In the introduction, we saw how systems of interest representation are embedded in employment and labour market relations. Corporatist systems emerge out of interaction between employer and employee, structured through stable networks of exchange between employers' associations and trade unions. As exchange transactions intensify, employment relations cease to be private economy arrangements, becoming institutionalized in the public domain (Crouch 1993: 30). Accordingly, organized interests broaden the scope of their activities. If they are able to enter the political arena, their interaction develops into a network of ‘generalised political exchange’ (Crouch 1993: 3, 53; Marin 1990b; Traxler 1990), facilitating their incorporation into the public policy process. Corporatism thus goes hand in hand with institutionalized employment relations entrenched either in law, as in Germany, or in mutual agreement between employers' associations and trade unions as in the Scandinavian countries.

Democratization and market transitions in east/central Europe coincide with a shift in the west away from institutionalized systems of employment relations. Economic globalization and technological change place a premium on company flexibility, with industrial relations subject to transitional tendencies towards decentralization and deregulation. The pace of change has been subject to considerable cross-national variation. The paradigm case of de-institutionalization is the United Kingdom, where single-employer bargaining is now endemic (Millward et al. 1992), whilst at the opposite end of the spectrum, in the corporatist heartland of Scandinavia, institutional entrenchment has proved resistant to wholesale change.