in these theories have been increasingly concerned with the issue of institutional change. This reflects a shift in the nature of the competitive environment of firms from the stable and planned and predominantly national models of economic organization supported by the Keynesian state, which dominated in the 30 years after 1945, to the uncertain and high‐risk environment of the current period in which globalization has opened up the possibility of new forms of firms and institutions. In this paper, we emphasize that in the current context of globalization, firms and actors within firms are continuously developing the way in which they organize work and employment to produce goods and services that are competitive in global markets. The paper argues that new market conditions lead firms to constant experimentation in work organization as they seek to position themselves within systems of production and innovation that are global in nature. This creates a pressure for institutional change to facilitate the process of firm‐level experimentation; it also tends to create a pressure for new experimental forms of institutions that are themselves searching for ways to improve their relevance. This change calls for extending the study of industrial relations and employment systems in the current era to investigate how new dynamic complementarities among employees, managers, institutions, and markets are created (or not) and what the effects of these processes are on: employment growth, income inequalities, inequalities between groups, rights at work, and the distribution of skills and autonomy in the workplace. The paper therefore proposes a framework and conceptual language for identifying forms of institutional change in the current period. These developments are illustrated through an analysis of the way in which actors in the Danish context have responded to the challenges of the last few decades. It is the capacity of actors within firms to use and develop institutions in ways that enable them to restructure work and employment and gain a more effective position in the market that is crucial to institutional change. However, these micro‐level processes may be unseen and unappreciated by actors at the macro level such as political parties, employers’ associations, and unions, who are generally perceived as being most influential in processes of redesigning institutions and complementarities at societal levels. This creates a tension between micro and macro changes that we examine in the Danish case, arguing that it is possible to reconcile this dilemma under certain circumstances. The final section suggests that while Denmark is distinctive in terms of how these processes of experimentalism relate to firms and institutions, similar issues can be seen at work in other national contexts where the results are very different. This suggests the need for a comparative study of institutions, work, and employment that places change and the dynamics of firms and markets at the center of the analysis and searches for how systemic change can itself be institutionalized. The current paper offers a framework for such analytical work.