What do business associations do?

Abstract

What are the economic roles of business associations (BAs)? How do they fulfill them? This article proposes a new conceptual framework, based on new institutional economics, and reviews the empirical literature to answer these questions. Challenging the popular distinction between beneficial, market-supporting and harmful, rent-seeking (lobbying) goals of BAs, I demonstrate that there are three major economic roles of BAs, all of which can involve activities linked to the private order and the public order, and all of which can be both socially beneficial or harmful. I also challenge the proposition that institutional strength is needed for BAs to fulfill beneficial economic roles. Even weakly institutionalized associations can fulfill, to some extent, all types of socially roles. BAs tend toward socially beneficial or harmful activities depending on the limitations of their internal organization and their institutional environment.