Trade Associations: Exploring the Trans Tasman Environment for Business Associability

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ABSTRACT

Trade associations are a form of business network distinguished by third party coordination and representation of sector-affiliated organisations. In New Zealand, a recent review found that trade associations have made increasing contributions to industry and business development. The possibility that New Zealand's associations benefit from a small country advantage in supporting collective activity is explored. This follows suggestions in the New Zealand survey and Nordic claims that small economies benefit from shared trust that facilitates business cooperation. A matched sample of 13 Australian and New Zealand trade associations reveals that New Zealand's associations tend to have higher levels of membership and are less troubled by 'free riders' than their Australian counterparts. There is weak evidence that support for trade associations reduces with increases in enterprise diversity (size and activity specialization) within an industry and that the organisation of industry value chains influences trade association activity. Any advantage in maintaining participation is reduced by the greater resource strength of Australian associations. Further investigations of Trans Tasman differences in business associability are justified.

Keywords: Trade association; New Zealand; Australia; cooperation; enterprise; shared trust

Trade associations exist for reasons that generally rely on the willingness to recognise and support collective interests (Olson 1982; Streeck 1991; Bennett 2000). Representing issues to government that are shared by all or most of the participants in an industry means that the gains from trade association activity are not restricted to the members of the association (Bennett & Ramsden 2007). The ability for associations to function is, therefore, dependent partly on the level of associability and cooperation within industries. For this reason, the status of trade associations has been linked to the characteristics of national business environments affecting the acceptance of shared interests between independent enterprises (Grant 1993; Lane & Bachman 1997; Bennett 1998). This has been demonstrated by comparing the status of associations in economies with a history of 'social partnership' with those in economies without a tradition of organised cooperation between business representatives and trade unions (Sayer & Walker 1992: 137; Sabel 1994: 152; Herrigel 1993; Lane & Bachmann 1997).

The purpose of this paper is to compare trade associations in two 'Anglo Saxon' economies that share similar histories and political economies: Australia and New Zealand (Castles 1988; Marceau 1992; Mabbett 1995). The aims are to benchmark New Zealand's associations against those in a similar but larger economy and in so doing reveal influences on trade association activity that are less readily observed in a single country study. The high degree of common enterprise ownership and economic integration across the Tasman, strengthened by the longstanding closer economic agreement between the two governments (Grimes et al. 2000), may question the likelihood of discovering differences in trade association activity. On the other hand, if differences are revealed this may add to currently poor understanding of the contingencies promoting business cooperation (Perry 1997; Huggins 2000). As well, the policy significance of the findings is increased when comparing similar economies to the extent that the transfer of association experiences is possible.

Underlying the motivation for the comparative study is recent evidence suggesting that New Zealand's trade associations have become significant sources of business and industry development support (Perry 2007). Around half a sample of 101 trade associations had, for example, contributed to a strategic plan designed to encourage industry expansion with a similar proportion having some form of industry marketing programme. Two thirds of associations provided resources to assist individual business development with many also involved in training and industry standards. …