Financialisation, institutions and the implications for employment relations

Contemporary times witnessed financialisation emerging as a new form of economic development in liberal market economies (United Kingdom/United States). Consequences include a reshaping of the corporate governance and employment relations models owing to the dominance of finance capital leading to the increased prominence of shareholder value maximisation. I investigate the process of diffusion of these shareholder value maximisation practices in the form of corporate restructuring activities in Germany and France. Adopting a strategic choice perspective, I highlight that the process of diffusion of UK/US-based practices will be highly mediated for two reasons. First, the presence of important institutional differences in Germany and France, as compared to liberal market economies, enables domestic actors to better resist the diffusion of financialisation practices. Second, the governance of the firm constitutes the outcome of interactions among different firm stakeholders (employees, managers and shareholders) whose preferences are not monolithic. The implementation of corporate restructuring practices reflects the overlapping of preferences among different categories of firm stakeholders across countries. A Qualitative Comparative Analysis (QCA) methodology is adopted for unravelling the causally complex mechanisms leading to employee downsizing (Germany and France) and wage reduction (France) via the use of necessary/sufficient conditions