In twentieth-century capitalism, there have been several changes in perceptions about the relative effectiveness of specific management styles and work organizations (Boyer, 1991; Chandler, 1962, 1977, 1990; Piore and Sabel, 1984; Sabel, 1982). Changes in technology, relative prices, and consumer preferences have been instrumental in altering the perception as to why one form of management style and work practice is superior and should supplant existing forms (North, 1990). Economic actors not only defend specific forms of management and work practices as means of achieving particular economic outcomes and performances (Marglin, 1991), but they also attempt to borrow from other societies what they consider to be “best practices.”

This paper argues that forms of economic coordination and governance cannot easily be transferred from one society to another, for they are embedded in social systems of production distinctive to their particular society. Societies borrow selected principles of foreign management styles and work practices, but their effectiveness is generally limited. Economic performance is shaped by the entire social system of production in which firms are embedded and not simply by specific principles of particular management styles and work practices. Moreover, a society's social system of production tends to limit the kind of goods it can produce and with which it can compete successfully in international markets.

The chapter suggests, with empirical references to the Japanese, German, and American economies, that a society's social system of production his very path dependent and system specific.