Not all firms are created equal: SMEs and vocational training in the UK, Italy, and Germany

Why do skill formation systems put SMEs at greater disadvantage in some countries than others vis-à-vis large employers? By comparing vocational education and training (VET) institutions and their differential effect on firms of different sizes across three countries (UK, Italy, and Germany), we show that the design of vocational training institutions has profound implications for shaping the ability of SMEs to use institutions as resources. In particular, quasi-market institutions in Britain amplify SMEs’ disadvantage, while non-market coordinating institutions in Italy and Germany narrow the gap between SMEs and large employers. By unpacking the comparative disadvantage of SMEs, we offer important nuances to the argument that institutions help firms coordinate their business activities in different varieties of capitalism.