A Theory of Employment Systems considers why there are such great international differences in the way employment relations are organized within the firm. Taking account of the growing evidence that international diversity persists despite 'globalization', it sets out from the theory of the firm first developed by Coase and Simon, and explains why firms and workers should use the employment relationship as the basis for their economic cooperation. The originality of the employment relationship lies in its flexibility. It gives managers the authority to organize work, but it also establishes limits on employees' obligations. The nature of these limits is fundamental to our understanding of the employment relationship and its international diversity. The author argues that they are provided by four basic types of employment rule. Which one predominates in a given environment is the source of international diversity in employment relations. Drawing upon evidence from the US, Japan, France, Germany, and Britain, the theory is developed to show why such diversity extends deep into key areas of human resource management, such as performance management, incentive pay, and skill development. It also explains why the open-ended employment relationship continues to dominate work despite the growth of market-mediated work relations.

Marsden's deductive analysis of employment systems is interesting and insightful from a micro-level perspective. * Suzanne J.Konzelmann *
"A recent elegantly written book by Professor David Marsden at the London School of Economics provides further evidence of the need for the closing of that perceived gap between work and how it is organised." Robert Taylor, Financial Times, 03/02/2000

David Marsden is Professor of Industrial Relations at the London School of Economics. His career has also taken him to Aix-en-Provence, Trier, and Rome as a Visiting Professor. He has researched extensively on comparative industrial relations and labour markets, and he has worked with the ILO, the OECD, the European Commission, and the World Bank. At present, he also acts as a member of a team of advisors to European Commissioner Edith Cresson on education and training policies in the EU.