The Labor Market Regimes of Denmark and Norway

- A Parting of the Ways?

Paper by Paul Gooderham (Norges Handelshøyskole), Steen E. Navrbjerg (FAOS), Karen M. Olsen (Norges Handelshøyskole) & Christina Roe Steen (Norges Handelshøyskole)

In general, the literature on the Danish and Norwegian labor market systems emphasizes the commonalities of the two systems. In this paper, this perception is challenged by investigating the development of flexicurity in Denmark since the mid-1990s.

The paper argues that flexicurity constitutes a significant regulatory development in that it grants Danish employers a considerably greater degree of flexibility to engage in staffing changes than its Nordic counterpart Norway which has not introduced it. Institutional theory leads us to suppose that large firms located in the Danish setting will be less likely to engage in employer-employee communication on staffing plans than their Norwegian counterparts. 

In addition, the paper argues that in the Danish context indigenous firms will have a better insight into the normative and cognitive aspects to flexicurity than foreign-owned firms meaning that they are more likely to engage in institutional entrepreneurialism than their foreign-owned counterparts. Institutional theory is supplemented with an actor perspective in order to take into account the role of labor unions. Hence, five hypotheses are generated and tested these using a survey of 203 firms which are either indigenous multinational companies (MNCs) or the subsidiaries of foreign MNCs.

On the whole the analysis show for Denmark and Norway a parting of the ways particularly for indigenous Danish firms.

The full paper was presented at ILERA European Congress 2013, Amsterdam, the Netherlands, 20-22 June 2013.