Darius Ornston

When Small States Make Big Leaps: Institutional Innovation and High-Tech Competition in Western Europe

In this dissertation turned book, Darius Ornston tries to solve the puzzle of how Denmark, Finland and Ireland, despite their small state status, have been able to compete in rapidly evolving high-technology markets. Distinguishing among the three neo-corporatist subtypes, conservative (Germany), competitive (Ireland) and creative (Denmark and Finland), Ornston seeks to identify the specific constellations of stakeholder power and interests that shape each sub-type, in turn generating distinctive economic trajectories. Contrary to what one could expect, the neo-corporatist institutions that structured these small state economies until the 1980s did not inhibit the redistribution of resources to new activities. According to the author, this is best explained by the turn to new forms of corporatism in the three cases during the last three decades. In the Irish context policy makers, trade unions and firms used a competitive corporatist approach to adapt to competencedestroying economic challenges – i.e. they implemented tax reductions, labour market deregulation and fiscal austerity to promote market competition. In the Finnish and Danish cases economic and political elites used ‘creative corporatism’ – i.e. they invested in disruptive new inputs such as risk capital, human capital, and research and development explicitly designed to promote the establishment of new enterprises, the acquisition of new skills and the creation of new industries. In Ornston’s framework, creative corporatism facilitated restructuring by relying on collective investment, in contrast to the market-based deals that characterise competitive corporatism. Two criticisms may be levelled at the book. First, it has a hard time living up to its ambitious scope: a new analytical category – ‘creative corporatism’ – is developed and compared to three other forms of approaches to reform; in-depth analysis of developments in financial markets, labour markets and industrial policy in three cases is conducted (Chapters 2–4); the arguments are extended to other West European states (Chapter 5); and the consequences of the financial crisis in light of differences in governance structures are evaluated – all over the course of only 204 pages. The book would have benefitted from a clearer focus on only a couple of these subjects. Second, the main theoretical contribution of the book – the analytical category of ‘creative corporatism’ – suffers from an unclear connection to the existing literature on institutional change, especially historical and discursive institutionalism as well as policy learning more generally. For example, this reviewer missed a more thorough discussion of where the solutions and ideas fostered inside the national frameworks of creative corporatism originate.