Academic journal article Irish Journal of Management

Management Adaptation of Business Association Services: Long-Term Stability 1783-2012 and 'Change Points' for Irish Chambers of Commerce

Academic journal article Irish Journal of Management

Management Adaptation of Business Association Services: Long-Term Stability 1783-2012 and 'Change Points' for Irish Chambers of Commerce

Article excerpt

Introduction

Business associations provide a range of external services to businesses, especially concerning information, advice and networking. This paper examines how association services are managed to ensure durability in both the long- and the short-term. There is a significant lack of case studies of institutional adaptation among associations, especially for Ireland. The case of the Irish chambers of commerce is used here to help fill that gap. Irish chambers are among the oldest business organisations in the world. Hence, they provide important opportunities to examine adaptation in the face of changes in the external environment, over a 200-year history. They also allow for the recent 'change point', resulting from the Irish economic crisis of 2008-2011, to be used to show how short-term management decisions feed into long-term adaptation. The discussion focuses on services to small and medium-sized enterprises (SMEs), since these form the overwhelming majority of chamber of commerce members. Irish chambers are voluntary, private law bodies, as in the UK and the USA, which contrasts strongly with the public law associations of several European countries. They are also themselves SMEs, with the largest chamber (Dublin) employing 22 staff in 2012. Others have only one employee, but many of the smallest have no staff and are managed entirely by volunteers.

The remainder of the paper is organised as follows. First, theoretical expectations for the adaptation of association services are examined using three strands of literature that offer insights into how chamber managers might be expected to behave: service bundling to limit free-riders, transaction cost structures, and theories of organisational evolution. In addition, the environment of state support in Ireland is examined to demonstrate the strong dependence of chambers on voluntary and private sector inputs. Second, the theoretical expectations for service adaptation are tested against the long-term development of five of the largest and oldest Irish chambers from 1783 to 2012. This identifies three significant 'change points', the most recent from 1998 to the present. Third, the expectations are tested against the short-term adaptation of the Irish chamber system over the 'change point' since 1998 and the subsequent Irish financial crisis. Finally, the paper addresses how short- and long-term adaptations interrelate with Irish government and EU policies for business support and economic growth.

Expectations for the evolution of business association services

The core services provided by associations to businesses vary. However, all have a core activity of representing and lobbying for the interests of their members. In addition, almost all provide a range of service activities directly to individual businesses, ranging from tailored services (such as advice and information provision) to collective services (such as meetings and networking). The core question investigated in this paper is how these services are adapted to ensure durability of the organisation over the long- and the short term. Three main theoretical approaches are used: collective action leading to service bundling, transaction cost economics, and theories of organisational evolution. Additionally, the role of the Irish state is examined.

Collective action, service bundling and free riders

It has been widely recognised that associations face managerial challenges because their core collective services of representing and lobbying on behalf of their members are non-excludable. These are delivered to members, but it is impossible to prevent consumption by others without being non-members and contributing to their costs ('free riders'). For example, all relevant firms benefit from a change in government regulations that an association has encouraged, such as tax reduction or tax reform, and all businesses benefit from new infrastructure that an association provides or encourages others to provide. …

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