BUSINESS AND ASSOCIATIONS IN WESTERN COUNTRIES:

Functions of associations

As a form of collective (coordinated) action of business association market agents have a dual institutional status. On the one hand, they form one of links in the economic governance system, along with the market, hierarchies, networks of mutual obligations, etc. On the other side, associations serve as a form of organizing interests. In this capacity they act as an integral part of civil society and the political system. Features of institutional status determine the main functions of associations business and as part of the mechanism for managing the economic system and as a form organizations of interests. Four such functions can be distinguished: market coordination, provision of services, negotiations with trade unions, representation of interests. Functions of market coordination and provision of services to its members of the association businesses are carried out rather as part of the mechanism for managing the economic system, and negotiations with trade unions and representation of interests - mainly as part of civil society and political system.

Basic types of associations

Among the specific types of business associations that have developed under the influence circumstances, it is customary to distinguish three main types: business associations as such, employers' unions, chambers of commerce. The first two types, in turn, usually
are divided into national and sectoral. Along with "pure" types, “mixed” ones are also distinguished: intersectoral, regional.
Business associations (branch/trade/industry associations) are the most common type. These are voluntary associations of participants in any industry or sector of the economy.

Core function: regulation of horizontal competition among its members and vertical competition between participants in the distribution chain. Specific manifestations of this function are the distribution of export quotas, the development professional standards, improving the quality of products. Often perform the functions of representing interests. Fairly homogeneous membership base makes it easier to “harmonize” interests and develop coordinated positions (collective interests), to represent and promote these collective interests in public opinion and authorities. Business associations are also involved providing selective services to its members, for example, organizing exchanges industry-wide raw materials, ensuring the development and compliance of standards for products manufactured in the industry.

One of the most common types is the small business association, which unites small entrepreneurs and provides them with specialized services (In the latter, In this case, the determining factor for membership is not industry or function, but size firms.) Employers associations – voluntary associations that specialize in the field of labor relations. Sphere activities: labor standards, wage negotiations, training issues frames. Most often, they are created on an industry basis, but by agreement with trade unions can also unite companies from different industries.
Chambers of Commerce and/or Industry: are created to represent the interests of entrepreneurs of a certain geographical region (membership criterion is territorial). In principle, all enterprises relevant region, regardless of industry, size and etc. may be members of a particular chamber. The membership base differs fundamentally heterogeneity. The Chamber has to reconcile the conflicting interests of companies a wide variety of categories. It is especially difficult to develop a common position. According to these reasons, chambers focus on providing their members with the most services they need. At the same time, the presence of a wide membership and regional base makes the chamber especially convenient for performing delegated functions government
"Continental" and "Anglo-Saxon" models
Depending on the existence of a special law, as well as the principle of membership (voluntary - mandatory) there are two main models of the chamber - "Continental" and "Anglo-Saxon". According to the "continental" model, chambers are corporations created on the basis of a separate law, and membership in them is mandatory. Chambers of the continental model have public legal status, This gives them certain privileges in relations with the government, as a rule, the formal right to consultation and the exercise of public functions, delegated to the chamber by public authority. According to the "Anglo-Saxon" model. The chamber is a voluntary association (membership is voluntary), not implying no special law regulating its activities.
 
The strengths of the ward of the “continental” model include high protection from the law and public authorities. Mandatory membership guarantees the fully representative character of the chamber, the absence of problems “free rider”, as well as wide and reliable sources of cash receipts. Wardcontinental model has guaranteed access to government bodies,
monopoly on regional representation and lack of competition. At the same time, the continental model also has significant disadvantages: it is absent voluntariness, monopoly on representation and guaranteed access to power give rise to the loss of strong incentives for effective work and demand orientation, difficulty in presenting clear positions due to the obligation to represent a balanced point of view, guaranteed protection from the authorities can result in constant interference in the affairs of the chamber.

The “Anglo-Saxon” chamber model also has its pros and cons. Among the advantages: independence, voluntary membership creates strong incentives for effective work and orientation to demand, freedom to determine the nature of the work and the set of specific functions, implemented by the chamber. Disadvantages: free rider problem, competition with others chambers for the provision of services and performance of representative functions, lack of
reliable sources of financial income, lack of political influence coincide with functional specialization. Despite the existence of associations,only a few employers specialize in trade union relations cases, there is a consistent division of roles between industry sectors associations and industrial unions of employers. In France, industry business associations, along with their core functions, often perform the functions of unions employers. Functional specialization is much more common in associations business in Germany. There are divisions of roles between business associations and unions employers is carried out more consistently. The most complete form specialization by function was acquired in few cases. Until recently, such complete specialization was typical for Sweden, where functional the division between business associations and employers' unions is consistent traced from the industry level to the national level. The same can be said about the function of representing interests. Until recently. Over time, this function has not become an object of specialization in the work of associations business. As a rule, representation of interests was combined with the performance of some other functions: negotiations with trade unions, market coordination or provision of services. At the same time, functional specialization or lack thereof in the work of a particular business association is not a constant. It arises under the influence of specific circumstances and may change over time: specialized functions can turn into auxiliary functions and vice versa.

Alternative forms of representation

Business associations are not unique either as part of the governance mechanism economics, nor as a form of organization of interests. Along with associations, there are also alternative forms of organizing interests. Functions of the representative office unorganized or weakly organized interests of individual industries and sectors may be taken over by ministries and other government departments. 

Recently, a large firm is increasingly perceived as a special form organizations of interests that have significant weight in the economy and increased social significance. In this case, the company is interpreted as a community of associated it has heterogeneous participants (stakeholders), which, as a rule, include shareholders, management, employees, members of their families, suppliers and buyers, local community residents, etc. Representation of interests of large companies, as a rule, is carried out by internal divisions of the relevant profile (“political departments”) and specialized external intermediaries (consulting firms).