This paper is concerned with recent changes in the way capital–labour relations are governed and regulated in German small and medium-sized enterprises. Drawing from institutionalist and regulationist approaches a geographical perspective is adopted which links processes across different sociospatial scales and stresses the importance of relative mobility differences in asymmetric power relations. By considering 28 individual case studies of firms in the Ruhr Area of Germany, it is argued: first, that as stakeholders in the firms respond to a changing environment and to increasing uncertainty, capital–labour relations in Germany are being downscaled and decentralised, profoundly changing the traditional power geometry between capital and labour; second, that the regulatory landscape is being ‘reworked’ in terms favourable to capital during a period in which the latter is in the ascendancy in the labour market; and, third, that there is a peculiar spatial dimension to the rearticulation of power relations and core institutions of the German model. As solidarity and trust appear to be increasingly produced and reproduced at the firm level in the emerging regulatory configuration, the scale of labour regulation is being recast.
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