Testing the Varieties of Capitalism theory; an analysis of radical and follow-up patents

Abstract

This study tested the claims made in Hall & Soskice’s (2001) Varieties of Capitalism (VoC) theory that the institutional context in which Liberal Market Economies (LME) solve their coordination problems, causes them to be more favourable for high-tech industry and radical innovation specialisation than Coordinated Market Economies (CME). This was done by analysing the origin and radicalness of the ten most-cited patents and their 50 first follow-up patents in the high-tech Office, Accounting and Computing Machinery (OACM) sector. It was shown that the distribution of patents is more strongly concentrated towards LMEs. Using a novel method of measuring radicalness based on the distance between technology fields, it was found that in stark contrast with VoC theory’s claim, most of the patents were incremental. Using the number of inventors as an indirect indicator for radicalness, it was found that the majority was radical. All in all, only partial support for VoC theory was provided by the findings and the use of citation count as an indicator for radicalness was called into question.