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

Industries Time period

• Chemical industry (consolidated). 1987-2002

• 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)?

UK GER USA

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.

UK GER USA

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.

Competition Cooperation Neutrality

UK GER USA

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).

UK GER USA

Competition Cooperation Neutrality

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.