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292 FORMS OF BUSINESS ORGANIZATION

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YUI TSUNEHIKO and NAKAGAWA KEIICHIRO (eds) (1985) Business History of Shippil1g Strategy md Structure Ibkyo University ofTokyo Press

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eH A P T E R 13

BUSINESS INTEREST

ASSOCIATIONS

LUCA LANZALACO

131 INTRODUCTION

THROUGH much of the twentieth eentury business interest associations (hereafter BIAs) were neglected as the object of academic study and systematic research Although the topie attracted considerable interest among institutional economists and sodal reformers on both sides of the Atlantic during the late nineteenth and

twentieth centuries it is only from the late 1970S that modern scholars have once again begun to delve seriously into BIAs organization and strategies The enshysuing debate has involved both sodal scientists and historians who have frequently dealt with similar topics even if usually separately This disciplinary divide has negatively affected the study ofbusiness history since the structural and functional properties of BIAs have had a significant impact on the evolution of capitalism So explanations for the different historieal evolution of capitalism in national political

I Major exceptions to this periodization indude the work of Clarence Bonnet (1922 1956) the lapanese business history sehool (Yamazaki 1988 Kikkawa 1988 54-8) early and policy oriented (antitrust legislation regulative effeetiveness of BIAs ete) literature about BIAs in the USA (Lynn and McKeown 1988 pp XIII-XV especially footnotes) and reeent historicalliterature on the role of employers and their associations in the developrnent of the welfare state (Pedersen 1993 Ebbinghaus and Manow 2001a Swenson 2002 Mares 2003)


fable 131 Forms of capitalist action

Capitalists may act as Capitalists may act

Individually Collectively

Employers Collective Employers bargaining at associations firm level human resource management

Businessmen Firm strategies and Trade associations choices trusts

economies cannot omit a careful comparative analysis of BIAs institutional role (Hall and Soskice 2001 Ebbinghaus and Manow 20mb)

The introductory section of this chapter presents the main theoretical issues at stake synthesizes the outcomes of historical research and analyzes the interrelashylions between them The second section sketches a comparative-historieaI frameshywork to expIain the development of BIAs while the third section outlines the long-term historical development of BIAs since the Middle Ages The final section proposes an agenda for future research

The role of BiAs can best be understood by analyzing the various forms of action by capitalists First they may act either individually as managers of firms or collectively as members of coalitions and organizations such as trusts associations joint ventures clubs ete (Martinelli et aL 1981) Second they may act either as employers when they interact with workers and trade unions in the labor market or as producers (or businessmen) in their relationships with customers suppliers politicians and other firm managers in product and capital markets (Sisson 1979

Streeck 1991) By crossing these two orthogonal dimensions we obtain a simple typology of the various forms ofcapitalist action (Table

A first point to stress is that there are two different types of BIAs trade asshysociations and employers associations (hereafter TAs and EAs respectively) This distinction is quite relevant since these two types of associations are characterized by different political functions organizational structures and patterns of historshyical development Very briefly from an organizational point of view TAs tend to privilege the vertieal dimension (in which associational domains and identities are delimited by sector category or product) since they have to bring out the peculiar interests of specific groups of producers and firms while EAs are more prone to a non-sector-specific or horizontal mode of organizing (namely on a loeal or regional basis regardless of lirms productive specialization) since they have to reflect the territorial configuration of the labor market From a functional point ofview trade associations not only provide all those services needed by firms

BUSINESS INTEREST ASSOCIATIONS 295

such as marketing fiscal and financial advice research and innovation regulation of competition etc but they also act as pressure groups (or lobbies) for definshying promoting and defending the interests of their membership in the political arena vis-a-vis government authorities public administrations and state agencies Employers associations on the other hand specialize in industrial relations issues and deal with a1l issues concerning not only collective bargaining and strikes but also labor and social policies 2 This four-cell typology makes dear that the study of capitalists action must not be seen as a field of inquiry which is fragmented into a variety of circumscribed topics (the content of the individual cells) but should be seen as an integrated area of research in which market trends technological innoshyvations entrepreneurial strategies industrial relations and political concerns are all interrelated (the links among the various cells) In other words when explaining the evolution of a specific form of action what is happening--or what has happenedshyin the other fonns cannot be ignored In the case of BIAs for example the choice of combining and acting with other capitalists the way in which this collective action is organized the goals pursued in both the political and industrial relations arenas and the services that are provided to firms all depend on their individual strateshygies which are influenced in turn by associational choices (Tolliday and Zeitlin 1991b )

From a theoretical point of view two Iinked core issues stand at the center of the debate about BIAs The first concerns the reasons why capitalists decide to combine and to form associations The second focuses on the relationship between the collective action of capitalisls and that of workers

The simplest answer to these problems has been given by the pluralist school in Political Science According to the group theory of politics BIAs emerge spontashyneously as an effort to defend capitalists collective interests tor the same reason that trade unions are founded by workers

The pluralist approach was questioned by Mancur Olson (1965) in his seminal work on the logic of collective action He assumes as do the pluralists that capitalshyists and workers act according to the same logic that is as rational actors But he shows that precisely because both sets of actors rationally pursue their individual interests they will not combine spontaneously to defend their collective interests unless (a) the group is small and provides some selective incentives (services rewards offices) to those who contribute to collective action or (b) some coercive mechanism (compulsory membership control over monopolistic goods etc) is deployed Hence Olson identifies no substantive difference between the logic of collective action of eapitalists and that ofworkers He only suggests that employers

2 This distinction is not empirical but analytical since it does not necessarily give rise to distinct organizations In some countries the same organization acts both as an employers and as a trade association whereas in some others there are distinct associations which have specialized in each of the two functions As Streeck et al (zoos) argue this functional distinction appears to be diminishing in recenr years because of the declining relevance of unions and dass confiict


are Ilkely to overcome the free rider problem more easily than workers since they are fewer in number and better endowed with resources3

These theses have been radically criticized by Offe and Wiesen thaI (1980) in an important and theoretically subtle article Taking off from a rigorous Marxist position they contend that--contrary to the claims of both the pluralist school and Olsons rational-choice approach-the logic of collective action is not single but double Workers Jogic of action is essentially (even if not exclusively) dialogic since they have to discover and define their collective interests together by means of complex organizational processes (eg identity building communication decishysions etc) whose costs tend to increase with the number ofparticipants Capitalists logic of action is on the contrary monologic since capital is dead labor which is already organized and whose interests and preferences can be taken for granted The crucial conclusion of the authors is that the collective action of capitalists is less demanding less resource consuming and less divisive than that ofworkers and that this structural asymmetry reproduces in the political arena the c1ass inequality of capitalism and thereby distorts the mechanisms of pluralist representation in deshymocratic regimes Offe and Wiesenthals contribution is quite interesting since emphasize that the costs of collective action and hence of political representation vary for different types of actors and above all they underline the consequences of this variation for democratic theory Where they fail is in thdr attempt to root these differences between capitalists and workers in their logics of action overlooking that what BIAs organize are not quotas ofcapital (namely firms) but social actors namely capitalists just as trade unions (and other interest groups) do So the issue of the logic of collective action must be kept distinct from that of its organization even if different social actors surely have to cope with difterent organizational dynamics dilemmas and costs they share a common logic of action

This approach has been adopted by Sdunitter and Streeck (1981) In very simple terms according to their framework the structural and operative properties of BIAs like those of every interest representation organization may be conceptushyalized and explained from both a comparative and an historical perspective as a compromise between the logic of membership leading to associative structures reflecting the fragmented and specialized demands and charactcristics of firms and the logic of influence which tends to produce more unitary and encompassing structures in response to the demands and characteristics of capitalists interlocushytors such as state agencies and trade unions

3 The free rider problem emerges whenever a publie good must be provided Onee a good has been produeed nobody ean be excluded from its consumptioll induding those not eontribute to its produetioll So a rational actor will not participate in a eollective effort but will try to exploit freely the public goods ereated by the other members of the group Olsons crucial point is that the outcomes of pressure group activities (eg regulations eolleetive agreements ete) ean be seen as public goods for their actual and potential membership thereby obliging these groups to cope with the free rider problem


The main challenge for BIAs comes from the logic of membership since capishytalists are always in conflict with one another If they opera te in the same sector they struggle as competitors in product and labor market whereas if they act in different sectors they have conflicting interests in raw material and capital markets as seilers and buyers Furthermore these differences are reinforced by the fact that firms come in different sizcs often operate in different markets (internal vs international) have different forms of ownership (private public cooperative or mixed) and use different technologies So BIAs have to cope with achallenge that trade unions do not have namely the management ofdiversity of the interests they organize and represent (Martinelli et al 1981) This makes the collective action of capitalists not easier-as Offe and WiesenthaI and partially 0150n claim-but more difficult and divisive than that of workers because of the heterogeneity of their interests and their unwillingness to accept associational discipline (Streeck 1991) This is why state intervention incorporation in decisional processes and bodies privileged relationships with public administration devolution of public functions and recognition of public status) is so important fuumlr the birth develshyopment and consolidation of BIAs This point has been stressed not only in the literature about corporatism (Berger 1981) Bowman (1982 1985 1989) fuumlr example adopting a sophisticated game-theoretical approach demonstrates on the one hand that intraclass conflicts among capitalists create collective action problems that are distinct from and logically prior to those that are generated by antagonism of capitalists and workers (Bowman 1985 36) while c1aiming on the other hand that the state may play an important role in helping capitalists to solve these conflicts by supporting BIAs This thesis has also been empirically corroborated

Schmitter and Brand (1979) in an impressive quantitative-diachronic analysis of the development of BIAs in the United States and the UK from 1871 to 1970

They show that intrasectoral conflicts economic crises and market trends are much more salient explanatory factors than unionization strikes and wars in accounting for BIAs birth and development So in order to understand the logic of capitalists collective action they propose to substitute what they call the orthodox or defenshysive model based on the assumption that BIAs emerge as areaction to interdass conflict with a revised model in which intradass conflicts between and within sectors give rise to TAs that then playa pivotal role in fuumlunding EAs when the challenge of trade unions emerges (Schmitter and Brand 1979 5) This means that contrary to the practice of many scholars EAs and TAs must be jointly studied especially in their historical evolution

Many of these topics at the center of the social science debate have also been addressed by historians (or rather by historically oriented scholars) even if adopt an approach which is much less prone to wide generalizations and much more careful about national regional and sector contexts and specificities Another peculiar trait of historical studies is the absence of those sharp contrapositions among different research traditions that as we have seen characterize the social

298 PORMS 01 BUSINESS ORGANIZATION

sdence debate The rare divergences are often due to the characteristics of the specific national system studied and not to the approaches adopted as is demonshystrated by the debate about the impact of the industrial infrastructure upon the birth and development ofTAs (Cochran and Miller 1961 Feldman and Nocken 1975

Pierenkemper 1988) and EAs (Jackson and Sisson 1981)

To sum up the overlapping if not convergence ofinterests between the historical and sodal scientific traditions of research on BIAs is evident which makes crossshyfertilization between them plausible and promising ccn if so far cxplorcd by relatively few scholars 4 For example many social scientists emphasize the historical reconstruction of the origins development and evolution of BIAs (Schmitter and Brand 1979 Sisson 1979 1987 Jackson and Sisson 1981 Windrnuller and Gladstone 1984 Lanzalaco 1990 Grant Nekkers and van Waarden 1991) just as Tolliday and Zeitlin (199Ia 18-22) link the historical study ofbusiness strategies to the theoretical debate about BIAs Historical reconstruction and theoretical speculation need one another

At first glance we may distinguish those topics where historical research subshystantially confirms the suggestions of theoretical models from those where they add new original and promising themes of inquiry

More specifically historical analysis undoubtedly confirms the point at the core of the theoretical debate namely the centrality of the management of diversity ofbusiness interests in explaining BlAs organization strategies and functions For example the diversification of capitalists interests-namely the emergence of new industrial sectors alongside handicrafts and traditional industries and the conshyflicting objectives among firms ofdifferent sizes mainly in international marketsshyplayed a central role in Japan and Germany first in separating BIAs from chambers of commerce and then in promoting differentiation among themselves at the beginning of the twentieth century (Gellately 1974 Miyamoto 1988 Pierenkemper 1988) In similar terms the internal politics of the British Engineering Employshyers Federation before World War Il cannot be understood without taking into consideration the heterogeneity of the sector and the regional deavages within it (Zeitlin 1991) Similarly the failure of the four attempts to unite French employers into a single encompassing national peak association can be explained only by the divisions among different sectors (Ehr mann 1957 17 Lefranc 1976 31-2) Historical evidence also shows that because of the intrinsically divisive nature of business interests the state played a crucial role in fostering the birth and consolidation of BIAs as a tool for policy making in many countries such as France (Ehrmann 195711981) Germany (Bunn 1984 Ullmann 1988) Italy (Lanzalaco 1990) and Japan (Miyamoto 1988 Gao 2001)

4 Arnong the oommon research interests should be recalled the causes of BlAs birth and consolishydation the relationships between economic and politkaJ action (trusts S associations) the functions performed by BIAs in the political and industrial relations arellas and the origins of the different structural properties of BIAs at the national level (Yamazaki and Miyamoto 1988)


Historical studies provide not only contlrmation but also new hints for theoretishycal speculation and empirical research Four themes ofgreat interest are highlighted

this literature The first is the competition between BIAs and political parties as channels of

representation of business interests in the political arena (Kocka 1981 DavenportshyHines 1988 Pierenkemper 1988) The second concerns the peculiarities of the national context-namely the specific milieux within which BlAs emerged and opcratcd- and thc ways in whieh these historicallegacies molded BIAs organishyzational properties (Feldman and Nocken 1975 Iolliday and Zeitlin 199ta) The third is the effectiveness of EAs vis-a-vis their interlocutors and membership The differences between those nations (eg Germany or Sweden) where BIAs are strong and influential organizations and those where they are weak (eg the UK) has been explained in various ways Some authors stress the relevance oflong-term explanashytory faetors such as the existenee in the early phase of development of BLAs of legislation forbidding the regulation ofcompetition or the founding ofassociations as in France (Daviet 1988) Others emphasize instead more structural elements such as the position of the country in international markets its technological and managerial endowments the strength of national trade unions and the structure of collective bargaining or the different relationships between that state and BIAs during war mobilization (Jackson and Sisson 1981 Harris 1982 Sisson 1987 1991

Grant etal The fourth theme largely neglected by political scientists concerns the subshy

stantive content of policies pursued by BIAs in relation to managerial strategies at the firm level Some authors have focused on economic policies and industrial relations (Braunthai 1965 Lynn and McKeown 1988 Tolliday and Zeitlin 1991b)

while more recent work has analyzed comparatively and historically the role played employers and their associations in the origins and development of the welfare

state (pedersen 1993 Ebbinghaus 2001 Swenson 2002 Mares 2003) Three elements emerge from these contributions The first is the existencc of sharp disagreements among employers in different sectors when a new sodal policy has to be introduced Since employers are exposed to different levels of uncertainty and risk-which they share with workers to some extent-their strategies vary in relation to the trade-off between risk distribution and labor-force control (Mares 2003) Employshyers are not a monolithic group hence intradass conflicts are salient explanatory factors for understanding their strategies and logic of collective action Second these researches reconstruct the emergence in different countries of cross-dass strategie alliances between capital and labor in order to foster the adoption ofsocial insurance schemes against sickness disability andn unemployment (Swenson 2002

Mares 2003) The third finding of these studies is thaI the success of cross-class alliance building depends not onlyon interactions between employers and workers at the firm or micro level but also on BIAs properties and capabilities at the macro level where they negotiate with trade unions and the state So specific attention has


been devoted to the analysis 01 the processes 01 associative centralization in various countries (Swenson 2002) These findings have some noteworthy theoretical implishycations which go far beyond the analysis 01 the development 01 the welfare state First of all this historicalliterature emphasizes that the interests of employersshyeven when they act in the political arena-are shaped both by marketconstraints and by firm strategies adopted to cope with them And this assumption-firmly rooted in the political economy approach-could be generalized to other fields of inquiry Second these authors emphasis on the role of illterclass contlicts and illtraclass alliances forces us to rethink the usefulness of dass-oriented explanations of social and political processes

132 THE STRUCTURING OF BUSINESS

INTEREST REPRESENTATION A COMPARATIVE-HISTORICAL FRAMEWORK

In sum even if scholarly interest in BIAs has developed relatively recently there is now a substantial body of historical and comparative research that needs to be situated in a more general explanatory framework

In the historical process of structuring systems of business interest represenshytation the founding of national peak associations is a critical juncture namely an event which determines the specific way in which capitalists interests will be defined not only in a given country but also in the international arena (Lanzalaco 1992) Hence this has to be the starting point for any attempt at systematization

In very general terms BIAs-like all political organizations--may emerge at a national level in two ways (Eliassen and Svaasand 1975) either by diffusion (namely the spontaneous germination of small associations and then their progressive integration into broader federations) or by penetration (when a previously founded national federation or confederation conquers new domains by generating new associations)5 These two processes may develop along both territorial and sectoral dimensions So we may have four types ofgenetic models ofBIAs (Table 132) There may be a process of sectoral diffusion (eg the CBI in the UK) in which spontashyneously sprouted sector-specific associations combine in anational federation or confederation Alternatively there may be a process of territorial diffusion whereby

5 Both these processes are usually present What matters is their timing and length nameiy whether the phase of diffusion or that of penetration is predominant in the birth of a peak association This is the reason why the detailed reconstruction of the historical development of an association or of an associative system is so important in the study of BIAs Different modes of identifying the phases of BlAs development may be found in Alemann (1987) and Pierenkemper (1988 236)


Table 132 Historical processes of peak association formation a typology

Dimension along Modes of formation which the process

of formation oecurs Diffusion Penetration

Territory Formation by Fonnation by territorial diffusion territorial (eg SGV and Vorort penetration (eg VN F in Switzerland) in Netherlands and

Confindustria in Italy)

Seelor Formation by Formation by sectoral secloral diffusion penetratlon (eg SAf (eg CSI In the UK In Sweden) and CNPF I n Fra nce)

the original units that form the national peak association are non-sector-specific associations organized on a local or regional basis (eg the Vorort and SGV in Switzerland) In a process of territorial penetration (eg the VNF in the NetherIands and Confindustria in haly) a strong local association extends its domain over the whole national territory by creating or incorporating other associations while in a process of sectoral penetration (eg the SAF in Sweden) a rather strong sector-specific national association plavs this role of federation or confederation builder6

Another important historical factor in the development 01 associative systems is the role played by exogenous actors in sponsoring the formation of the peak associations leading us to distinguish between internally and externally legitimized associations The first type owes its formation to the autonomous and spontaneous action of capitalists so the association is endogenously legitimized by its represenshytative action In other cases less infrequent than one might suppose the source of legitimization is exogenous to the organization itself This extern al legitimizer may be the Church as for example occurred in some Dutch BIAs a political party as in the case of many peak associations 01 retailers artisans farmers and cooperatives in Italy or often the state itself as happened in France

Although more empirical and historical research is needed in general terms we may infer that the way in which a peak association is formed determines its

6 There are also two intermediate modalities A national peak association may be formed through a fusion of two pre-existing federations or confederations which we may assimilate to a process of diffusion (as in the British case) or through structural differentiation when as a consequence of a process of functional specialization a peak trade association generates a peak employers association or vice versa which is a kind ofpenetration prOCess (as in the Japanese German and US cases)


Table 133 Formation legitimation and institutionalization of peak associations

Formation Process legitimation Institutionalization

Penetration Internal Stmng Penetration External Weak Diffusion Internal Weak Diffusion Externat Weak

struetural properties in partieular its degree of institutionalization7 BIAs genershyated and developed by diffusion regardless of the source of their legitimization tend to be weakly institutionalized In taet when the national peak association emerges the territorial and seetoral assoeiations adhering to it are already eonshysolidated and reluetant to devolve their power and authority to a new eentral organization as in the eases of the Freneh CNPF or the British CBI In the ease of BIAs born as a result of penetration their degree of institutionalization will be dependent on their form of legitimization If the souree of legitimization is internal they will be strongly institutionalized the Swedish SAF) whereas if the legitimizing souree is external they will be weakly institutionalized (eg the Italian Confindustria whosc consolidation was lostered by the Fascist regime) sinee the control over organizational resources and the Iinkages of loyalty depend on the external sponsoring organization (see Table

133 THE LONG- TERM EVOLUTION OF

BUSINESS ASSOCIATIONS

Since the eighteenth eentury capitalists and before them artisans have been expershyimenting with the scale of their collective action exploring new associative forms and exploiting those still available In very general terms we may distinguish four phases of development ofBIAs

7 A strongly institutionalized association is characterized by a high level of intraassociative hoshymogeneity integration and centralization It is also able to control the behavior of its members (both firms and associations) Conversely a weakly institutionalized peak association is a polycenshytrie organization which is dependent on subunits that are heterogeneous and poorly integrated with one another So according to the neocorporatist approach a relationship exists between the degree of institutionalization of an association and the function (representation of interests vs control of the membership) it performs within the political system and the industriaJ relations arena


The Primitive Phase (tenth to eighteenth centuries) The first lorms of organizashytion ofbusiness interests were the merchant and craft guilds (corporations in French

which developed mainly in Germany Great Britain Franee Japan and Italy In each country they assumed specific

but there are some common generaltraits (Farr 2000 eh 1)They were compulsory assodations whose membership was composed of merchants and starting from the twelfth century eraftsmen operating in the same business profession or sec tor (weaers bookbinders fullers painters etc) Their formation was duc to several historical factors 1989) First the legacy of the first voluntary rcligious guilds of the sevcnth eentury whieh provided the organizashytional technology on which they were based namelv the idea of an autonomous self-regulativc associative order that even BIAs S Second this inherited technology was used to cope with new emerging ehallenges the process of urbanization and thc early formation of towns as a new type of spatial organization of sodal economic and politicallite on the one hand and the need for reciprocal defense against the risks created by the growth of new economic activities on the other (seeurity for the members of merchant guilds and uneertainties deriving from the market lor those of the crafts guilds respectively) Finally another factor that must be kept in mind to explain the birth and growth of guilds is the increasing numbcr and differentiation of craftsmens activities

The guilds performed very important sodal and economic functions In the first place they erected robust entry barriers to the main professions against external eompetition in each town only those belonging to a guild were allowed to exerdse the corresponding business activity This has often led seholars to emphasize the

monopolistic eharacter and henec their negative effects In fact they also By controlling many important aspects of jobs-the level of

and the training of eraftsmen-they prevented competltlOn aeting as a self-regulating order and as tools for

controlling economic Furthermore the guilds established a sort of welshyfare poliey for their members providing forms of insurance or aid in the ease of sickness death or economic disaster Henee the birth and consolidation of these organizations was with various fluetuations by public authorities because of their capacity for producing colleetive goods (Farr 2000 eh 4) In a few deeades they established robust rclationships with the political and religious powers becoming the main actors in the municipalities sinee their leaders often occupied important politieal positions

To aecomplish this eomplex set of regulative and distributive functions the guilds were organized into a rigid system of rules and a pyramidal strueture of

8 According to Schmitter and Streeck (1985) BIAs may act as private interest governments (PIGs) primarily if they are highly institutionalized and if they are part of a corporatist system of interest intermediation These are the prerequisites needed to control and discipline their membership

304 FORMS 01 BUSINESS ORGANIZATION

authority that-in spite ofdifterences from country to country and within the same country-was always based on the overlapping between the hierarchy of internal authority on the one hand and professional mastery and seniority on the other Sometimes they also established cooperative relationships with their counterparts in other towns and nations Between the end of the eighteenth century and the beginning of the nineteenth the strength of guilds declined In some cases they were abolished because of state intervention (eg France Minard 2004) in other cases through the expansion of new industrial activities the prevalcncc of a liberal conception of the free market and the strengthening of their heirs namely the eh ambers of commerce

The analysis of these primitive forms of association is important for two reashysons First they represent the germs of contemporary BIAs Already a thousand years ago at the very beginning of the process of industrialization and capitalist development thc need to (self) regulate the market and economic activity by means of an associative order was feit Second the decline of guilds created a sort of regulatory gap that was filled by the chambers of commerce (eg in France Germany and Austria) or by modern forms of association (eg in Japan)9 It would be interesting to analyze comparatively the ways the different historical backgrounds of guilds aftected the subsequent developments of BIAs in various count ries

The Phase 0 Diffusion and Integration (Nineteenth Century) This phase stands in-between the birth of the first associations and the founding of national peak asshysociations Its duration is a very important explanatory variable since it determines the genetic model of the associations and hence their subsequent history and development (see the previous section) A long process ofdiffusion and integration is usually associated with the diffusive model while a rapid process of diffusion leads to the penetrative modeL

While the founding dates of peak associations are weil known (see Table 134)

much more uncertainty exists about the beginning of the diffusion phase When did the very first BIA spring up in a given country In some cases it is possible to establish with a certain accuracy this moment of genesis while in others lt is much more difficult to establish a clear starting point On the one hand the first associations were very volatile structures Often they were really professional lawyers practices and we can speak of associations only when these associations acquired their own office and a small bureaucratic staff On the other hand there is a substantial continuity between the premodern forms of association and the modern ones often due to the presence of chambers of commerce--an object of inquiry whose interest and relevance has often been undervalued and neglectedshywhich played a crucial role in the development of BIAs as for example in USA

9 Por a very exhaustive analysis of this need for self-regulation see tor the Prench case the recent volume edited by Kaplan and Minard (2004)


Table 134 Foundation date of the first peak associations in certain industrialized countries

Country Irade Emplovers Mixed funetion Associations Associations (lAs and EAs)

Austria Germany 1876 Zentralverband der 1904 Haupstelle Deuscher

Deutschen Industriallen Arbeitgeberverbande 1895 Bund der 1904 Verein Deutscher

Industriellen Arbeitbgeberverbande

France 1919 Conseil Franaise de la Production

Japan 1922 Japan Eeonomic 1931 Nationa I Federation 1917 Industry Club of

Federation of Industrial Japan Organizations

1919 Confindustria

Netherlands 1899 Vereininging van 1920 Centraal Overleg 1917 Verbond van Nederlandse Werkgevers Nederlandse Fabrikanshy

1920 Centraal Illdustrieel tenvreiningingell

Verbond UK

Italy

1919 National 1916 Federation of Confederation of British Industries Employers Organizations

United States l 1895 National Assodation of Mallufacturers

1908 Nationallndustrial Council

1912 Chamberof Commerce of the United States

Sweden 1910 Sveriges 1902 Svenska Industriforbund Arbitsgivarefoumlreningen

Switzerland 1870 Schweizerische 1908 Zentralverband Handerls und Industrie Schweizerischer Verein Arbeigebershy

1879 Schweizerische Organizationen gevernbevernband

Note 1US peak associations even if Ihey deal with industrial relations do not have a dillct role in collective baIyaining given the predominance of firm and sectoral bargainning levels

(Lynn and McKeown 1988) Germany (Weber 1991) Japan (Miyamoto 1988) and France (Daviet 1988 270 Lemercier 2003)

If we jointly consider the suggestions provided both by the defensive or orshythodox model and by the revised one (see above) we may say that the first transformations of associative action and integration into more inclusive secshytoral and territorial federation emerged-depending on the country in question-in

306 ORMS OF BUSINESS ORGANIZATlON

reaction to two different stimuli (Lanzalaco 1990) either as an attempt to regulate conflicts within the capitalist dass or in response to the need to cope with the challenge of the working dass

In general where capitalism started early and developed gradually the first forms of associationalism were not aimed at coping with the challenge of the labor movement but were attempts 10 avoid cut-throat price competition on the marshyket eftuumlrts to limit or prevent altogether the access of foreign competitors to the domestic market endeavors to form a common front is-ais the seilers of basic raw materials and other supplies and the like (Schmitter and Streeck 1981 16) The main problem was not to organize against an external enemy represented by the labor movement but against an enemy internal to the capitalist dass itself namely producers from other sectors and countries In such cases trade associations and sectoral forms of aggregation prevailed Within this group of countries it makes sense to distinguish those countries where the processes of organizational centralshyization with the formation of the first peak associations occurred before World War I (eg Switzerland and Germany) from those where they occurred afterwards (the UK France the Netherlands) Where capitalist development started late and proceeded rapidly capitalists got organized predominantly as a response to the labor movement Initial forms of associationalism and early processes of organishyzational centralization were led by dass conflict In such cases where unity and cohesion were required against a common external enemy employers associations and territorial modes of organization prevailed Also in this group of countries we must distinguish between those countries where the challenge of the labor movement came mainly in the political arena (eg Sweden) from those charactershyized by late democratization where the challenge of the labor movement occurred mainly in the labor market (eg Italy) Typically peak associations are much more institutionalized and centralized in the fuumlrmer count ries than in the latter ones as is demonstrated by the case of the Swedish SAF

The Phase of Penetration Centralization and Consolidation (Beginning of the Twentieth Century to the End of World War II) More or less quickly depending on the length of the diffusion phase on the one hand the number of associations progressively increased and on the other they combined with one another to bring about more indusive federations and confederations (Windrnuller 1984) These processes ofassociative integration which have been only sporadically studied gave rise in all industrialized countries to the first national peak associations beginning from 1870 to 1920 and accelerating in the first years of the twentieth century (see Table 134)10 In the subsequent decades up to the end ofWorld War II these BIAs

10 BIAs tend to integrate their action in more and more complex associative systems that are pyramid shaped Peak associations are the hlghest organization level in the sense thai they are at the top of the system they are sector unspecific their domain is national and their membership is composed of assodations or federations of associations so they are associations of the second or third


strengthened their structures and assumed their present tuumlrm So it is precisely in this period that national models of business interest representation emerged with their peculiarities National trajectories became more clearly defined and once these associations were fully institutionalized and consolidated their structural and operative properties remained relatively impermeable with the exception of so me minor adaptive transtuumlrrnations to the changes that occurred in the productive systems (dedine of the primary sector and of traditional industries such as steel and manufacturing the emergence of high technology sectors definitive affirmation of the tertiary sector ) in the collective bargaining arena (decline of trade unions and labor unionization reduction of industrial conflict strengthening of firm and sometimes individual level agreements) and in the institutional context (European integration globalization and liberalization of market transactions etc) And this is why when a comparative approach is adopted the historical and diachronie perspective may explain intercountry differences much better than a structural approach which focuses mainly on industrial infrastructure or collective bargaining arrangements in order to explain national differences and similarities What pened during this crucial period and its outcomes cannot be explained without taking into consideration two key historical events the involvement of many counshytries in World War 1I and the divide between those countries wh ich experienced authoritarian rule and those in which liberal democracies persisted

As regards the first element World War 1I imposed on all states a more or less exshytensive intervention in the economy in order to plan production assure the supply of raw materials control inflation and finance the contlict Even if all states had to cope with these challenges the way in which they organized wartime mobilization varied (Grant et aL 1991 Table 135) In some cases BIAs were directly involved in other cases individual businessmen in some cases corporatism was imposed by the state whilc in others it was almost spontaneously organized by trade associations and industries ll In general with the exception of the United States wartime mobishylization had the effect ofwidening the functions performed by BIAs and reinforcing their role in relation to state agencies and public administration In other words it is precisely during World War II although the first signs of this trend can be

order Needless to say the associations that do not have direct relationships with firms and employers have to accomplish functions which are different from those offust-order associations which have to provide services assistance and solidaristic goods direcdy to the membershlp

11 Corporatism and pluralism are two different ways oforganizing and representing functional (eg economic) interests A corporatist order is characterized by two trait~ a limited number of noncomshypetitive and hierarchically ordered organizations recognized by the state and the concertration of major social and economic policies between them and the executive Conversely a plural ist order i5 characterized bya large number of competitive organizations whose rum i5 to exert pressure (often caUed lobbying) on public authorities (mrunly parliament) in order to affect the content of coUective decisions So the difference between corporatism and pluralism deal with both the mode of itlterest orgcmizatio71 (monopoly vs competition) and the mode of political representation (concertation vs pressure) Regarding the difference between these two systems of interest inter mediat ion see the seminal contributions ofSchmitter (1979) and Lehmbruch (1979)


labte 135 Modes ofinterest intermediation during World War 11

Macro level Meso level

State corporatism Germany Italy Japan France

Netherlandsi

Societal corporatism Sweden Denmark UK

Captured etatisme2 USA Canada

Notes Occupied countries in which state cqrporatism was imposed 2Captured etatisme is defined by 6111nt etal (1991 275) as the intervention by

a-temporarily-relatively strong but not all)nOmOUS state ( ) captured by businessmenshycum-civil-servants who also acted as interest intermedi~tormiddot where captured means that to man the economic emergency administration most countries had to enlist promishynent businessmen ( Jsince there was neither time nar capadty to train professional dvil servants tor economic-policy~ Source My elaboration and update from Grant etal (1991)

traced back to World War I that BIAs acquired areal public status and the sharp distinction between public and private regulation of the economy became blurred

As far as the second element is concerned authoritarian regimes tended to influence both at horne and in occupied counlries the structure of business interest representation and that oflabor as weil transforming them into mere organs of the state (state corporatism)ln particular four lines ofintervention were adopted the creation of more inclusive peak associations which were able to represent monopshyolistically all businesses their incorporation in corporatist institutions where trade unions were also present the institution of compulsory membership and last but not least centralized and politically controlled selection of the leadership (AJemann 1987) The legacies of these policies have not been as strong as one might expect With the return to democratic rule many associative systems such as the German and the Italian reassumed their original configuration which were often more fragmented and pluralistic that those imposed byauthoritarian regimes The legacy of authoritarian rule led to organizational consolidation of these associations their expansion over the whole national territory and the establishment of ongoing relationships with the state and in particular with the public administration

In sum the events of the 19305 and 1940S not only did not change the original and specific traits of national systems of business representation but even to a certain extent reinforced these differences

The Transnational Phase (since World War II) The national level was the highest level of business interest association only for some years At the end of World War I the International Chamber of Commerce (ICC) and the (International

BUSINESS INTERIlST ASSOCIATIONS 309

Organization of Employers OOE) were founded (in 1919 and 1920 respectively) After World War Ir important confederations such as the Conseil des federations industrielles (1949 from 1958 UNICE Union of Industrial and Employers Conshyfederations of Europe) and the COPA (Confederation of Professional Agricultural Associations 1958) were founded at the European level This process of transnashytionalization of BIAs and in particular of their Europeanization has proceeded rapidly mainly at the sectoral level and in the economic policy area with the emergence of a thick and fragmented network ofassociations and federations which are very active in lobbying and regulatory activities while non-sector-specific and employers associations are less developed (Lanzalaco 1995) The relative weakness of this last type of association may be explained both by the absence of a strong trade union movement at the lransnational level and by the strict link between capitalism and the nation-state So national BIAs (both sector-specific and genshyeral) are not declining but are restructuring their organization and strategies The transnationalization of capitalist collective action may be explained on the basis of two distinct factors The first wave of transnational BIAs those founded after World Wars land 1I can be interpreted as the attempt to create peaceful crossshyborder relationships among national capitalists in order to avoid further military conflicts The second wave during the last twenty-five years is mainly due to the increasing process of regionalization in some cases and globalization of the economy in others

In general terms no dear trend is easily identifiable globalization and regionalshyization breed transnational associative structures but they also involve national and local associative levels they require the development of new functions (eg to supshyport the processes of productive outsourcing and commercial internationalization) but they do not render the older ones obsolete (eg services and assistance to firms) These processes originally concerned multinational corporations and large firms but have recently bcgun to involve sm all and medium-sized firms in a dramatic way as weil They call for collective action but they also stimulate conHiet and asshysociational competition The main question is whether these inconsistent effects of globalization and regionalization are only temporary processes in the restructuring of BIAs or are going to became permanent traits of capitalists collective action (Streeck et al 2005)

13-4 CONCLUSIONS

As has been extensively shown the historical perspective has almost always been present in the study of BIAs even if many topics require further empirical reshysearch On the basis of the literature examined at least five fields of inquiry seem promising


As we saw at the beginning of this chapter the first broad area of research concerns the relationship between BIAs and the development of capitalism If it is tme that different modes of development of national capitalisms have created different systems of capitalist representation it is also true that BIAs once consolshyidated and frozen ean operate as an independent variable as weil Their strategies and policies may inlluence the evolution of national sectoral or local systems of firms by promoting specifie types of industrial and economie policy providing different types of services and assistance and inlluencing the distribution of pubshylic financial aid (Hall and Soskice 2001) For example BIAs mayadopt different policies when faced by the crisis of dedining economic sectors such as agriculture small-scale retailing or traditional manufacture they may seek to protect firms in these sectors or eonversely may foster economic choices and policies aimed at rationalizing these economic activities even if this implies the dosure of many inefficient produetive units In sum BIAs are able to make strategie ehoiees not only in the industrial relations arena (Tolliday and Zeitlin 1991a) but also in that of publie poliey (Swenson 2002 Mares 2003) These ehoiees in turn may have dramatic implieations that should be the objeet ofeareful research in a variety ofpoliey areas Such research should not only consider different levels of policy making (national loeal and sectoral) and different historieal periods but also eompare phases of economk growth with those of dedine in the face of national or international competition

The second major area of research eoneerns the causes of the different degrees of fragmentation of business interest representation systems In some countries these are highly indusive and there are a few peak associations representing firms of different sec tors (industry agrkulture and eommerce) size (arge smalI and medium-sized) and type ofownership (private public cooperative) In other counshytries on the contrary the system of representation is highly fragmented into many peak associations that not only represent different types offirms but often compete with one another What faetors explain this cross-national variation Why in some countries has the industrial bourgeoisie achieved a hegemonic position vis-a-vis farmers traders eraftsmen and other sectors of the business dass while in other countries it has remained relatively insulated from an assoeiative point of view What role in particular did the financial sector play in the historieal birth and development of BIAs In order to tackle these core issues a comparative-historical perspective is needed wh ich can identifY the different national trajectories and explain the similarities and differenees between them

The third area of inquiry concerns in very broad terms the relationships beshytween BIAs and the political system As Isabella Mares (2003 8) has noted recent literature has rediscovered the political role of capitalists but this topic needs further investigation In politieal science and sociology it is normal to distinguish two forms of political representation territorial (political parties) and functional (interest groups such as trade unions BIAs etc) Many studies on the relationship


between these two channeIs of political representation exist for the working dass while they are almost absent in the case of capitalists What is the relationship between political parties and BIAs What type of funetions do these two channels of representation perform In some countries certain associative expressions of business interests exist that are characterized by marked ideological radicalism mainly involving small and medium-sized firms (eg Franee Spain and to some extent Italy) [n eertain other countries this peculiarity is almost eompletely absent How can these differences be explained Studies ofpolitical parties and trade unions teach us that the answers to these questions may be found only in a historical perspective since path dependence has a erucial role in structuring the systems of working-c1ass representation The same holds tme for capitalists

A fourth area of research deals with the relationships between BIAs and public administrations We know from the seminal contribution of La Palombara (1964)

and others that bureauerats are the main interlocutors of interest groups The weight of publie administration in poliey making has grown inereasingly and it would be interesting to analyze how changes in the organization and policies of public administrations have affected-or conversely have been affected byshyBIAs inlluence and strategies This topie has been studied with particular attenshytion to the critkal juncture of World War 11 The scope of the analysis should be broadened in two directions On the one hand comparative research is urshy

needed-eoncerning the impact of World War I similar to that of Grant et al (1991) on World War II On the other hand these relationships should be studied also in peacetime when business cooperation is needed--even if in probably less dramatic forms than during war mobilization-to cope with ecoshynomic cycles and depressions market uncertainty and economic and technological transformations

Continuing with the question of bureaucraty there is a fifth almost unexplored theme to wh ich business history could make a great contribution namely the relationship within BIAs between elective leaders and paid officials It is weil known that politicalleaders and bureauerats have different time horizons aims and logshyics of action In particular paid officials are not simply passive executors of the direetives of elected leaders Hence it would be interesting to analyze how as a result of the institutionalization process associational bureaueracies have grown and affected the policies of BIAs Who is the aetual leader the president or the director How has the mode of recmitment and training of associational officials changed over time How has their role in shaping associative strategies and policies changed And how are these changes linked to the transformation of entrepreshyneu rial capitalism into managerial eapitalism Is there a symmetry between orgashynizational change within firms and within associations or were they autonomous processes

BIAs are not only major actors in the politieal system and the industrial relations arena but also play an important role for businesses in both providing them with


services ami guiding them toward specific policies of devdopment Managerial choices and associational strategies are closely linked a fact that has often been undervalued in the past This is a gap that business history has contributed-and can contribute more in the future-to filling

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HARRIS H (1982) The Right to Manage Industrial Relations Polides Amlrlcan Business in the 19405 Madison University of Wisconsin Press

JACKSON P and SISS0N K (1981) Employers Confederations in Sweden and Ihe UK and the Significance of Industriallnfrastrueture British Joumal of lndustrial Relations 143 306- 23

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KIESER A (1989) Organizational Institutional and Societal Evolution Medieval Crafts Guild and the Genesis of Formal Organizations Administrative Seienee Quarterly 34

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fable 131 Forms of capitalist action

Capitalists may act as Capitalists may act

Individually Collectively

Employers Collective Employers bargaining at associations firm level human resource management

Businessmen Firm strategies and Trade associations choices trusts

economies cannot omit a careful comparative analysis of BIAs institutional role (Hall and Soskice 2001 Ebbinghaus and Manow 20mb)

The introductory section of this chapter presents the main theoretical issues at stake synthesizes the outcomes of historical research and analyzes the interrelashylions between them The second section sketches a comparative-historieaI frameshywork to expIain the development of BIAs while the third section outlines the long-term historical development of BIAs since the Middle Ages The final section proposes an agenda for future research

The role of BiAs can best be understood by analyzing the various forms of action by capitalists First they may act either individually as managers of firms or collectively as members of coalitions and organizations such as trusts associations joint ventures clubs ete (Martinelli et aL 1981) Second they may act either as employers when they interact with workers and trade unions in the labor market or as producers (or businessmen) in their relationships with customers suppliers politicians and other firm managers in product and capital markets (Sisson 1979

Streeck 1991) By crossing these two orthogonal dimensions we obtain a simple typology of the various forms ofcapitalist action (Table

A first point to stress is that there are two different types of BIAs trade asshysociations and employers associations (hereafter TAs and EAs respectively) This distinction is quite relevant since these two types of associations are characterized by different political functions organizational structures and patterns of historshyical development Very briefly from an organizational point of view TAs tend to privilege the vertieal dimension (in which associational domains and identities are delimited by sector category or product) since they have to bring out the peculiar interests of specific groups of producers and firms while EAs are more prone to a non-sector-specific or horizontal mode of organizing (namely on a loeal or regional basis regardless of lirms productive specialization) since they have to reflect the territorial configuration of the labor market From a functional point ofview trade associations not only provide all those services needed by firms


such as marketing fiscal and financial advice research and innovation regulation of competition etc but they also act as pressure groups (or lobbies) for definshying promoting and defending the interests of their membership in the political arena vis-a-vis government authorities public administrations and state agencies Employers associations on the other hand specialize in industrial relations issues and deal with a1l issues concerning not only collective bargaining and strikes but also labor and social policies 2 This four-cell typology makes dear that the study of capitalists action must not be seen as a field of inquiry which is fragmented into a variety of circumscribed topics (the content of the individual cells) but should be seen as an integrated area of research in which market trends technological innoshyvations entrepreneurial strategies industrial relations and political concerns are all interrelated (the links among the various cells) In other words when explaining the evolution of a specific form of action what is happening--or what has happenedshyin the other fonns cannot be ignored In the case of BIAs for example the choice of combining and acting with other capitalists the way in which this collective action is organized the goals pursued in both the political and industrial relations arenas and the services that are provided to firms all depend on their individual strateshygies which are influenced in turn by associational choices (Tolliday and Zeitlin 1991b )

From a theoretical point of view two Iinked core issues stand at the center of the debate about BIAs The first concerns the reasons why capitalists decide to combine and to form associations The second focuses on the relationship between the collective action of capitalisls and that of workers

The simplest answer to these problems has been given by the pluralist school in Political Science According to the group theory of politics BIAs emerge spontashyneously as an effort to defend capitalists collective interests tor the same reason that trade unions are founded by workers

The pluralist approach was questioned by Mancur Olson (1965) in his seminal work on the logic of collective action He assumes as do the pluralists that capitalshyists and workers act according to the same logic that is as rational actors But he shows that precisely because both sets of actors rationally pursue their individual interests they will not combine spontaneously to defend their collective interests unless (a) the group is small and provides some selective incentives (services rewards offices) to those who contribute to collective action or (b) some coercive mechanism (compulsory membership control over monopolistic goods etc) is deployed Hence Olson identifies no substantive difference between the logic of collective action of eapitalists and that ofworkers He only suggests that employers

2 This distinction is not empirical but analytical since it does not necessarily give rise to distinct organizations In some countries the same organization acts both as an employers and as a trade association whereas in some others there are distinct associations which have specialized in each of the two functions As Streeck et al (zoos) argue this functional distinction appears to be diminishing in recenr years because of the declining relevance of unions and dass confiict

















































































1919 Confindustria



Verbond UK

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13-4 CONCLUSIONS















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Verbond UK

Italy

























Netherlandsi












13-4 CONCLUSIONS















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