Trade Associations: Exploring the Trans Tasman Environment for Business Associability

Article excerpt


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. This evidence reaffirmed a study completed in the mid 1990s showing that trade associations were becoming more important sources of international marketing support (Enderwick 2001). This evidence raises the question of whether New Zealand's trade associations have undergone some individual transformation or whether their experience is mirrored in other economies. In this regard one claim within the recent New Zealand evaluation (Perry 2007) suggesting that small-country attributes were advantaging New Zealand associations provided a further motivation for the study.

The possibility that New Zealand's trade associations exploit a small country advantage in business associability came in responses to open-ended questions rather than being systematically explored as part of the evaluation. Among the influences suggested to advantage associations were a preponderance of personal relationships across industry stakeholders; an ability to progress projects on the basis of comparatively informal understandings; less specialisation of industry representation resulting in increased integration of activities that in larger economies have separate associations; the need for trade associations to fill a gap created through the absence of large enterprises that otherwise coordinate industry value chains. These claims fit with research that argues small countries have a relative advantage over large countries in fostering business cooperation (Maskell et al. 1998). This perspective points to shared backgrounds and the likelihood of mutual participation in activity outside the workplace (social, political or professional) as a basis for trust and the identification of joint interests. Like a village compared with a city, visibility and recognition among the population as a whole is claimed to be higher in a small country compared with a large country (Maskell 1998: 198). On this basis, smallness can facilitate interaction and information sharing, make informal sanctions such as social ostracism a viable sanction against opportunistic behaviour and encourage conformity and the acceptance of collective interests. Based on these ideas, Maskell et al. (1988) suggested that 'shared trust' had allowed the Nordic small economies to avoid the 'small country squeeze' (Walsh 1988) otherwise arising from low economies scale, limited economic diversification and the periodic relocation of business to larger overseas markets. Assuming that the relative status of industry-based trade associations is one area where any small-country business associability advantage might be observed, comparison of trade associations in Australia and New Zealand gives opportunity to explore these ideas outside of the Nordic region.

Against this background, this study investigates a matched sample of Australian and New Zealand trade associations. As an exploratory study it is based on a relatively small sample of 13 Australian and 13 New Zealand trade associations but it does link to a larger body of evidence. The paper continues by first providing further conceptual background on trade association membership that explains the choice of indicators utilised in the study. The prior New Zealand evidence is then summarised as a context for the Trans Tasman sample selection. The findings are discussed in terms of the comparative levels of support obtained and the reasons for the support given by members; the activities conducted and the means by which they are funded; and the extent to which association aspirations are attained.


A trade (or industry) association can differ from other inter-firm networks in being coordinated by a third party that is independent of any association member and that has some degree of power to aid, abet, guide and cajole participating businesses (Provan 1983: Sayer & Walker 1992: 136). The extent of this differentiation can be modest where an association has a voluntary executive recruited from within the membership as compared with employing a professional executive staff. As well, a distinction exists between independent and participatory associations, although the boundary between them is blurred (Provan 1983). An independent association is overseen by an executive with a comparatively high level of autonomy from individual members. In a participatory association, affiliates maintain an active role in the association, both in their support of the association's management body and through direct interaction with other members on matters of concern to the association. These associations exist where organisations wish to retain influence over the association's operation but are unable or unwilling to take full management control. They typify most industry-based trade associations of the type examined in the present study whereas independent associations are more characteristic of sector-wide lobby groups (such as the Australian Industry Group and Business New Zealand) and sectors populated by large numbers of small enterprises (such as trade associations linked to the building and restaurants sectors).

The roles performed by trade associations rely on some degree of business cooperation. This applies to three main types of benefit potentially generated by a trade association: collective, club and individual (Table 1).

Collective benefits are generally expected to be the mainstay of trade associations (Olson 1971; 1982; Bennett 2000; Boléat 2003; Bennett & Ramsden 2007). These benefits are derived from lobbying and representation activities that secure changes in regulation or intentions to amend or introduce regulation. Given that the results of lobbying may affect members and non members alike, the option of 'free riding' exists. Membership of a trade association, therefore, indicates some cooperation within an industry but the relationship is complicated by at least two considerations.

1. Compared with sector-wide associations, industry-based trade associations are relatively easy to form and sustain (Olson 1971; 1982). This advantage has been linked to the small number of participants in many areas of business specialisation compared with the difficulty of gaining adherence to collective interests shared by large populations. Olson (1971: 14) thus reasoned that trade associations were unusually privileged because they relied on relatively low levels of inter firm cooperation. Indeed the individual share of the collective benefits obtained may be high enough for some industry participants to pursue collective benefits without the support of other group members. These may be businesses with a disproportionate interest in the collective goods pursued, perhaps because of their size relative to other enterprises. As well, the frequency of personal friendships and shared allegiances can contribute to group solidarity whereas social heterogeneity tends to weaken the ability for peer pressure to encourage membership of a large group (Olson 1982: 24).

2. The extent of cooperation needed to agree lobbying priorities depends on the nature of the collective issues being faced and the degree of business heterogeneity within industries. Even within industries with relatively few participants, business heterogeneity arising from differences in scale, technology and market focus can result in large differences in outlook and resource needs between industry participants (Streeck 1991; Grant 1993; Perry 2007). In this regard various studies have shown how the attractiveness of association membership can be expected to vary between associations. As well as being in a small economy (Maskell at al. 1998), it has been argued that association membership is most likely to be supported where:

* Small firms are dominant as large firms have less need of an intermediary organisation (Salisbury 1984).

* The sector is geographically concentrated as this reduces participation costs (Semlinger 1995).

* Industry ownership is concentrated as this increases informal pressure to join (Mizruchi 1992).

* The sector involves high value-adding activity as this gives resources to support association membership and activity (Lorenz 1993).

Consequently, even where national conditions are propitious for trade associations the support obtained by individual associations is likely to vary.

Aside from collective goods, two other types of association benefit can reflect varying degrees of business cooperation. 'Club' benefits accrue to all club members as an automatic outcome of membership with outsiders at least partially excluded from accessing them. These club benefits can arise from:

* Goodwill that members may receive from external stakeholders in return for affiliating with the club. This can be achieved by requiring adherence to an association code that members can promote their compliance to and from any accumulated positive reputation enhancement from membership.

* Member benefits in the form of discounted prices on products and services supplied on a preferential basis to club members exclusively.

* Access to association resources made available to all members such as industry data, guidance on industry regulation and tools to assist specific types of business transaction (such as employment or supplier agreements).

Maximising the value of club benefits depends on balancing two potentially opposing forces (Prakash & Potoski 2006: 54). First, the association needs to attract a sufficient quantum of members as the value of goodwill advantages and other member benefits tends to increase with the number of members. Increased membership helps advertise the status of the association as more members engage with outsiders and as it demonstrates the rigour and reliability of the association membership standard across more members and to more third parties. The challenge for associations is, therefore, to encourage membership where benefits are partly dependent on the decisions of other industry participants to join. Second, the value of the goodwill advantages is affected by the performance standards expected of association members and the ability to enforce compliance to those standards. Strict monitoring and enforcement of association-specific standards minimises the ability of members to shirk on their membership obligations. This has the potential to increase the value of the goodwill advantages, particularly in terms of the relationship with regulators. It can also increase the attractiveness of membership to those who perceive that the goodwill advantage derived from membership is potentially enhanced whilst simultaneously deterring those unwilling to accept the level of association surveillance required.

As with collective benefits, no simple link exists between the value of club benefits and the extent of business cooperation (Table 2). Based on New Zealand's experience (Enderwick & Wilson 1992; Perry 2007) and UK evidence (Bennett 2000) most trade associations have lenient entry standards - perhaps no more than the affiliation to a particular industry - and undertake little surveillance and enforcement of such membership eligibility rules as do exist. Trade associations are predominantly 'open access' because of their primary role in making representations to and gathering intelligence from government and other bodies. This activity is difficult to reserve exclusively as a club benefit, although many associations seek to do this (Bennett & Ramsden 2007; Perry 2007). Where representation of member interests is a main reason for the association it is difficult to maintain high entry barriers as the key output is not excludable from non members. In this situation, for example, a threat of expulsion from the association is an empty gesture except in so far that it reduces the scope to influence the lobbying priorities of the association.

At the other extreme, associations with high entry standards and credible enforcement mechanisms may respond to the opportunity for certain industry participants to differentiate their product and service from the wider industry. In New Zealand, for example, such an 'elite' association exists for providers of lodge accommodation marketed as providing luxury-level facilities. In this case, rigorous association membership rules can help to build and protect brand status from would-be imitators with inferior standards and helps to maintain claims of 'exclusivity'. In terms of industry-wide cooperation, more merit may be seen in those associations that have relatively lax entry requirements but that enforce compliance to rules post membership. In practical terms, this can be achieved through probationary membership categories and gradually escalating codes of practice that expected to be complied with over time. This type of strategy can exist where trade associations seek to enforce some form of industry self regulation, possibly as an alternative to government regulation being imposed. It results in a form of business cooperation based around the collective willingness to abide with the selfimposed regulatory regime.

Individual benefits, the final type of association outcome, include advice, training, trade shows and networking events. Individual decisions to utilise such services determine who benefits from this aspect of a trade association. Services such as trade shows, professional development workshops and training may be open to non members but typically at a higher cost than to members. Nonetheless the use of trade association services implies some element of business cooperation within industries: some services may be supplied to groups of members and paid for through an annual membership fee; and the option exists to obtain services from independent providers (Bennett 1998; 2000). Management structures of an association are likely to involve higher levels of accountability and reporting than in a purely commercial organisation, so as to accommodate member involvement. In this context, as well as the ability to maintain specialised resources association services can rely on a particular relationship of trust with association members (Bennett 2000: 39). The willingness to obtain services through a trade association and to allow outsiders to access them, therefore, has some connection with the extent of industry cooperation.

Collective association in Australia and New Zealand

It was noted above that cooperation within encompassing sector-wide associations may indicate a higher degree of business cooperation than participation in an industry-based trade association. In this regard it is of interest that previous research has claimed to find a difference in the strength of sector-wide business representation in New Zealand compared with Australia (Bray & Neilson 1996). Up to the mid 1980s, the Employers' Federation gave broad representation of New Zealand employers challenged mainly by the the Business Roundtable's representation of corporate business interests (Vowles 1992; Wanna 1989). In contrast, the 1980s saw growing disunity among peak employer groups in Australia partly around different attitudes to the establishment of centralised negotiating frameworks (Plowman & Street 1993). The origins of this divergence has been linked to a slower pace of change in Australia than in New Zealand arising from the contrast between a bicameral and federal division of powers versus the relative lack of checks and balances in a unicameral system of government (Castles et al. 1996: 10). At various points in time, including the 1980s, this help pushed through sweeping reforms in New Zealand's economic management that encouraged a polarisation of employer and labour groups.

Less is known about the comparative support for or contribution of industry-based trade associations. Cohesion at the level of peak employer groups can exist alongside considerable variation in the state of trade associations focussed on issues relevant to their specific industries. At this level the differences in political systems may be a source of relative strength to Australia's associations. A federal system's more diffuse distribution of power potentially raises demand for trade association services. Multiple sources of policy making may increase business demand for association services both in lobbying agencies and assisting compliance with state-specific regulations. The extent of difference may be somewhat offset by the greater ability of New Zealand's unitary government to act without the constraint of countervailing tiers of administration. In which case, while there are fewer government agencies to lobby there is a heightened need to be well positioned to engage with those that do exist.

Different recent histories of regulatory reform and different enterprise profiles within industries may also influence support for trade associations. In Australia, it has been noted that the most well resourced trade associations exist in sectors where union activity is strongest (Ryan et al. 2003: 193). This is also reflected in a continuing survival in Australia of 'employer associations' that have retained an exclusive focus on industrial relations services while separate 'employer organisations' serve the trade and service roles (Ryan et al. 2003: 192). Employer associations were a small proportion of all business organisations in the 1980s (Plowman 1988) but during the 1990s had a resurgence as state and federal legislation to curb trade unions was enacted (Gardner & Palmer 1997: 127). Employer associations engaged exclusively in industrial relations activities and functions existed in New Zealand but they did not survive labour market deregulation. Some New Zealand trade associations continue involvement in industrial relations advice and support but now as an offshoot of other member services and collective lobbying (Perry 2007).


The focal research questions are whether New Zealand's small country context influences support for trade associations and if so how this is reflected in the performance of trade associations compared with those in Australia. Answering this question requires the investigation to control for influences other than country size that may affect the characteristics of trade associations. Given that it was uncertain whether any significant differences would exist between Australian and New Zealand trade associations, it was considered appropriate to commence in this study with a small scale investigation based on a purposively selected sample. This allows for a relatively intensive and flexible investigation that is not limited by the need to prespecify all the variables measured and that is more geared to explaining the patterns observed rather than determining whether they are representative of a larger population (Massey & Meegan 1985). To control for some the variability among associations, the comparison is based on a matched sample of associations. Starting from a prior larger sample of New Zealand trade associations, cases where associations had similar activity representation in the two economies were identified. This list was reduced to exclude those trade associations affiliated to trade-based and consumer services. The focus is on associations that can represent a mix of enterprise types, implying some degree of cooperation among firms of different size; are potentially engaged in some form of industry strategy and that can be expected to represent a high share of the members targeted. The excluded associations include those operating in motor repairs, house construction, building trades and restaurants. Such associations tend to have much larger memberships than other types of trade association but also a much lower rate of recruitment (Perry 2007). The tendency to concentrate on member services makes them of less interest to this study than associations built around collective representation and club benefits delivered to a diverse membership. A further restriction on the sample was that the Australian association had a base in Sydney. That requirement reflected practical requirements arising from the method of data collection being face-to-face interviews with association executives.

The pre-determined New Zealand population of associations combined with the selection priorities in all eligible Australian groups being approached. One association declined to participate citing the confidentiality of association activity so that there was limited researcher influence on the final sample. The starting population of 101 New Zealand associations affiliated primarily to manufacturing and service activities represented two thirds of the associations identified in Perry (2007). Compared with this larger population, the associations in the matched sample are on average smaller although it does exclude those associations with fewer than 20 members that accounted for 15.8 percent of the total New Zealand sample (Table 3). The resource position of the selected associations differs in being less reliant on membership fees. Other indicators of association capacity to support industry development suggest that the selected sample is better positioned than associations as a whole. Of direct relevance to the context of the investigation, all except one aspire to encourage cooperation among their members for the purpose of achieving larger association objectives.

Face-to-face interviews with the directors of trade associations were conducted in the original investigation to enable an in-depth and flexible investigation that was not limited to the responses obtained to pre-set questions. This results in a combination of quantitative responses to fixed questions and qualitative information that elaborates on the objective characteristics of each association. All the associations covered in the study have a website that variously give access to newsletters, project profiles, details of membership benefits, application procedures, annual reviews of activity and in some cases membership lists and formal annual reports. Other than identities of the associations in the study and some broad characteristics of respondent associations, the results are limited to aggregate findings or individual findings expressed without revealing the respondent association. This respects a commitment in the interviews to protect the confidentiality of material gathered through the interviews.

From the larger body of evidence collected, six quantitative indicators were selected that measure the relative strength of associations. These indicators do not directly measure how far cooperation contributes to the strength of an association. Rather the existence of business cooperation is inferred according to the relative strength of associations. A further and challenging step would be needed to separate the overall environment for business cooperation from other influences on trade association performance: these include instrumental motives connected to the individual benefits obtained; the pressure to participate arising from government regulation and the comparative ease of coordinating action according to the extent of business heterogeneity. Nonetheless the indicators of association strength used in the study may imply different levels of business cooperation and have been selected partly for this purpose. As well, within the context of a small scale, exploratory investigation there is some scope to comment on the sources of association strength drawing on the qualitative responses obtained. The quantitative indicators used and their interpretation are as follows.

1. Recruitment: in terms of the range of membership sought and density of membership obtained. The former is indicated by the representation aspired to in terms of affiliation to a narrow industry group or more encompassing recruitment; the latter is measured by the share of potential membership that are currently members of the association. More encompassing associations and those with high recruitment success are judged stronger those with narrow representation and low membership density.

2. Free-rider constraint: this measures the extent to which the association recognises a constraint on activity from non joining eligible members that gain from its activity. The relative absence of free-rider constraint is considered a sign of strength.

3. Association resources: the number of executive staff per member and the diversity of funding from sources other than membership fees are examined. Funding diversity can arise in a variety of contexts but in New Zealand it generally adds to rather than substitutes for other association resources (Perry 2007). Consequently, more staff and variability in funding are taken to indicate higher membership support for the association.

4. Activity: the range and nature of activities are examined distinguishing between collective, club and individual outcomes. Involvement in activity promoting industry development is seen to indicate a stronger trade association than one engaged in lobbying and individual services only.

5. Membership diversity: associations that coordinate activity among enterprises of different resource capacities can face a higher challenge than those with a comparatively homogenous membership. Consequently membership diversity may indicate a comparatively high level of industry cooperation.

6. Performance: self assessed performance against the aspirations that the association seeks to achieve is measured. Strong associations demonstrate high levels of achievement across a range of aspirations.


Matching of the national samples of associations was based on at least a partial overlap in the activity represented (Table 4). Two of the Australian associations in the sample are state based organisations affiliated to a national federation. This arrangement results in some division of responsibilities between the state and national offices. This affects the depth of state activity (for example it precludes representation to Federal Government agencies but not state agencies) and reduces membership compared with a national association. Nonetheless as the state associations are still substantive organisations and because businesses do not have the option of direct membership of the national body, the comparison with New Zealand is still meaningful. In both countries, individual associations may have links to panindustry groups that are essentially similar to a state's affiliation to a national association. Overall, across the matches there are seven cases where the overlap is strong in terms of the range of activity represented. In four cases the New Zealand association tends to have broader representation than the matching association, leaving two cases where greater specialisation exists in New Zealand with the National Flooring Association (compared with the Furnishing Industry Association) and the Steel Construction Association (compared with the Australian Steel Institute). The origins and implications of the differences in membership are discussed further following the review of quantitative findings.

There is frequently a high level of interaction between the associations that have been matched. One indicator is that among the 12 New Zealand associations with websites, ten have a link to the corresponding Australian association and nine Australian associations reciprocated. Of greater significance, a number of associations have annual or twice annual meetings to coordinate activity and share experience. This arises partly because each economy tends to have its own areas of expertise arising from national business specialisations and regulatory regimes. This allows matched association to have particular ranges of expertise that can lead to mutual gains from the sharing of information. Interaction can be encouraged by Australian headquartered organisations seeking their Australian association to address issues affecting their New Zealand-based subsidiary or through the Australian association representing New Zealand in an international association. There are also occasional commercial transactions where programmes developed by one association are sold for use by the other. For the present study, the high level of familiarity between the matched associations means that any differences are likely to reflect some aspect of the different national business populations represented rather than reflecting any lack of familiarity with how associations might operate.


New Zealand associations are more likely to have recruited a higher share of the industry that they seek to represent than the Australian counterpart but the absolute number of members recruited is typically less (Table 5). There is a broad similarity in that an association with a high recruitment rate in New Zealand (60 percent or more) generally has a similarly high recruitment rate in Australia. The exceptions tend to be where a New Zealand association has a higher recruitment rate and where the Australian equivalent association has recruited less than half their potential membership. In the two cases where the New Zealand association has a lower recruitment rate, this either reflects a recent decision to broaden the recruitment base (making the current recruitment level misleading) or it involves an association that has still achieved a relatively high level of membership (60 percent versus 90 percent for the Australian association). Where the Australian association falls below its New Zealand equivalent, the gap in recruitment can be large: in four cases the gap ranges from a difference of 37 percent to 52 percent.

Free rider constraint

A failure to recruit one or more key industry participants is more likely to arise among the Australian than New Zealand associations: nine Australian associations have key potential members outside compared with four in New Zealand. Moreover, four of the Australian associations report a problem with these non members seeking to undermine the work of the association compared with one in New Zealand. A 'problem' or minor issue with non members gaining from the association's activity is more likely to arise among the Australian than the New Zealand associations (eight versus five report this). The perception of a free rider issue is related to the extent to which associations seek to enforce a demarcation between members and non members within the target membership population. Eight New Zealand associations frequently engage with non members, such as by opening association events to outsiders compared with four Australian associations that claim to do this. Such engagement might involve. No New Zealand association has an absolute policy of avoiding such interaction with non members whereas two Australian associations have such policies. One influence associated with these responses is that Australian associations perceiving an actual or potential loss of members to another association outnumber New Zealand associations by three to one.

Association resources

Australian associations on average employ over four times the number of full-time equivalent (FTE) executive staff than their New Zealand equivalents. The average ratio of FTE executive staff per number of members among Australian associations is six times that of New Zealand associations. Two associations have near equivalent staff to member ratios and one New Zealand association has a higher staff to member ratio. At the other extreme, three New Zealand associations have an executive limited to a single part time executive director. Some compensation for the relative absence of executive staff derives from a higher proportion of New Zealand associations with active member participation. Four of the Australian associations indicate that there is little member engagement with the association. In such cases, associations provide information and advisory services and may manage trade shows and other industry events but are not directed to such activity by members. One New Zealand association operates on this basis but otherwise member participation through annual strategy plans, association committees and other forum is high.

The overall income reliance on annual membership fees is around 60 percent for both sets of associations. Varying types of trading activity account for the largest source of secondary income. A greater differentiation of membership fess according to the size of member businesses is the main funding difference. One aspect of this is the sponsorship of three Australian associations by the largest industry participants with this form of membership funding accounting for up to two thirds of association revenue. This type of funding does not exist for New Zealand associations in either the comparative sample or larger population of New Zealand associations (Perry 2007). The use of finely graduated membership fee structures by Australian associations is a second point of difference. These are designed to differentiate subscriptions by the size of member business and are generally a device to match member contributions with the benefits obtained. Such scales are a feature of most New Zealand associations but generally have significantly fewer fee categories per member size range, suggesting less member sensitivity to the relative funding contributions of large and small enterprises. In the New Zealand there are even three cases of a uniform membership fee, although this is explained in one case by the uniformity of member businesses combined with a low level of fees.


Differences in association resources are not reflected in the diversity of activity sustained by the two sets of associations (Table 6). There is little difference in the proportion of associations providing a range of resources. In both cases, most associations have developed a strategy to support industry growth and some form of industry marketing. Involvement in industry standards is less frequent although particularly so in Australia. Overall there is no sign of associations in one locality being more engaged in activities of collective rather than club or individual benefit. This conclusion applies equally to the most recent allocation of each association's annual activity (Table 7). Fewer New Zealand associations indicate that one of the identified activities accounts for a major share of the association's work. This implies less specialisation in the activity of New Zealand associations as almost all associations, including those in Australia, allocate some time to each of the activities.

Membership diversity

The overall membership profile of the two samples is similar: around 45 percent of members are small enterprise (less than 20 employees), 33 percent are medium sized enterprise (20-100 employees) and 22 percent are large enterprises (over 100 employees). The match extends to the number (7) of associations with 10 percent or fewer of their members large enterprises. A minor difference exists in the number of associations with 80 percent or more of their members drawn from one size class: 6 in Australia and 3 in New Zealand. These data do not, however, capture how large organisations in Australia can be substantially larger than the largest enterprises joining New Zealand's associations.


Most associations in both samples judge that they are currently 'strong' or 'very strong', although more New Zealand associations (8) make the latter claim than do Australian associations (4). These judgements are based on a similar set of aspirations with the broad similarity maintained in respect of the achievement of individual aspirations (Table 8). A small difference is that the two Australian associations performing 'neither well nor poor' are affected by membership loss to another association. New Zealand's one association in this performance category is currently seeking to expand the role of the association in response to new challenges facing their industry. They have yet to achieve the transition aspired to partly because the strategy had been newly adopted.


The difference in resource capacity measured by executive staff is the strongest area of difference revealed by the quantitative indicators. In addition there is some evidence that recruitment rates are lower in Australia and that there is less engagement with non members. The qualitative components of the study give some further insight into these issues. They also permit exploration of the significance of the differences in the relative specialisation of associations.

Greater business diversity in a large economy is a common theme to the exceptionally low recruitment rates that have been obtained by some Australian associations. Industry complexity heightens the challenge of agreeing a shared agenda and of developing services relevant to all potential members. At the same time, the particular origins of the complexity need to be acknowledged before concluding that this is evidence of a systematic advantage accruing to associations in small economies.

* In one case the overall recruitment shortfall masks a market division. The Australian association has high recruitment from that part of the industry serving regulated markets and low recruitment from the less regulated segment of the industry. Given an association focus on the more regulated market segment, partly arising from statutory functions delegated to the association, it has concentrated on serving that segment. The same industry divide is less evident in New Zealand and this makes it less challenging for the association to encompass the whole industry.

* A second case of low recruitment was explained by the extent of intra-association rivalry. The end service to which the association is focused depends on various combinations of resources supplied by the specialised enterprises making up the association's membership. This creates a challenge for an association that seeks to focus on growing the sector as a whole without advantaging one segment of the industry over another. Accentuating the challenge, separate associations compete for members linked to speciality activities that overlap with those provided by member businesses. In New Zealand's case, intra sector rivalry is less developed and reduced by the need for the sector to attract overseas business. Given the scale of New Zealand's business capacity relative to the world market, this assists industry cooperation compared with situations where the domestic market dependence is high.

* The third case of substantially lower recruitment in Australia reflects the greater capacity for industry specialisations to form stand alone associations. In New Zealand, the industry association maintains representation of product specialisations as sub groups within their association. In Australia a number of the same specialisations have formed separate associations. Typically ties are maintained with the original association so that although its direct membership is low the real difference with New Zealand is not as great as recruitment data indicate. This is further underscored by the tendency for members of the breakaway associations to be subsidiaries of parent companies that retain membership of industrywide association.

* In the final case, associations in both countries have low rates of recruitment but especially in Australia. The low overall recruitment partly reflects the displacement of independent businesses by franchise groups and retail chains. Either the franchise group does not support participation or the retail chain participants in associations relevant to its main activity. Against this general weakness, the Australian association has now to compete for members with a rival association that broke away from the parent association. The new group is seeking to become the dominant national association based on a different funding model and strategies responding to the changes in industry ownership. The trend for ownership concentration is being brought to New Zealand partly through investment by Australian groups but at least so far this has had less impact on association membership. New Zealand's relative recruitment is assisted by the development of member services responding to industry regulation. The Australian association has, in contrast, continued to concentrate on employment relations advice as a main activity.

As well as the particular cases of low recruitment there is a suggestion that a failure to recruit key industry participants is more frequent among Australian associations than their New Zealand equivalents. Having one or more large organisations outside can detract from the association's lobbying influence, require effort in negotiating with the outsider over industry matters and lesser the incentive for other industry participants to join. In Australia, the existence of important outsiders reflects challenges in combining the representation of divergent scales of enterprise. Two associations linked this to a history of their association being run by representatives from small and medium-sized enterprises. This pattern has survived in the face of industry changes including the emergence of new business leaders distinguished by their scale or technology or both. In other cases the geography of Australia and relative remoteness of an enterprise relative to the association's main centre of activity were given as influences on the recruitment failure. New Zealand is less affected by such considerations. Over the last decade, a number of large corporate groups have fragmented, reduced activity or relocated functions outside New Zealand (Perry 2002). Trade associations have sometimes gained from the demise of former corporate groups that once dominated an association (Perry 2007). This type of experience is consistent with other research that points to the sensitivity of associations to member heterogeneity (Streeck 1991: 178). Similarly, New Zealand's trade associations have gained from the increasing concentration of economic activity in the largest metropolitan economy although even without this there is comparatively little geographical challenge to maintaining a national association.

A relatively higher reluctance to engage with non members is a related aspect distinguishing the Australian associations in the sample. The origins of a stronger demarcation may be explained partly by the larger resource base of Australian associations. In New Zealand, engaging with non members is variously to encourage recruitment, to increase the viability of association events, to seek additional sources of revenue to augment typically modest membership fees and occasionally to build industry consensus to inform representation to government (Perry, 2007). Australia's comparatively well resourced associations perceive less need to reach out to non members and they are more circumspect about offering services to non members. A higher level of inter association membership competition is a further influence with, as noted above, more associations in Australia having experience of loosing members to an association that is perceived to be a competitor. That experience has sometimes resulted in associations seeking to make association activity a club benefit as a way of enhancing the reasons for membership.

Relative recruitment rates may suggest that Australian associations are hampered by industry fragmentation but the presence of Australian associations with high recruitment and high member participation indicates that industry-specific rather than economy wide influences contribute to the differences observed. For example, one Australian association in the sample functions around quarterly meetings open to all members and it reports high levels of attendance. This association is ahead of its New Zealand equivalent in developing performance standards that would become a conditionality of membership, drawing on a scheme utilised by the equivalent and much larger association in the United States. As in New Zealand, support for the association comes from the attachment to a product that has a large but reducing market share. This context gives a perceived need for the development of industry standards and collective marketing resources to counter the alternative technology and to reduce risks of disruptive competitive strategies emerging within their own industry. In this case, the progress in developing industry strategies reflects the comparatively strength of the association which supports a full time executive whereas the equivalent New Zealand association as a single part time administrator.

The comparative resource wealth of trade associations in a larger economy is one influence offsetting any small-country associability advantage. As well, Australian associations can be strengthened by representation of activity encompassing a whole industry rather than a fragment of the value chain. Where the national industry includes manufacturers and users of raw material, the presence of manufacturers that are individually large compared with downstream activities is a strong inducement to association membership from the less consolidated part of the value chain. It gives the association a role in building connections across the industry by providing a forum in which competitors and customers can interact. The association can become important in standards development, training and innovation in the use of the core raw material. A further inducement is that upstream businesses can be motivated to disproportionately fund the association where they see it as assisting market development for their product. A potential downside is that a dominant role of upstream manufacturers can preclude association activity promoting alternative sources of raw material. Consequently a feature of an Australian association may be a limitation of membership to the users of locally-sourced product.

Inequality in business scale between the upstream and downstream parts of the value chain is important in encouraging joint representation in a single association. Within the sample, it is more likely that Australia's larger economy context results in more specialised representation rather than in associations encompassing whole value chains. As noted in the introduction, a number of New Zealand associations claim to benefit from their broader representation than their Australian counterparts. This difference originates from less specialisation within individual businesses or a need to attract a broader range of members to maintain a viable industry association or from both of these influences. Encompassing representation has generally been viewed as more helpful for economic development than representation by multiple, narrowly constituted groups (Olson 1982; Bennett 1997). Whatever this possibility, there appears to be no ambition to match the wider representation found in New Zealand. Membership diversification is judged unhelpful in the context of different opportunities arising from industry change. For example, an Australian association referred to its ability to promote the use of new product formats that are a threat to the industry segment 'missing' from their representation. The same association noted that where synergies existed it is possible to work jointly with related associations. For example, it organised joint conference and industry awards with other associations matching what the New Zealand association had claimed to be unique opportunities for its widely-based association. In terms of servicing the part of the industry it covers, the Australian association believes its focused services offer more than can be provided by its New Zealand equivalent. It has, for example, developed an industry software-based marketing tool that has been expanded for use in New Zealand. Moreover, they pointed out that the integration of representation in New Zealand was incomplete as a specialist association continues to exist alongside the larger, pan-industry group. That dualism was seen as a further endorsement for the continuance of separate associations in Australia.


This article has provided an exploratory investigation of differences between a matched sample of industry-based trade associations in Australia and New Zealand. Trade associations can be sources of support for enterprise and industry development and are a feature of most industries on both sides of the Tasman. Given their potential importance to business, the study has investigated whether there is evidence of greater effectiveness among a sample of New Zealand trade associations than among their counterpart associations in Australia. This possibility had been eluded to in a larger study of New Zealand trade associations and is consistent with claims that small countries are advantaged by their levels of inter firm cooperation. The study covers a small but matching set of associations that are representative of a larger set of New Zealand associations. Even so, a small sample can give indicative implications only. There is difficulty in knowing how far the differences observed arise from the particular characteristics of business populations as compared with being an aspect of systematic processes affecting associations in general. In this regard a principle importance of the study is to determine whether a large scale, representative investigation is justified and to give some guidance on the possible sources of difference that might be explored further. Meanwhile, five specific conclusions arise from the findings.

First, many aspects of trade association activity are broadly similar despite the different scales of activity represented. Associations encompass similar ranges of activity and frequently gain the membership of a broadly similar share of the industry that they seek to represent. There is some evidence that increased industry participation enables more specialised representation in a larger economy but this pattern is not consistent. It has been suggested that the extent to which value chains support integrated or fragmented representation may be linked to the extent to which one part of the chain is highly concentrated but this relationship is clearly an area requiring further investigation. Overall, based on the broad similarity of representation in the two economies it appears that the boundaries between trade association memberships are affected by widely experienced processes. The continuing relevance of Olson's (1971; 1982) theories of collective association are suggested as explanations for the tendency for groups to remain fixed to comparatively narrow areas of business activity. Similarly there are no clear differences in the activity performed with associations seeking to provide a wide range of services as well as maintaining a clear role in representing their industry to government and other agencies. Whatever the recruitment success or level of association resources, most claim to be making progress in supporting the areas of business and industry develop that they aspire to influence.

Second, the differences in association characteristics that have been identified are consistent with a greater willingness to support collective activity in New Zealand. In the smaller country, associations appear to be more likely to recruit a high share of the membership targeted and to be more willing to engage with non members than are their Australian counterparts. As well as the generally higher recruitment rates there are some Australian associations with substantially lower rates of membership. In contrast, there is no example of a highly recruiting Australian association matched by a New Zealand association with low recruitment. There is also some suggestion that member participation is higher in New Zealand's associations to the extent that more in Australia seem to operate primarily as suppliers of business services without member engagement in the setting of association strategy or in any form of industry planning.

Third, the origins of association differences may at least in part be explained by industry and market characteristics. Less business specialisation in New Zealand appears to assist associations in this country as it minimises intra industry rivalry and the divergence of interests between industry segments. In some cases, a low dependence on the domestic market makes recruitment a lesser challenge in New Zealand. The scope for identifying shared interests can be higher in the context of an industry with a small market share than in the context of an industry that is more market constrained. In a small economy, trade associations can make up for the industry coordination that otherwise is provided by an integrated value chain. Without the local presence of upstream suppliers of raw materials and components, business can be encouraged to use a trade association for technical support, training and market intelligence. Australian experience indicates that trade associations can exist alongside an integrated value chain but that associations are influenced by the interests of dominant components within the value chain. This may result in an association that has a broader membership than one forming 'naturally' based on interests shared by one type enterprise at one stage of the value chain. An interim finding, therefore, is that industry structures have more influence over cooperation within trade associations than national proclivities to be more or less cooperative. This conclusion questions Nordic claims of a small country advantage for building trust among businesses.

Four, any New Zealand advantage arising from the ability to obtain a more inclusive membership is offset by the greater resource strength of Australian associations. Greater resource exists when measured on a per member basis and so is not simply a consequence of the larger average membership of Australian associations although this contributes to it as well. The resource difference is significant in the context of associations in both countries frequently claiming to pursue a similar range of activities. Consequently as well as the participation in and support for trade associations the substantive services and programmes will determine the contribution to business competitiveness. In this regard it is notable that while several Australian associations referred to resources being transferred to New Zealand no examples were discovered of initiatives transferring in the reverse direction although some training programmes had been under investigation.

Five, the study confirms that Australian and New Zealand associations generally aspire to be significant agents of business and industry development and that they claim to be having positive impacts. This underscores the justification for further research into the conditions assisting association effectiveness and to obtain a member perspective on the importance of associations. One unexpected finding of the study is the extent of Trans Tasman cooperation between trade associations. This can include formal inter association bodies and contact arising at the initiative of member companies. It was noted, for example, that members with overseas subsidiaries may seek their national association to address issues arising for those subsidiaries in New Zealand. The cooperation can also come through mutual participation in international industry associations or through one country's association (only a New Zealand one in this study) delegating their representation to the other. The issues addressed through these relationships and impact on business and regulatory convergence are potential future areas of investigation. In the context of a world economy dominated by northern hemisphere economies there is scope for Australasia's industry associations to gain importance as relatively independent sources of guidance to international agencies and policy making bodies. The greater understanding of how far this is already happening and the potential to enhance such a role are areas of investigation to further diversify the understanding of the changing role of trade associations.



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Received 3 March 2008 Accepted 19 February 2009

[Author Affiliation]


Associate Professor, Department of Management, Massey University, Wellington, New Zealand