Evolution of Business Associations

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A Century of Research of on Interest
Intermediation – New Approaches,
Methods and Explanations
Volker Schneider and Achim Lang
University of Konstanz
Department of Politics and Management
Three innovations in the book
New theoretical perspective
•
Introduction of basic concepts of complexity theory into the research on business
associations
•
Emphasis on ecological models within the complexity paradigm
Application of new methods
•
Use of social network analysis as a new tool in associational research in order to
address relational complexity
•
Analysis of multiplex relations among business associations
Explanation how business associations respond to changes
•
Conceptualization and analysis of changing positions due to globalization &
Europeanization as a complex adaptation process
•
Test of different theories:
•
Punctualistic impact theory versus gradualist modernization theory
•
A synthesis in a complexity perspective
The complexity paradigm as a conceptual network
The evolution of theories of business associations
Marxism and Pluralism
Marxism (since 1880s)
Explanandum: Interest groups express and represent different class interests in capitalist
society, mainly Capital and Labor
Assumptions: Positions in economic structures fully determine class interests.
•
Capitalists have important structural advantages to organize and express their class
interests; business associations represent the dominant class interest in capitalist
society
•
Labor has to solve the organizational problem of interest heterogenity
Pluralism (1900s)
Explanandum: Formation of interest groups and governmental action/policies.
Assumptions: High differentiation of modern society and multiplicity of interests
•
Interest group formation: collective interests explain collective action; business
associations are only one group among many others
•
Policy outcomes: resultant force in a parallelogram of multiple group pressures.
Systems theory and Neo-corporatism
Systems theory (1960s)
Explanandum: Emergence of specialized interest groups and their functions and outputs
Assumption: Interest groups fulfill political roles and functions shaped by the overall
political system
•
Level of differentiation  specificity of political functions
•
In modern systems interest groups specialize in interest articulation.
Neo-corporatism (1970s)
Explanandum: functions of associations and associational subsystems in political systems
and policy outcomes
Assumption: utility maximizing and rationally acting policymakers and lobbyists.
•
Structures of associational systems are the result of historical group struggles and/or
bargaining outcomes.
•
Policy outputs within corporatist arrangements are bargaining outcomes among large
organized groups, i.e. capital and labor, but also specialized associations at the sectoral
level (meso-corporatism).
Transaction Cost Theory
Explanandum: the establishment of governance modes
Assumptions: exchange relations add additional transaction costs to the production costs
• Transaction costs may arise before and after transactions have taken place:
• Ex ante transaction costs: information, negotiation and contracting costs.
• Ex post transaction costs: enforcement and arbitration costs.
• Transaction cost theory compares governance alternatives (market, hybrid, and
hierarchy):
•
•
costs they pose on economic transactions in different environments.
different capacities to adapt to environmental turmoil.
• Business associations: hybrid governance (collective self-regulation)
• Regulation of intra-industry competition
• Regulation of between industry relations (customers and suppliers)
 Associational governance: lowers industries ex ante transaction costs
Collective Action/Public Choice Theory
Collective Action Theory (since 1960s)
Explanandum: formation and behavior of interest groups.
Assumptions: utility maximizing and rationally acting individuals.
•
Large groups: free-rider behavior  Non-exclusion from gains of collective action.
 “Selective incentives”: positive inducements, restricted to membership.
•
Small groups: individual gain exceeds the cost of providing collective good.
Public Choice Theory (since 1960s)
Explanandum: policy outcomes, its distributive effects and social costs.
Assumptions: utility maximizing and rationally acting policymakers and lobbyists.
•
•
Policy outcomes = interest groups pressure (money and information).
Uncertainty: political, social and economic consequences of legislative activities, affects
interest group „success“.
Exchange Theory
Political Entrepreneurship (since 1960s)
Explanandum: formation and management of interest groups.
Assumptions: utility maximizing and rationally acting individuals.
Formation: the political entrepreneur initiates the formation of interest groups by
• Investing his capital.
• Past experience: subdivisions of older associations, formerly employed by other assoc.
Management: distribution of tasks to members and management of external relationships.
Corporate Actor Theory (since 1960s)
Explanandum: formation and supervision of interest group, system of political exchange.
Formation: individuals (or corporate actors) pool resources and set up a constitution for
the interest group.
Supervision: set up of organizations within the corporate actor (e.g. supervisory board).
System of political exchange: parties, business, legislators and voters.
• Each actor strives to control certain outcomes within the political system.
• Exchange of (scarce) resources at market price.
Organization Ecology
Population Ecology (since 1980s)
Explanandum: abundance and frequency of associational forms.
Assumptions: population as basic unit of analysis.
•
•
•
Variation: founding of new associations, deliberately or accidentally internal change.
Competition: for scarce resources, some associational forms prove more successful.
Selection: environments differentially select associations for survival on the basis of fit
between associational form and environmental characteristics.
•
Retention: over time more successful associational forms have a higher survival rate
and become more frequent within a population.
Niche Theory (since 1990s)
Assumptions: interest groups act in well defined niches.
Niche overlap between associations leads to a partitioning of that niche. Two mechanisms:
•
Associations compete over the share of overlap until this share is partitioned.
 Associations become dissimilar over time.
•
Associations actively cooperate (consensus over the partitioning) of the overlap.
 Associations become similar over time.
Comparison
Ecological Analysis of Business Associations
Evolution of Business Associations:
Foundings, mergers and split-ups.
Ecological Relations:
Cooperation, Competition and Neutrality.
Species: Types of business associations
Multi-level lobbyists, service providers, etc.
Industries
Time period
• Chemical industry (consolidated).
1987-2002
• Information and communications industry (in the making).
Research Question:
Do business associations in different industries evolve differently (varieties of capitalism)?
Or do they share similar characteristics (globalization, Europeanization)?
Chemical Industry Associations
UK
GER
Findings:
• Few foundings of business associations.
• No mergers in UK and GER, few in the US.
• Few split-ups in GER and US.
 Low population dynamics.
 Some dynamics in biotech and pharmaceutical industry.
USA
Chemical Industry Associations
UK
Competition
GER
Cooperation
USA
Neutrality
Findings:
• Few changes in network structure induced by newly founded associations.
• Cooperative relations dominate.
• Some competitive relations (induced by biotech and pharmaceutical associations).
• Formal (GER) and informal (US) hierarchies still prevail.
Information- and Communications Industry Associations
UK
GER
Findings:
• Many foundings of business associations.
• Some mergers in GER and the US.
• Few split-ups in GER and US.
 High population dynamics.
 Dynamics in communications industry (telecom, internet).
 No dynamics in „old“ media industries (print, press).
USA
Information- and Communications Industry Associations
UK
Competition
GER
Cooperation
USA
Neutrality
Findings:
• Many changes in network structure induced by newly founded associations.
• No relation dominates network structure.
• Many competitive relations (induced by telecom/internet associations).
• No formal and informal hierarchies existent.
Major Findings
Evolution of Business Associations:
More foundings, mergers and split-ups in the emergent IC industry.
Ecological Relations:
• More cooperation between chemical industry associations.
• More competition between IC industry associations.
Species: Types of business associations
IC industry associations more heterogeneous.
Globalization, Europeanization:
No uniform and homogenizing effect.
Varieties of Capitalism
On a sectoral basis, not nationally determined:
 technological innovations change market structure  new niches  foundings of
business associations
 niche overlap
 increasing competition.
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