Global Business Associations

Karsten Ronit

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781317336228
• Edition: 1
• Topic: Economics
• Subtopic: International Economics
• Index: Economics

Global business tends to be perceived as a number of individual but powerful multinational corporations, capable of controlling markets and influencing political decisions; in fact, global business is highly organized through a plethora of associations that bring together competing companies and conflicting national businesses. Indeed, global business associations have a long history and, with accelerated globalization, further opportunities emerge for unified business action.

This book fills a significant gap in the current literature, examining the pivotal role of global business associations and providing a concise and accessible overview of their different functions in a range of institutional contexts. Beginning by clarifying the concept of global business associations, the author puts their role into a historical and contemporary context in which their economic, social and political functions are sketched. Their historical origin is outlined, including the proliferation of global associations in the twentieth and twenty-first centuries. He then moves on to explore and analyse the different types of actors, explaining key categories and their place in the organization of global business with chapters on peak associations (e.g. ICC and WEF), industry associations, alliances, as well as clubs and think tanks, and facilitators.

Covering the history, current role and future evolution of this dynamic category of associations, this work will be essential reading for students and scholars of international political economy, international relations, international organizations and global governance.

1

Peak associations

• Overview: major features and challenges of peak associations

• Relations between peak associations: members and markets

• Activities: policy fields and service provision

• Multiple exchanges: relations with IGOs and other actors

• Profiles of peak associations: similarity and variation

• International Chamber of Commerce

• International Organization of Employers

• World Chambers Federation

• Business and Industry Advisory Committee to the OECD

• World Economic Forum

• World Business Council for Sustainable Development

• Global Business Coalition

• BRICS Business Council

• Conclusion

A small group of very large associations known as peak associations aspire to organize vast sections of global business, and these horizontal structures occupy a central place in the associational system. While the trans-industry character of peak associations gives them a unique commitment to addressing concerns shared by the global business community, there is a considerable distance between these organizations and the conditions of individual firms in markets around the globe, and it can be difficult to trace the impact of associations on their economic situations. As a rule, however, peak associations are linked to corporate interests in two ways: they build on national peak associations and, in a few cases, on individual firm membership,¹ and they are designed to represent the general interests of these diverse constituencies.

Their mutual status as peak associations does not suggest that they are all similar. As we shall see, they manage their roles as “peaks” and their roles as “associations” somewhat differently.² As horizontal organizations with potential overlaps with other associations in the small cluster of peak associations, they have to observe how adjacent associations administer their roles. They find many ways to adapt, mindful of broader trends in and beyond the global system of business associations. This interesting differentiation among peak associations is attributable to multiple factors. They do not organize exactly the same members, they do not specialize in exactly the same fields, and they do not face quite the same environment. This important variation is also related to their different historical backgrounds. The chapter opens with an overview to introduce these factors.

In this overview, we discuss issues that are of concern to all associations but of particular interest to peak associations, which meet different challenges than do the industry associations and alliances studied in the following chapters. Theoretically, it is a strategic issue how associations define their various tasks, domains and relations, as this will ultimately impact on their competition with kindred associations and crucially affect their chances of survival. Hence, in a comparative perspective, we analyze the patterns of relations that exist between the associations, identify and discuss their concentration on different policies as well as some aspects of their service provision and, finally, examine their relations with relevant international agencies and civil society organizations. These bodies have traditionally played a key role in the environment of peak associations.

In a further step, the chapter analyzes and offers a profile of the following actors: the International Chamber of Commerce (ICC), International Organization of Employers (IOE), World Chambers Federation (WCF), Business and Industry Advisory Committee to the OECD (BIAC), World Economic Forum (WEF), World Business Council for Sustainable Development (WBCSD), Global Business Coalition (GBC), and the most recently formed, BRICS Business Council (BBC). We first draw a general profile of each of the associations and highlight aspects of their history, their membership bases, leadership structures, norm- and rule-building activities, and external relations. These associations were founded during different time periods, and we will analyze them in chronological order gradually adding to the ecology of organizations. Although their emergence is not a neat chain of related events, it is important to understand the shifting organizational contexts in which new associations have materialized.

Finally, we conclude the chapter by discussing the apparent similarities and differences among this small group of organizations and by placing the associations into the context of the general system of business associations and related entities.

Overview: major features and challenges of peak associations

Global peak associations have, in principle, more or less identical tasks as they all seek to organize business on a global scale, but nevertheless there is huge variation as to how this task is defined. It is clear that they try to recruit some of the same members and cover some of the same parts of the world, but the definition of these domains is not always very precise. The same applies to the fields of activity, and not least the policy issues they are engaged in, where they both specialize and tend to concentrate on some of the same issues. This activity is also related to their relations with the environment, where peak associations establish relations with important intergovernmental agencies. Before we study specific peak associations, it is useful to highlight these general theoretical challenges and see how they are addressed in a comparative perspective.

Relations between peak associations: members and markets

In an attempt to differentiate themselves and define their own roles, peak associations rarely refer to other peak bodies. However, there has always been a profound awareness of the broader context in which the peak associations find themselves and especially a great and constant attention paid to their closest “neighbors,” with whom opportunities for competition or collaboration are particularly strong, an issue that is of key theoretical and practical importance. Accordingly, they have found various ways of adaptation and specialization. We can distinguish between different organizations at the peak level in terms of territorial scopes, member properties, and market orientations, all factors that are crucial to their profile.

First, the associations vary in their territorial scopes. All of them seek to organize global interests, but not all of them cover the entire globe, either because their constitutions and ambitions do not point to such goals or because they are not able to achieve a global presence. This palpable variation in globalization and the different profiles have consequences for their legitimacy as global actors. ICC, WCF and IOE all have a substantial global basis and cover all continents soundly. BIAC also has many members and has managed to expand its membership domain over time, moving from an inter-regional organization covering mainly North America and Western Europe to a global organization with members on several continents. GBC has a global presence, albeit stunted in recent years, but it only attends to large economies and big business communities, and here we find some deficiencies. BBC has a global basis but also accommodates very large countries and few members. WEF and WBCSD organize firms from many countries, but those from developing countries are quite few. There is clearly a bias toward developed countries, especially the United States and Europe, and there are important limitations to the representation of global business.

Second, the associations vary in relation to the basic member properties. We can distinguish between associations with first-order membership (direct), which organize single firms, and second-order membership (indirect), which organize associations.³ This has various implications for how collective action is organized. ICC, WCF, IOE, BIAC, GBC, and BBC are federations, and they all have associations as members—in most cases, national associations. There are also some consultations with large companies in, for instance IOE, but core membership is restricted to national associations that present a unified national business position, somewhat akin to the role of states in IGOs. However, it is important to note that the different peak associations do not link up with the same national associations, as the national associations tend to cater to different groups in the national business community, but some of the peak associations also have some of the very same members. WEF and WBCSD form another group of associations. They apply the direct-membership model, and especially large firms have direct access to the decision-making structures of the two organizations and, hence, do not represent national business interests in general. These patterns give rise to different opportunities for governing the associations, and in some cases, single corporations are important in influencing leadership structures.

Third, the associations vary according to their market orientations. Typically, they define their formal status as employer related, producer related or a mix, and this shows that there are many drivers for associability related to different markets.⁴ With a few minor exceptions, IOE organizes national employer associations (some of which are mixed) and also classifies itself as an all-out employer association, whereas BIAC defines itself as a mixed association and has both employer and producer associations among its members. There are also some overlaps between IOE and BIAC in terms of members and orientations, especially when it comes to questions relevant for developed countries, but formal coordination mechanisms exist between the two bodies to discuss issues of common concern. Occasionally, GBC may address employer-related issues, though its engagement in this field is weak. The rest of the peak associations, ICC, WCF and BBC, concentrate on issues not related to unions and to the labor market, and an agreement adopted in the 1970s stipulates the division of labor between ICC and IOE.⁵ As mentioned, WEF and WBCSD organize firms only, and firms, of course, are an embodiment of both producer and employer functions, but WEF has paid little attention to employer issues, and WBCSD has not displayed an active interest in labor issues.

Activities: policy fields and service provision

The profile of the associations, and the way they define membership, is closely related to their policy engagement, and the involvement in policy fields is, of course, also an area in which the associations may come into competition. Indeed, in a theoretical perspective there are also many dimensions of competition. We observe that policy portfolios differ between the peak associations, and we witness not only different styles of engagement but also different priorities for the development of policy in relation to other tasks, such as service provision. Indeed, there is space for specialization and a refined division of labor, but cases of intersection also occur.

First, as peak associations, the eight organizations reviewed in this chapter are committed to addressing a relatively broad array of issues, yet there are remarkable variations in their approaches. ICC definitely has the broadest coverage—this also has some benefits for WCF, an organization which thinly covers its policy fields—and ICC has a much broader engagement than GBC, also spanning strong capacities in areas of self-regulation. BBC seems to host an ambition to systematically cover areas embraced by BRICS. WEF engages in a huge number of areas and is able to bring many fresh ideas forward through reports and events but, like WBCSD, without an explicit obligation to represent a negotiated compromise supported by members. In comparison with ICC, both IOE and BIAC have defined a smaller but slowly growing number of policy fields, BIAC because of its dual commitment to employer and producer issues. Because of the focus on employer concerns, the two associations are active in areas where the other organizations are largely absent.

From a wider perspective, however, the stricter division of labor between peak associations that existed in the past is giving way to flexible approaches in more or less all associations, and employer and producer issues have become harder to separate. Add to this the circumstance that all associations today try to grapple with a range of new issues, for instance in the broad area of corporate social responsibility, where complex issues of economic, social and human rights force associations into often-unknown terrain where they meet experienced experts from intergovernmental agencies and civil society organizations.

Second, the associations have different styles in their communication of policies. Some try to reach beyond the business community and traditional interlocutors, such as the most important intergovernmental bodies, and address the general public. This is clearly the dominant strategy of WEF, which has been very successful in setting agendas and staging different kinds of events and is seen by some, perhaps, as the quintessential voice of business. As an association only based on firms, WBCSD is also an active player but is confined to a relatively small field and for more special audiences. The attention received by WEF is often envied by other peak associations, which may seem less innovative and energetic, but it is important to note that these other associations face strikingly different conditions because they are representative organizations with a commitment to members and are not broad forums for deliberation.⁶ They have to go through the often-tedious process of negotiation before joint positions are reached and communicated. Also, ICC is an active communicator and uses many channels, but while GBC has maintained its level of communication, especially in relation to the G20 summits, BBC has still to develop its own style. These organizations are somewhat underprivileged, and they are not supported by strong secretariats and committee systems. WCF mainly relies on ICC, and IOE and BIAC are very active in the context of their primary institutional environments but less so in a general public context.

Third, the peak associations also have strategies regarding their internal and external activities and how to balance the development of policy with the development of services. Members will appreciate active organizations that set important agendas, but they will also expect various services to be provided. In general, all the associations seem to have become increasingly aware of the value of services and, accordingly, they have tended to upgrade this activity. However, ICC has substantial experience and by far the most sign...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Acknowledgements
• Abbreviations
• Introduction
• 1. Peak associations
• 2. Industry associations
• 3. Alliances of corporations and associations
• 4. Clubs and think tanks
• 5. Facilitators
• 6. Conclusion
• Bibliography
• Index