Trade Associations in Ireland and New Zealand: Does Institutional Context Matter for Collective Action?

By Perry, Martin | Irish Journal of Management, January 1, 2012 | Go to article overview

Trade Associations in Ireland and New Zealand: Does Institutional Context Matter for Collective Action?


Perry, Martin, Irish Journal of Management


ABSTRACT

The performance of individual businesses is affected by conditions shared across an industry. This is reflected in the widespread participation in industry-based trade associations. As agents of potential importance to business and industry development this study explores whether there is opportunity to transfer practice between trade associations in two comparable economies: Ireland and New Zealand. Industry and institutional influences on trade association activity are identified to explain why associations may differ between the two economies. Industry influences consider how business populations differ in the ease of coordinating collective action; institutional influences include economic governance structures and the extent of embeddedness within social environments. A comparison of eighteen matched associations finds that overall support for associations is higher in New Zealand but that the individually strongest associations are found in Ireland. This outcome is explainable by differences in industry characteristics, confirming the expected sensitivity of trade association to levels of business heterogeneity. Limited evidence of institutional influences on trade associations suggests scope to strengthen industry-based collective action.

Key Words: trade association; New Zealand; Ireland; embeddedness; collective action

INTRODUCTION

Industry-based trade associations are the main manifestation of an individual enterprise's awareness that their prosperity is partly a collective matter (Olson, 1971; Aldrich and Staber, 1988; Bennett, 1998; Barnett, 2006; Perry, 2009). Of all the various forms of memberbased business associations, including pan-industry groups such as those representing the small business sector as a whole and geographically based groups such as chambers of commerce, trade associations have the highest level of support (Bennett and Ramsden, 2007). With their main role in addressing concerns shared by a particular branch of economic activity, trade associations frequently have fewer than 100 members but this can represent a large share of the membership targeted (Bennett, 1998; Perry, 2007). In the United States (US), for example, it is claimed that almost every industry is represented by at least one trade association and almost every firm is a member of at least one (Barnett, 2006: 1755).

Trade associations are of research interest for four main reasons. First, trade associations have been studied as an external resource providing enterprises with a bundle of support services, including management advice, market information and assistance in complying with business regulations (Bennett, 1998; Boléat, 2003; Barnett, 2006; Bennett and Ramsden, 2007). Second, trade associations have informed understanding of collective action problems and the conditions favouring the organisation of groups that generate public goods (Olson, 1971, 1982; Streeck, 1991). Third, trade associations have been studied as markers of the institutional environment in which they operate with particular focus on the way systems of 'social partnership' tend to heighten support for trade associations (Lane and Bachmann, 1997). Fourth, the mobilisation of private interests through trade associations is of interest, as with the lobbying against financial market regulation by the International Swaps and Derivatives Association, a trade association representing financial conglomerates including Goldman Sachs, J.P. Morgan and other international banks, in the lead-up to the post-2008 global financial crisis (Tett, 2009: 39).

The investigation reported in this paper links to the first three of these four areas of research interest. It reports the findings of a small but matched sample of trade associations representing businesses in New Zealand or Ireland. It examines their respective levels of support and activities and considers whether this identifies an opportunity to transfer experience between countries. …

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