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This paper investigates the effect of state-society relations on the industrially-related growth paths of developed countries.

It introduces a novel theoretical framework, the state-business-labor relations (SBLR) framework, where four main actors are identified: the state, big businesspersons or tycoons, owners and managers of small and medium enterprises (SMEs) or Entrepreneurs and labor. Different SBLR categories or modes are introduced depending on levels of coordination and power relations between the studied actors. The paper then investigates how these SBLR modes, through adopting various policies targeting the industrial sector, lead to different growth paths. Rather than focusing only on economic growth, this research regards a growth path as a matrix of the performance in long-run growth and equality of distribution.

Using regression analysis and statistical data, the results suggest that the Co-Balanced mode, having higher levels of coordination and lower favoritism, leads to the best growth path among the four introduced modes, especially with its emphasis on high levels of venture capital availability and easiness of starting business. while the Lib-Capture mode, characterized by lower coordination and higher favoritism, seems to have the worst growth path and the best implemented policy for this mode is suggested to be high profit taxes that seem to counter the negative impact of the existing high levels of favoritism.

Despite the important findings that this research has reached, this paper is mainly meant to open a further investigation into this topic and open this dimension that the research on VoC and political economy have under-researched. A deeper investigation of SBLR typologies that could only be possible by having richer datasets with more data on coordination for the whole world, rather than only the advanced economies, would further our understanding of the dynamics that shape the growth paths of different countries of the world.

To realize the best industrial growth path, fighting favoritism should be an important objective. The negative impact of favoritism on innovation could not be disregarded in the eve of the fourth industrial revolution, where innovation is increasingly pivotal to future industrial development. Actively engaging societal groups in the policymaking process is important in addressing their concerns and balancing them at the same time. This should lead to the double benefit of formulating better policies that should foster growth as well as provide better distribution of this growth. High levels of coordination should help in realizing this objective. Yet, this could only be possible if societal groups are free to associate and aggregate their power and when there are means of preventing one actor from gaining more favorite treatment and exclusive influence over policymakers. The presence of both powerful and broadly represented business associations and labor unions and the existence of a government interested in coordinating their efforts-rather than letting itself be controlled by one group at the expense of the others-should help in the realization of the best growth path. Thus, institutional reform that empowers societal groups and enables them to defend their interests as well as fights all forms of corruption should lead to the realization of a more prosperous and equitable industrial development, with the “re-industrialization” of the developed world being no exception. The technological and social challenges of intensive automation and digitalization accompanying the fourth industrial revolution make the envisaged institutional reform more urgent.

This paper is introducing a novel theoretical framework for studying the effect of state-society relations, particularly SBLR, on the industrial growth paths of developed countries. It integrates three important bodies of literature in order to build a more comprehensive understanding of the dynamics of state-society relations and their economic consequences. These are the Varieties of Capitalism (VoC), State-Business Relations (SBR) and Industrial Relations. The SBLR framework differentiates between tycoons and entrepreneurs, an important distinction that often goes unnoticed. Different SBLR categories or modes are introduced, depending on levels of coordination and power relations between the actors. It is proposed in this research that the effect on growth paths goes beyond the simple dichotomy between CMEs and LMEs usually present in the literature of VoC and that power relations provide an essential complementary dimension in explaining this causality.

This study aims to examine decision factors for global sourcing, differentiated into transcontinental and continental sourcing to obtain insight into locational aspects of sourcing decisions and global trends. This study analyzed various country perceptions to reveal their influence on sourcing decisions. The country of origin (COO) theory explains why certain country perceptions and images influence purchasing experts in their selection of suppliers.

This study used a two-study approach. In Study 1, the authors conducted discrete choice card experiments with 71 purchasing experts located in Europe and the USA to examine the importance of essential decision factors for global sourcing. Given the clear evidence that location is a factor in sourcing decisions, in Study 2 the authors investigated purchasers’ perceptions and images of countries, adding country ranking experiments on various perceived characteristics such as quality, price and technology.

Study 1 provides evidence that the purchasers’ personal relationship with the supplier plays a decisive role in the supplier selection process. While product quality and location impact sourcing decisions, the attraction of the buying company and cultural barriers are less significant. Interestingly, however, these factors seem as important as price to respondents. This implies that a strong relationship with suppliers and good quality products are essential aspects of a reliable and robust supply chain in the post-COVID-19 era. Examining the locational aspect in detail, Study 2 linked the choice card experiments with country ranking experiments. In this study, the authors found that purchasing experts consider that transcontinental countries such as Japan and China offer significant advantages in terms of price and technology. China has enhanced its quality, which is recognizable in the country ranking experiments. Therefore, decisions on global sourcing are not just based on such high-impact factors as price and availability; country perceptions are also influential. Additionally, the significance of the locational aspect could be linked to certain country images of transcontinental suppliers, as the COO theory describes.

The new approach divides global sourcing into transcontinental and European sourcing to evaluate special decision factors and link these factors to the locational aspect of sourcing decisions. To deepen the clear evidence for the locational aspect and investigate the possible influence of country perceptions, the authors applied the COO theory. This approach enabled authors to show the strong influence of country perception on purchasing departments, which is represented by the locational effect. Hence, the success of transcontinental countries relies not only on factors such as their availability but also on the purchasers’ positive perceptions of these countries in terms of technology and price.