The Political Economy of State-Business Relations in Europe

Interest Mediation, Capitalism and EU Policy Making

Rainer Eising

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781134038954
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

The delegation of policy-competencies to the European Union has changed the context in which national actors form their interests and represent them. Shaping European markets and societies, EU regulation has important effects in the member states. This book analyses how business interest organizations respond to this challenge and what strategies they develop to cope with European integration. Starting from the idea that institutional contexts, resource dependencies, and organizational characteristics explain, to a considerable degree, how interest groups adapt to EU policy-making, this study delivers important insights into EU governance. The empirical analysis draws on a comprehensive data set of German, British, French, and EU business associations and large firms. Divided into three parts, it moves from the study of domestic contexts to the analysis of multilevel-governance in the EU before finally scrutinizing in greater detail the factors that shape the access of interest groups to the EU institutions.

Making an important contribution to the development of institutional and organizational accounts of interest groups in the EU, this book will be of interest to political scientists, economists, and sociologists working in the areas of European integration, comparative European politics, political economy, interest groups and civil society.

Part I
The theoretical and empirical study of state—business relations in Europe

1 Introduction

European integration has prompted a large number of societal and economic interest organizations to promote their cases before the European Union (EU) institutions. These organizations transport socio-economic interests onto the EU level, are sources of information to the EU institutions, exert influence on the EU policy-process, cooperate in the implementation of EU policies and deliver their members’ compliance with European decisions, to name only a few of their important functions. The EU institutions have long recognized the relevance of interest groups. They have accorded to the cross-sectoral European employer associations and trade unions the status of social partners in the social dialogue. In other policy areas, they have established expert committees in which interest organizations routinely represent their members and domains. The Lisbon treaty further strengthens the role of interest groups and civil society in EU decision-making by introducing provisions for a participatory democracy at EU level.

Interest organizations seem particularly important to EU politics because the European Union lacks some channels of representative democracy that are crucial in its member states when tying state institutions to citizen preferences. The use of concepts such as associative democracy or participatory democracy in the analysis of EU politics signals that interest groups might help to fill a void that political parties leave in the EU, linking the EU institutions closer to the citizens of the union. Partly due to the transformation of the European nation state, the importance of electoral and party politics appears to be in decline (Bartolini 2005; Balme and Chabanet 2008) and the ‘authoritative allocation of values’ seems to migrate into policy networks (van Waarden 1992; Falkner 2000) and negotiation systems (Mayntz and Scharpf 1995) in which interest groups assume prominent positions. However, despite the important political role that is ascribed to them and despite numerous empirical studies, our knowledge of interest organizations in the EU is limited (see also Beyers, Eising and Maloney 2008). There are notable gaps in the study of EU interest representation and several scholars have arrived at different conclusions regarding the role of interest groups in EU politics (see Chapter 2).

Empirical and theoretical scope of the book

Against this background, this study seeks to enhance our knowledge by describing and explaining the adaptation of domestic interest organizations to the EU multilevel system. European integration and globalization, especially during the two decades which followed the end of the Cold War, correspond with an increase in the transnational flows of capital, goods and information, and confront the nation state with new trans-border challenges. Contemporary governance features a growing importance of non-governmental actors and a rise of transnational networks straddling frontiers and levels of governance. This has tremendous consequences for how interests organize and how views of citizens are represented by, through, and within interest organizations. While the coincidence of boundaries in the past led to nation state institutionalization of interest representation, contemporary de-bordering leads to its reconfiguration in the EU multilevel setting.

As a result of these changes, it is now common to claim that interest groups need to follow a ‘dual strategy’ (Mazey and Richardson 2002; Kohler-Koch 1997) and must represent their interests both in the member states and at the EU level in order to exert influence on EU policies. Some studies have identified groups that pursue such multilevel strategies and others suggest that the EU provides exit options to domestic actors that can lead to major realignments in national systems of interest representation (see Bartolini 2005:304–8). But, so far, we know surprisingly little about several important issues linked to this institutional transformation: To what extent is this course of action pursued? Which groups pursue it? Under what conditions do they employ it? And what are the effects on domestic interest group systems? Attempting to answer these questions, I seek to advance our knowledge about the adaptation of national interest groups to the European Union and our insights into how multilevel governance operates in the EU. While there is a burgeoning Europeanization literature that investigates the impact of the EU on domestic political systems and in the international arena since the 1990s (Kohler-Koch and Eising 1999; Goetz and Hix 2000; Cowles, Caporaso and Risse 2001; Héritier et al. 2001; Schmidt 2002, 2006; Dyson and Goetz 2003; Graziano and Vink 2007), there have only been few studies on how interest groups responded to the integration process.

Before outlining in more detail the basic ideas and arguments to come, it is necessary to clarify what I mean by the term interest organization. In this study, I use the terms interest organization and interest group interchangeably. In essence, three factors define the terms (see Beyers et al. 2008): organization, political interests and informality. Organization relates to the nature of the group and excludes broad movements and waves of public opinion that may influence policy outcomes as interest groups. Interest group politics concerns aggregated individuals and organized forms of political behaviour. Political interests refers to the attempts these organizations make to influence policy outcomes. This aspect is often called political advocacy, which refers to all efforts to push public policy in a specific direction on the behalf of constituencies or a general political idea. Informality relates to the fact that interest groups do not normally seek public office or compete in elections, but pursue their goals through frequent informal interactions with politicians and bureaucrats. This, however, does not rule out that important facets of state—group relations in capitalist democracies can be heavily institutionalized. Not all interest organizations are permanently involved in politics, for some political activities are more sporadic and ephemeral. Note also that not all interest organizations are groups strictu senso. Some interest group scholars consider institutions such as hospitals, universities, firms or local governments to be interest groups or interest organizations (see Gray and Lowery 2000). These institutions show some level of organization, they exhibit policy preferences and their capacity to mobilize resources makes them potentially powerful. Accordingly, it makes sense to conceive of them as interest organizations that are equivalent to interest groups, although they are not aggregating (or grouping) the preferences of some constituency.

This book is based on the idea that institutional contexts, resource dependencies and organizational characteristics explain, to a considerable degree, how interest groups adapt to EU policy-making. Institutional theory stresses that institutions structure political, social and economic processes. They do not fully determine the outcomes but they set the rules of the game, endow the actors with resources, define their roles and channel their perceptions, interests and behaviour, both by providing opportunities and setting constraints (Hall and Taylor 1996; March and Olsen 1989; Steinmo, Thelen and Longstreth 1992). As a result, the actors make choices depending on their expectations of how these rules and structures affect the outcomes they desire (see also Czada 1991:259). An institutional perspective places the emphasis on the structured relations, the enduring division of labour, and the rules of the game that emerge within the EU institutional context because these affect the strategic choices and the political behaviour of the actors.

Resource dependence theory complements this perspective. According to this approach, the EU and the national institutional contexts are important for understanding what decisions interest organizations take. The EU institutions and these organizations are interdependent: neither of them controls ‘all the conditions necessary for the achievement of an action or for obtaining the outcome desired from the action’ (Pfeffer and Salancik 2003:40). On the one hand, EU institutions depend on business interests to ensure the flow of policy information, the cooperation and the political support that are necessary to formulate policies that solve problems and find acceptance. On the other hand, business interests depend on their access to EU policy-makers to receive information about and exert influence on EU policies because state actors have some degree of autonomy when designing these policies. Accordingly, I seek to identify the strategic actions in which these organizations engage to obtain support from their institutional environment.

Finally, I argue that organizational characteristics are important determinants of the responses of business interests to the European Union. In that respect I distinguish among large firms, national associations, and EU associations because these different forms of organization are in control of different exchange goods and are placed at different locations in the EU multilevel system. Regarding business interest associations, I also analyse the impact of organizational domains and resources on their choice of organizational strategies and their political behaviour in the EU multilevel setting.

Throughout, the analytical method consists in the development of explicit concepts and categories that shed light on the adaptation of domestic groups to the EU as well as in the empirical test of explanatory causal hypotheses. Each chapter tests competing theoretical propositions to support, modify or disconfirm long-standing conjectures about interest group activity in the European Union. The aim is to generate mid-level generalizations about the role business interests play in EU policy-making, the patterns of interest intermediation in the European Union, and the EU impact on domestic interest representation.

The following chapters develop these ideas more fully and outline in detail the domestic institutional contexts in France, Germany and the United Kingdom. Focusing on interest organizations from these countries holds important background factors constant while important elements of the institutional contexts vary. These nations have different varieties of capitalism and modes of interest intermediation. France is grouped among the Mediterranean market economies and has a statist regime of interest intermediation, the United Kingdom (UK) is held to be a liberal market economy with pluralistic traits, and Germany falls into the camp of coordinated market economies and is characterized by corporatism. The empirical analysis demonstrates that the associational settings display distinct national traits but that these cross-national differences are far less noticeable than is often asserted.

Having placed the interest organizations in their domestic contexts, Idescribe and explain how they have adapted to the European multilevel system. I start by characterizing the EU interest group system and by examining why national interest organizations join EU associations given that they specialize in representing their members’ interests. In this respect, I test two competing explanations that centre on contextual factors and organizational features. I compare the importance of domestic political contexts and socio-economic dynamics, on the one hand, to the relevance of the organizational incentives that EU business associations offer their potential members on the other hand. Politico-economic structures and modes of interest intermediation seem to explain the overall membership pattern rather well, whereas the selective material incentives of EU associations say little about how many of their potential members join them. This finding alludes to the importance of domestic institutional contexts for political behaviour and calls into question the Olsonian logic of collective action.

Thereafter, I move beyond the analysis of the formal membership patterns of EU associations, discussing at what levels of government and at what stages of the EU policy cycle interest organizations represent their interests in the EU multilevel system. Drawing on European integration theories, I test three different hypotheses about the impact of the EU institutional context on interest representation. In brief, liberal intergovernmentalism suggests that interest groups remain embedded in domestic institutional contexts, neofunctionalism posits their move to the EU level and multilevel governance claims that domestic interest groups become vocal at both the EU level and in the member states. The findings indicate that the multilevel governance approach captures the responses of interest groups best. Nonetheless, it is important to note that only a minority of national organizations have evolved into multilevel players who represent their interests routinely at both the EU level and in the member states. The majority of national interest groups remains rooted in domestic contexts and depends on other actors—European associations, national interest groups that act as multilevel players or national governments—to support their cases vis-à-vis the EU institutions. Accordingly, their positions in the multilevel setting and the division of labour within domestic interest group systems condition the responses of interest groups to European integration.

Then, I analyse the impact of the EU on domestic interest organizations and modes of interest intermediation in more detail, scrutinizing three different explanations for the adaptation of domestic groups to the EU: the degree of fit between the EU and national systems, organizational negotiation capacities, and the material resources of interest organizations. These results call into question the core hypothesis that has emerged in the Europeanization literature, namely, that the degree of fit between the EU and domestic settings matters most for the adaptation of domestic actors to the European Union. Rather, organizational resources and negotiation capacities impact more profoundly on the response pattern to European integration. All in all, I find that adaptation to the EU context leads to extensions and some modifications of established practices rather than a fully fledged transformation of domestic interest group systems.

Having so far focused on the vertical set-up of the EU multilevel system, I then seek to develop a comprehensive explanation of interest group access to the European Union institutions—the Council of the EU, the European Parliament and the European Commission. This explanation of the political exchanges between state and business takes into account the domestic contexts of the interest groups, their organizational structures, exchange goods and strategies. The analysis moves beyond the argument that the exchange of information is most critical for interactions among EU institutions and interest groups (Bouwen 2002a, 2002b; Crombez 2002). In a first step, I seek to explore the access of different forms of interest organization to EU institutions, identifying significant differences in the access of firms and associations. Nonetheless, the evidence qualifies the often-made assertion that large firms have invariably better access than EU business associations to EU institutions. In a second step, I deepen the access analysis, focusing on business associations. The outcome supports the idea that institutional contexts, organizational structures, resources and strategies must be taken into account when explaining the access of interest groups to EU institutions. The results highlight important general features that mark EU interest representation. These are the division of labour among EU and national associations; organizational resources such as money, information and economic clout; and the extent of EU political regulation that affects the interest groups and their members. The findings also point out the contingencies emanating from the EU institutional context such as varying consultation criteria of the EU institutions.

The remainder of the introduction presents the data and the methods of the study in more detail. Thereafter, the plan of the book is outlined.

Data, cases and methods

The empirical analysis is based on an original data set (EUROLOB—Lobbying in the European Union) covering 800 business associations in Germany, France, the United Kingdom and at the EU level, as well as on 34 large firms from these three large member states. In some chapters, complementary evidence is drawn from the CONECCS database (Consultation, the European Commission and Civil Society) of the European Commission. CONECCS covers EU-level interest groups and allows extension of the comparison to the EU-15.¹ In the EUROLOB survey, the interest organizations provided information on:

• their contacts and relations with national and EU political institutions;
• their activities during different phases of the policy-making process;
• their links and relations with other interest groups;
• their organizational characteristics; and
• the features of the economic sector in which they operate.

The questionnaire used in gathering the EUROLOB data is printed in the appendix to this book. The empirical scope of the project is larger than that of many other studies about interest groups in the EU to achieve more robust analytical results than case studies can deliver. This study combines Lijphart’s comparable cases research strategy (1975) with statistical methods. Important context variables are controlled by focusing on specific types of interest organization. The emphasis is placed on business interest associations and large firms. Furthermore, these actors are located in member states with several common features. The study is targeted at testing theoretically derived explanations rather than at manufacturing fancy hypotheses even though, in that respect, the differences between quantitative and qualitative studies should not be overdrawn. The cross-sectional analysis is based on a survey that was conducted between June 1998 and March 1999 and gives an account of the adaptation of interest groups to the European Union at the turn of the millennium.² Major institutional reforms of the EU—the Single European Act, the Maastricht Treaty and the Amsterdam Treaty—had been decided and implemented before this survey was completed so that many interest organizations in the three long-standing EU member states had at that moment already responded to European integration in one way or another. Accordingly, the survey covers the responses of these national interest organizations after long years of experience with European politics.

The EUROLOB survey focuses on two classes of actor. It was addressed to 1,998 German, French, British and EU business asso...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• List of figures
• List of tables
• Preface and acknowledgements
• List of abbreviations
• PART I The theoretical and empirical study of state—business relations in Europe
• PART II Multilevel governance and the Europeanization of domestic interest group systems
• PART III The access of business interests to the EU institutions
• Appendix: Questionnaire
• Notes
• References