1. ¹University of Paderborn, Paderborn, Germany
2. ²Institute for Labour Law and Industrial Relations in the European Community, Trier, Germany
3. ³SAS Institute Austria, Vienna, Austria

Correspondence: MR Schneider, University of Paderborn, Warburger Strae 100, Paderborn D-33098, Germany. Tel: +49 (0) 5251 60 2929; Fax: +49 (0) 5251 60 3240; E-mail: martin.schneider@notes.upb.de

Received 30 October 2007; Revised 8 February 2009; Accepted 26 February 2009; Published online 27 August 2009.

Abstract

We examine how institutional configurations, not single institutions, provide companies with institutional capital. Building on the varieties-of-capitalism approach, it is argued that competitive advantage in high-tech industries with radical innovation may be supported by combinations of certain institutional conditions: lax employment protection, weak collective bargaining coverage, extensive university training, little occupational training, and a large stock market. Furthermore, multinational enterprises engage in "institutional arbitrage": they allocate their activities so as to benefit from available institutional capital. These hypotheses are tested on country-level data for 19 OECD economies in the period 1990 to 2003. A fuzzy-set qualitative comparative analysis yields several interesting findings. A high share of university graduates and a large stock market are complementary institutions leading to strong export performance in high-tech. Employment protection is neither conducive nor harmful to export performance in high-tech. A high volume of cross-border mergers and acquisitions, as a form of institutional arbitrage leading to knowledge flows, acts as a functional equivalent to institutions that support knowledge production in the home economy. Implications of these findings for theory, policy, and the analysis of firm-level behavior are developed.