Linking institutions and firm level outcomes: the roles of diverse innovative capability profiles in Germany's economy
Traditionally, scholars of comparative capitalisms expect a solid link between institutions and outcomes, such as exporting and innovation. For Germany seminal approaches rely on an ideal typical firm level profile with strong innovative capabilities and high traditional institutional embeddedness. Current literature on firm level diversity in Germany exposes that the empirical links between institutions, de facto firm level profiles, and their outcomes are not well understood. An analysis of 988 German firms reveals no direct link between institutional variables and outcomes. A latent class analysis identifies five innovative capability profiles, which display diverse institutional embeddedness patterns and outcome levels. The prevailing profile conforms to several traditional expectations about the ideal typical German firm level profile. However, a second profile achieves similarly high export and innovation rates without traditional institutional embeddedness. The analysis shows the importance of diverse innovative capability profiles for the de facto links between institutions and firm level outcomes within Germany's economy.