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 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 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

The complexity paradigm as a conceptual network

The evolution of theories of business associations

Marxism and Pluralism 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. 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

Systems theory and Neo-corporatism 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). 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.

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 Transaction Cost Theory

Collective Action/Public Choice Theory 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“. 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.

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. 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.

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

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. Ecological Analysis of Business Associations IndustriesTime period Chemical industry (consolidated) 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)?

UKGERUSA Chemical Industry Associations 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.

UKGERUSA Chemical Industry Associations 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. CompetitionCooperationNeutrality

UKGERUSA Information- and Communications Industry Associations 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).

UKGERUSA CompetitionCooperationNeutrality 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. Information- and Communications Industry Associations

Major Findings 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. 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.