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coordinated market economy

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is one of the varieties of capitalism identified by Peter A. Hall and David Soskice and exemplified by the economies of Germany and Japan. Coordinated market economies rely on formal institutions to regulate the market and coordinate the interaction of firms and firm relations with suppliers, customers, employees, and financiers. CMEs tend to be characterized by relatively long-term relations between economic actors that are also relatively cooperative (see patient capitalism). In the field of HRM, CMEs tend to have high levels of job security, a good record on training and development, institutionalized forms of worker participation, based on works councils, and relatively cooperative relations between trade unions and employers' associations. These long-term, cooperative relations provide CMEs with their source of comparative advantage in the world economy: they tend to be good at process innovation and the production of high quality, high value-added goods in mature manufacturing industries.

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