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Is Polder-Type Governance Good for You?: Laissez-Faire Intervention, Wage Restraint, And Dutch Steel

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Author Info
Schenk, E.J.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)

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Abstract

This paper searches for the origins of the relatively successful performance of Hoogovens, the only sizeable steel firm in the Netherlands. It is suggested that Hoogovens has at critical moments benefited substantially from both strategic and financial support, but was basically left to decide its own policies. Luckily, it mostly opted for 'right' policies so that the industry's decline hit less hard in the Netherlands than elsewhere thus making it less necessary to develop emergency programmes. More specifically, Hoogovens chose to diversify into the aluminium market at a relatively early stage, and it broke up its merger with Germany's Hoesch. However, Hoogovens also benefited from the Polder Model's emphasis on wage restraint as much of the firm's output is exported. Moreover, corporatist welfare arrangements allowed Hoogovens to shed labour without causing extraordinary unrest. It is concluded that the success of 'laissez-faire intervention' heavily depends on the qualities of the supported firm's management. Polder-type governance in terms of wages and labour has beneficial effects in the short run, may but retard innovation.

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Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2000-28-ORG Revision_Date: 2008-03-04.

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Date of creation: 07 Jul 2000
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Handle: RePEc:dgr:eureri:200031

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Related research
Keywords: Dutch Miracle; industrial policy; steel industry;

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  1. Kleinknecht, Alfred, 1998. "Is Labour Market Flexibility Harmful to Innovation?," Cambridge Journal of Economics, Oxford University Press, vol. 22(3), pages 387-96, May.
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