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Really interesting article from Tom Fairless and David Luhnow in the Wall Street Journal discussing why Europe’s share of the massive tech industry remains relatively small.

👉 wsj.com/tech/europe-big-tech-ai-1f3f862c

The piece points to a risk-averse business culture, complex regulations, and a smaller VC pool. This brought back insights from Michael Kitson’s economics lectures during my time at the CJBS, where we explored Hall and Soskice’s “Varieties of Capitalism” framework (Hall and Soskice, 2001) and the crucial distinctions between Coordinated Market Economies (CMEs) and Liberal Market Economies (LMEs).

As Hall and Soskice outlined, CMEs (common in Europe) often see firms relying on non-market relationships, leading to more incremental innovation, typically bank-financed. In contrast, LMEs (like the US) see firms coordinating via competitive markets, fostering disruptive, venture-backed innovation. CMEs are also more prone to complex regulations.

The iPhone example is stark: a radical disruption in the US. Meanwhile, in a CME context like Germany, innovation often looked like developing apps for existing service sales: valuable, but more an incremental adaptation.

This CME/LME lens can help understand the different paths to innovation and the challenges Europe faces in fostering disruptive tech breakthroughs.

(The cover image is a detail from “Work” by Ford Madox Brown. The painting featured on the “Varieties of Capitalism” book cover, rich in themes of social and economic systems.)