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A Century of Research of on Interest Intermediation – New Approaches, Methods and Explanations

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. New theoretical perspective

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A Century of Research of on Interest Intermediation – New Approaches, Methods and Explanations

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  1. 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

  2. Three innovations in the book • 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 • 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

  3. The complexity paradigm as a conceptual network

  4. The evolution of theories of business associations

  5. Marxism and Pluralism • 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 • 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.

  6. Systems theory and Neo-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. • 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).

  7. Transaction Cost Theory • 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

  8. Collective Action/Public Choice Theory • 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. • 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“.

  9. 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 ofexternal relationships. • 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.

  10. 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.

  11. Comparison

  12. Ecological Analysis of Business Associations 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. • 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)?

  13. Chemical Industry Associations UK GER USA • 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.

  14. Competition Cooperation Neutrality Chemical Industry Associations UK GER USA • 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.

  15. Information- and Communications Industry Associations UK GER USA • 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).

  16. Competition Cooperation Neutrality Information- and Communications Industry Associations UK GER USA • 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.

  17. Major Findings • 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. 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.

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