TY - JOUR
AU - Behrens,, Martin
AB - Abstract Analysing a unique data set of the organizational characteristics of 358 German employers’ associations, the article investigates how employers manage to represent the contradictory interests of competitors within a single organization. Previous research has strived to solve this puzzle by way of distinguishing between two competing logics which operate within those associations: one logic focusing on the relationship between the member company and the association, a second bringing to bear the relationship between the association and the environment. While in much of this literature the first (membership) logic is sacrificed to the advantage of the second, I argue that members’ interests are protected by way of establishing an elaborated set of rules. Such rules guard the association’s ports of entry, resolve conflict among members and between members and leadership, activate and emphasize certain interests but also block the associations access to confidential business information, thus insulating parts of business interests from collective representation. It is well established that organizations of many different kinds face a number of daunting collective action problems which need resolving before they come into being (Olson, 1965; Salisbury, 1969; Moe, 1980; Marwell and Oliver, 1993). Many of these problems do not disappear when organizations are to be maintained and reproduced over a long period of time. To list just the most important examples: organizations have to cope with issues of free-riding, have to solve commitment problems but also need to monitor the individual compliance of their members (Ostrom, 1990). Just like many other interest groups addressing particularistic demands (Baumgartner and Leech, 1998, p. 46), employers’ associations1 are subject to many of those general collective action problems but are additionally affected by some other, more specific challenges which are based on their nature as non-profit organizations of for-profit members. As such, employers’ associations represent firms within a certain market segment or associational domain which compete for both customers and employees and thus have to represent these somewhat contradictory interests of competitors within a single organization. It is striking that against these odds employers’ associations have been created in many developed countries and have also survived over long periods of time. This article contributes to explaining the persisting associability of employers by way of following up on two different perspectives: a dual-logic perspective, linking members’ interests to the wide political economy and a meso-level perspective of associational rules. Based on the analysis of a unique data set of the organizational characteristics of 358 German employers’ associations, it is argued that there is a limited set of formal rules to enable employers to exercise collective action, albeit in only a limited range of subject areas. This perspective is somewhat different from classical accounts which see members’ interests silenced for the purpose of improving the associations’ influence vis-à-vis labour unions and the state. Employers’ associations are important key actors in countries with multiemployer collective bargaining (Van Waarden, 1995; Traxler et al., 2001, p. 105ff; Brandl, 2013). By way of collective bargaining centralization, employers—along with unions—can bring collectively agreed standards to a large number of companies and their employees. Consequently, bargaining coverage in countries with multiemployer bargaining is much higher when compared with countries with single-employer bargaining (Brandl, 2013, p. 513). The capacity of employers to organize a significant share of firms within their particular jurisdiction, however, cannot be taken for granted (Thelen, 2000). With diversity between sectors and industries growing (Silvia, 2013, p. 200ff), some scholars have even argued that the German political economy might be subject to a ‘dualization’ of labour relations, whereby a sheltered core in manufacturing stabilizes itself while labour relations on the periphery (mostly private services) are fairly disorganized (Palier and Thelen, 2010; Hassel, 2014; Thelen, 2014, p. 47ff). Importantly, as declining employer membership (and correspondingly declining collective bargaining coverage) in Germany indicates, the ability of employers to organize member firms within their organization is constantly being challenged (Ellguth and Kohaut, 2014). Some of the classical accounts of employers’ associations, which provide some insights into the way by which the collective actions of employers turn out to be fragile, concerns the narrative of two competing logics to create tensions within those collective interest representation bodies (for an overview see Behrens, 2011, p. 19–33). From this perspective, a first logic materializes within the relationship between a member and the association while a second logic emerges between the association and its environment. While the terms assigned to these dimensions are different, for example; logic of membership vs. logic of influence (Schmitter and Streeck, 1999, first published 1981), representative vs. administrative rationality (Child et al., 1973) or legitimacy vs. effectiveness (Weitbrecht, 1969), to name just a few, the authors share a set of common assumptions: First, there are no more than two general principles at work within an employers’ association. Secondly, those principles are either driven by forces which have their origin within or beyond the boundaries of those associations. Thirdly, the tensions which arise from competing logics require associations to find appropriate means to reconcile those competing principles. The following analysis will add to this perspective and suggests a complementary perspective of associational rules. I will argue that a major tension within any employers’ association emerges from the fact that, by their very nature, employers’ associations are non-profit organizations of for-profit members who all too often are competitors within product and labour markets. Beyond the notion of a single dimension of ‘membership logic’ the article emphasizes the associations’ role of seeking to reconcile conflicting interests within this dimension. The article will proceed in five sections: the following section will develop in more detail how traditional accounts have conceptualized the tensions which are at work within employers’ associations and also develop propositions to guide the empirical analysis. Section 2 will introduce the data set as well as the research methodology on which the analysis is based. Section 3 will then turn to test propositions with evidence. The following two sections will further qualify these findings by asking for patterns of variation (Section 4) and some of the outcomes associated with associational rules (Section 5). Section 6 concludes. 1. Dual logics revisited: resolving tensions within employers’ associations Among the first accounts that conceptualize the inner tension within employers’ associations is Weitbrecht’s seminal work on the effectiveness and legitimacy of collective bargaining (Weitbrecht, 1969). Employers’ associations as key actors within the system of multiemployer bargaining do not only have to represent members’ interests in negotiations, in addition they need to commit members to the outcomes of negotiations, a process which Weitbrecht calls ‘internal legitimacy’ (Weitbrecht, 1969, p. 47). According to this perspective, if associations fail to provide for internal legitimacy, this leads to unresolved conflict and might cause problems such as high absenteeism, low performance and even wildcat strikes. Beyond legitimacy, however, associations also have to provide for effectiveness which is conceptualized as the ability of negotiators to agree on compromises at the bargaining table. As Weitbrecht has emphasized: Organizations are not able to pursue their goals in a direct way; they always need a minimum degree of consent from the membership on matters such as the organizational structure, the leadership and organizational goals. Thus, every viable organization represents a compromise between forms of membership involvement to produce a maximum degree of effectiveness and those to generate a maximum degree of legitimacy by membership. (ibid. 90, translation by the author) At the end of the day, however, reconciling both logics is only possible through ‘quasi-participation’ which gives members the impression of participation but keeps decision-making powers in the hands of the association’s leadership (Weitbrecht, 1969, p. 89). In a nutshell: it is not the unequal timing of effectiveness and legitimacy functions which enables associations to reduce tensions, rather it is smart impression management. In this sense Weitbrecht’s approach is somewhat different from the account by Child et al. (1973) to analyse collective bargaining by unions (but was later also applied to employers’ associations, see Traxler, 1986, p. 26; Schmitter and Streeck, 1999, p. 19; Helfen, 2007, p. 53). By referring to ‘administrative’ and ‘representative’ rationality Child et al., also identify two competing logics but, however, conceptualize them in a dynamic perspective. Tensions between both ‘rationalities’ are resolved within a ‘central cycle of activity’, whereby certain actions and decisions are emphasized or deemphasized in different phases of the bargaining process (Child et al., 1973). The concept of ‘logic of membership’ vs. ‘logic of influence’—probably the most widely recognized concept, which was published more than 10 years after Weitbrecht’s account, is influenced by the debate on corporatism (Lehmbruch, 1974; Schmitter, 1974), a debate which flourished in the late 1970s. In their article ‘The Organization of Business Interests’ Schmitter and Streeck (1999) have argued that German employers’ associations are subject to a dual logic. The logic of membership, a first dimension, requires business interest associations to provide their membership with incentives motivating them to supply the association with sufficient resources. As part of the ‘logic of influence’, a second dimension, associations need to exercise influence on the state and labour unions, aiming at receiving important resources, recognition, concessions or subsidies (a perspective of the employers’ role which has been revitalized in more recent work, see Martin and Swank, 2012; Paster, 2012). Both logics are closely interconnected: The appeal an association derives from its members can even be increased if the state commissions associations with implementing government policies or with regulatory tasks. In these cases, free membership converts somewhat into mandatory membership so that the ‘logic of influence’ gains more emphasis (Hilbert, 1988, p. 34f), thus identifying the state as the driving force of associability (Lang et al., 2008, p. 28). The approach presented by Schmitter and Streeck anticipates a transformation of business interest associations from tools for promoting members’ interests to ‘quasi authorities’ which are empowered to enact rules which are binding for the association’s entire membership (Traxler, 2007a, p. 5). From this perspective—in order to remain effective and stable—associations have little choice but to downgrade the logic of membership and in turn emphasize the logic of influence (Schmitter and Streeck, 1999, p. 93). Consequently, associations transform themselves into ‘established interest governments’ (Schmitter and Streeck, 1999, p. 93), the latter being based on the dominating logic of influence. As this brief description of the different approaches to conceptualizing the inner tension within employers’ associations reveals, authors seem to agree that employers’ associations are based on a dualist structure which in turn nurtures internal tensions between those two dimensions or logics. Accounts, however, differ in terms of the means by which those tensions can be controlled or reduced: some authors such as Weitbrecht or Schmitter and Streeck argue that a first logic is subordinated to a second. Others see logics emphasized or de-emphasized within a bargaining cycle (Child et al., 1973), while still others argue that competing logics are attached to certain tasks to be pursued by an association (Weber, 1987). At the end of the day, as most of these authors argue, employers’ associations need the support of actors outside their own organization to be able to reconcile those competing logics, be it the unions or the state. Furthermore, there appears to be a tacit agreement that to reconcile different logics, employers have to silence membership needs by simultaneously strengthening the following points that have been named effectiveness, logic of influence or administrative rationality. However, as Traxler has argued in his ‘resource model’ it is hard to imagine that employers agree easily to accepting that their membership rights be silenced as part of the associational life.2 The reason for this is simply that, as very resourceful actors, companies or ‘employers’ always have the fall-back option to regulate employment relationships on their own rather than through collective action exercised by an employers’ association (Traxler, 1999; Henneberger, 2010, p. 134ff). Despite these concerns and following the conclusions to be drawn from the ‘dual logic’ literature, employers’ prospects for meaningful participation within their associations are fairly bleak, as involvement has to be sacrificed to effectiveness. Moving from the literature on employers’ associations to more general accounts on associability published by scholars in the field of sociology, political science and organizational studies, we might come to different conclusions. For example, Burns and Stalker (1961) find organizations with a rather participatory (‘organic’) structure more easily able to adopt to a rapidly changing environment when compared to those with a more hierarchic (‘mechanistic’) structure (see also Donaldson, 2001, p. 2). In addition, Cohen and Rogers (1992) argue that so-called ‘secondary organizations’ do have a comparatively effective form of interest aggregation when they involve their members, when leadership can be held accountable and when they cooperate with external groups or associations. According to this perspective, hierarchical internal relations, clientelism and a conflictual governance style have proven to harm the effective aggregation of interests. Granovetter’s account points in a similar direction: economic actors find it easier to share information among each other when they are connected by ‘weak ties’. In contrast ‘strong ties’ tend to inhibit information exchange (Granovetter, 1982). Locke (1995, p. 25f) even argues that the association’s inner structure has a crucial influence on local and regional economic networks. According to his account, a higher degree of openness enables firms as well as labour unions to generate multiple horizontal ties, which serve as building blocks for polycentric network structures. In their historic analysis of American business associations Berk and Schneiberg have argued that economic actors, such as business associations, have the capacity to ‘reflect collectively on background conditions, discover and experiment with alternatives, deliberate about their consequences, and then revise those conditions’ (Berk and Schneiberg, 2005, p. 49). Instead of a dominant logic or coherent order, the authors find a loosely coupled system of multiple institutional projects, logics or paths (Berk and Schneiberg, 2005, p. 74). Also, as associations are rarely able to directly intervene in the internal affairs of firms, they are restricted to voluntary forms of collective self-regulation (Schneiberg and Hollingsworth, 1990, p. 322). The lesson to be learned from this literature is that, other than predicted by much of the writings on the ‘dual logic’ of employers and business interest associations; there might be a case for open and cooperative organizational structures to be associated with successful representation of interest. The contradictory perspectives and insights provided by both literatures raise the following question: what motivates employers, who have multiple options for individual action, to commit to an employers’ association while at the same time restricting members’ access to the association’s politics? I will argue that employers’ associations exercise strategic choice by way of enacting rules within their organizations which help to select, channel and activate members’ interests.3 Somewhat following the sociological critique of neoclassical economics, interests here are not treated as being exogenously given but they are constructed (for a summary of this literature see Woll, 2008, p. 12ff). Seen from the perspective of an employers’ association functioning as a collective entity, they elaborate upon members’ interests. Such associations do not simply aggregate members’ interests (as has been argued in the ‘dual logic’ literature presented above) or subordinate membership participation (‘quasi’ participation, as Weitbrecht has called it) to a higher good. It is proposed that employers’ associations provide a dense network of formal rules and procedures which actively shape members’ interests. Such rules do concern elementary aspects of associational life: how to get in and out, what types of interests to represent, how to draw resources from members, how to deal with diversity among members and how to resolve conflict. It is these aspects which every association needs to address and which are frequently submitted to regulation in the associations’ constitution or bylaws. As will be shown in the following section, bylaws provide a rich source for the study of those formal procedures. 2. Data and methods This article is based on the analysis of the bylaws of 358 employers’ associations. In Germany, as there is neither a public register which would include names and addresses of employers’ associations, nor a data set which would—as required—include information on internal rules and procedures, the analysis had to proceed as part of a multistep procedure. In a first step, I had to identify the names and addresses of German employers’ associations, aiming at collating them in a database. Because in Germany the structure of business interest associations is separated into trade associations (which represent product-market related interests of business) and employers’ associations (which represent labour-market related interests, including collective bargaining) and mixed associations which represent both types of interests, the process of identifying the population has been somewhat complicated (Streeck, 1991). In addition, because the names of associations do not necessarily reveal the specific type of organization (business, employers or mixed associations), the initial screening also included pure business associations which had to be excluded later in the process. In total, 900 organizations of all kinds (employers, business or mixed associations) could be identified. Organizations were identified by way of including all member associations of the peak-employers confederation BDA, and also identifying independent associations through Hoppenstedt’s register of associations, public administration and business organizations, but also taking into account newspaper reports and lists provided by labour unions, which include their particular parties for collective bargaining. Upon completion of the database, all associations received a letter asking them to provide documents such as bylaws, convention minutes and business reports. In total, 216 associations have provided me with their bylaws, which is a response rate of 24% (close to 16% have sent business reports). A number of documents could be retrieved through secondary sources: an intense screening of the web pages of associations and other publications. In addition, a large number of bylaws could be accessed through public registers, maintained by the local courts. To maintain the legal status of an ‘eingetragener Verein’ (e.V.), which is necessary to constitute associations as a legal entity, employers have to register their bylaws with the local court. In total 236 additional bylaws could be identified through the registers, which in sum adds up to 449 documents available for the analysis which is 49.9% of all organizations identified by the initial screening. The bylaws have been analysed and coded by a team of researchers, and each document has been cross-checked by at least one additional person. The analysis presented in the following excludes the bylaws of 91 associations (n = 358) because analysis has revealed that they do not have any collective bargaining function so that they cannot be classified as employers’ or mixed associations. In the following we will consider an association to be an ‘employers’ association’ if at least one of the following three conditions is satisfied: first, the association is party to collective bargaining with unions, second, it coordinates the collective bargaining activities of its affiliates or third, it represents members in bi- or tripartite commissions which are empowered to negotiate standards on wages, hours and working conditions (see Behrens and Traxler, 2004). 3. Selecting, channeling and emphasizing members’ interests The analysis of the bylaws of employers’ associations focuses on the most elementary aspect of associational life: how to connect the essential interests of the members to the generation of collective goods, to use Olson’s famous term (Olson, 1965). As Ostrom (2015, p. 27) has argued, efforts to organize collective action have to cope with a set of problems, including free-riding, solving commitment problems, the supply of new institutions and monitoring individual compliance. These are all problems which are also of the highest relevance to employers’ associations. Coping with those problems, Ostrom further argues, requires rules. As the analysis has revealed, the bylaws of employers’ associations include rules covering five different subject areas which somewhat resonate with Ostrom’s perspective of institutions as a set of working rules (Ostrom, 2015, p. 51).4 Admission rules, as a first set of rules, define representational domains but so do provisions for voting procedures used for admitting new entries into the associations. Thus, admission rules define membership positions (‘position rules’) and also who is eligible to enter those positions (‘boundary rule’). The insulation of certain interests constitutes a second set of rules which requires members, as well as the association’s staff and leadership, to keep all information on the business affairs of members confidential (‘information rules’) but also limits the range of potential outcomes of an association’s activity (‘scope rules’). By assigning voting rights to members, and allowing them to vest other members with voting rights, a third set of rules contributes to shaping the division of power within employers’ associations (‘aggregation rules’). Fourth, rules for the selective activation of members provide for special committees that involve members more deeply in the affairs of the association. Similar to Ostrom’s ‘choice rules’ such provisions can selectively widen or narrow the range of actions assigned to participants and also determine who is in control of an association’s agenda (Ostrom and Crawford, 2005, p. 201). Finally, it will be shown that several associations maintain their own internal tribunals and other procedures for dispute resolution as a means towards solving conflict among members but also between members and the association’s leadership. The mere existence of such rules for dispute resolution (which do not have a corresponding match in Ostrom’s concept), as will be shown in the analysis to follow, indicates that associational rules are not just a function of payoff schemes as suggested in many accounts inspired by game theory, but rules for procedural justice and third-party involvement. 3.1 Admission rules Employers’ associations provide a full range of different rules and procedures to guard their ‘ports of entry’. These rules are quite definite in that they allow only a certain group of potential members to apply for membership while blocking the way into the associations for those firms or employers who do not qualify; a concept Ostrom and Crawford (2005, p. 195) have called ‘first order boundary rules’ defining the eligibility of individuals to hold the position of a member. The most common set of standards regards definitions for an association’s interest ‘domain’ (Schmitter and Streeck, 1999, p. 55ff; Traxler, 2007b, p. 31f; Sheldon et al., 2016, p. 164). Domain demarcations regularly apply to two different dimensions: locality and industry. Membership is offered to employers from a certain region only. Definitions vary a great deal: while a few associations (for example the banking employers’ association) cover the entire country, the most common regional domain is the area of one of the German states (Länder). Also, there are associations, most notably in the state of North-Rhine Westphalia, which offer admission to membership at the county level. County-level associations, in turn, are affiliated with state-level associations which in turn, are members of federal-level peak associations. As a result, we find complex associational structures with several second- or even third-tier associations below the confederate level. In terms of admission rules, however, it is decisive at which level the membership status of the employers is established. In addition to regional space, the second dimension through which employers’ associations define their representational domains is industry. Again, practices vary substantially: at the one end, for example, there is Gesamtmetall as an association with an extremely broad and complex industrial domain. Among others, Gesamtmetall represents employers in the auto and machine-tool industries, electronics, computer-industries, plant-construction, tube-industry and aircraft manufacturing. At the opposite end of the spectrum there is an employers’ association for the brush and pencil industry, representing <100 companies from this particular industry. In addition to defining a certain representational domain, bylaws also provide rules for the admission process. About 89% of employers’ associations for which bylaws could be retrieved, commission an elected body to take the initial decisions on an employer’s application for membership. Another 5% of employers’ associations present applications to a membership assembly while in 7% of the associations a single person (president or director) is empowered to take this decision. Admission to an employers’ association sometimes comes along with a price tag. A total of 21% of associations included in the database have included provisions into their constitutions, which require new entries to pay an admission fee. In many cases (among those for which information is available at all) fees are fairly modest, requiring applicants to pay <€100, in some cases, however, fees can be as high as €5000 and more. Because fees are often to be transferred to the association’s strike funds (not all associations actually have such a fund), high admission fees might serve the purpose of bringing new entries up to the level of contributions already paid by long-time members, who have accumulated contributions to the funds over a long period of time. While a majority of associations refrain from introducing excessive demands, there are a number of associations from industries such as security, construction, landscaping and road-haulage who ask applicants for membership to qualify in terms of ‘good business practices’ or to give proof that they are committed to good business ethics. For example, some associations from the landscaping industry require future members to submit documents to prove that they are paying their taxes (certified documents issued by the local tax authority), and pay their employees’ welfare state contributions as required by law or have proper insurance. Some associations from the road-haulage industry, in addition, require proof of adequate vehicles, storage places, insurance and certified qualification of both the employers and their employees. It is striking that such additional requirements are most common in sectors and industries where competition is fierce, the number of market competitors high and barriers for market entry comparatively low. 3.2 Rules on the insulation of interests In terms of sequencing or shaping members’ interests, ‘insulation’ only becomes relevant after members have been admitted to membership. For employers’ associations, the insulation of the interests of different spheres of businesses is of particular importance when a significant share of the association’s membership is in close competition within product and labour markets. As Franke emphasized about 50 years ago: ‘To stabilize inner structure requires employers’ associations to keep the competing market interests of firms from deeply penetrating the association and consequently to keep those interests from abandoning internal solidarity among members’ (Franke, 1964, p. 138, translation by the author). While its role as a party to collective bargaining with unions requires employers’ associations to submit one essential part of the business activity to collective representation,5 at the same time associations do have to help members keep their internal business affairs confidential and, in addition, treat all members equally. In a nutshell: employers’ associations need to convert the interest of individual entrepreneurs and firms into collective action and representation and at the same time need to hide the motivations and factual context information on which membership interests are based. To do so employers’ associations pursue two different strategies: they first introduce special clauses into their constitution, requiring office holders and paid staff to keep membership information confidential, second, they create the position of a neutral broker, to handle this sensitive information. Confidentiality clauses could be identified in a third of all associations for which bylaws could be analysed. Such requirements apply mostly to members of an association’s executive board and paid staff, most prominently to the executive director. As Ostrom and Crawford (2005, p. 206) have argued in their account of information rules, such rules affect the level of information available to participants. They define legitimate channels of information flow but also subjects of communication and an official language. In some cases, clauses also commit individual members. It is striking that such clauses are most widespread in sectors and industries where barriers for the entry of new marker participants are rather low and competition among associational members is fierce. While the share of associations with confidentiality clauses is 34% for all associations, it is 63% in retail, 42% in construction and 41% in manufacturing. A second strategy to insulate members’ interests concerns brokerage. At the center of interest brokerage is the traditional division between voluntary leaders and paid employees (Streeck, 1972, p. 142; Schroeder and Silvia, 2003, p. 257). The executive board of German employers’ associations is usually a body elected from the ranks of the association’s membership. Consequently, board members are either owners of companies or managers. In contrast, the director is in charge of the day-to-day operation of the association and usually not selected from the membership of the organization. Consequently, we rarely find business people (owners or managers) in the position of director of an employers’ association. As Kessler has argued, for the members of an employers’ association the director seems to be trustworthy because he or she is not a competitor (Kessler, 1907, p. 132). As an analysis of the business reports and web pages reveals, even today employers’ associations recruit persons for the position of the director from the ranks of university graduates. As shown in Table 1, with a share of 36.3%, lawyers represent the largest group among the paid directors of employers’ associations, while the share of lawyers is only 0.7% among the (elected) members of the associations’ executive boards. In total, 13.6% of executive board members hold an academic degree while this share is 53.9% for the directors of employers’ associations. As this data indicates, German universities are not just crucial for the reproduction of a business elite, more than this they are an important base for the recruitment of skilled experts who are neutral in terms of their own, personal business interests. In addition, as one director revealed in an interview, in terms of their financial compensation, university graduates are also a good bargain. According to this narrative, most employers’ associations simply could not afford to pay for experienced top managers from the ranks of an association’s membership. Table 1 Academic background of leadership in employers’ associations Academic degrees Executive boards (‘Präsidium’, ‘Vorstand’) Directors (n = 1909) (%) (n = 311) (%) Professor 1.6 1.3 Doctor 14.1 23.2 Lawyer 0.7 36.3 Engineer 8.1 4.8 MBA 3.9 9.3 Other academic degrees 0.9 3.5 Academic degrees Executive boards (‘Präsidium’, ‘Vorstand’) Directors (n = 1909) (%) (n = 311) (%) Professor 1.6 1.3 Doctor 14.1 23.2 Lawyer 0.7 36.3 Engineer 8.1 4.8 MBA 3.9 9.3 Other academic degrees 0.9 3.5 Source: WSI-Database on Employers Associations (2006). Note: Academic titles (‘Doctor’ and ‘Professor’) and degrees in certain subject fields (law, engineering) do not serve as exclusive categories. Table 1 Academic background of leadership in employers’ associations Academic degrees Executive boards (‘Präsidium’, ‘Vorstand’) Directors (n = 1909) (%) (n = 311) (%) Professor 1.6 1.3 Doctor 14.1 23.2 Lawyer 0.7 36.3 Engineer 8.1 4.8 MBA 3.9 9.3 Other academic degrees 0.9 3.5 Academic degrees Executive boards (‘Präsidium’, ‘Vorstand’) Directors (n = 1909) (%) (n = 311) (%) Professor 1.6 1.3 Doctor 14.1 23.2 Lawyer 0.7 36.3 Engineer 8.1 4.8 MBA 3.9 9.3 Other academic degrees 0.9 3.5 Source: WSI-Database on Employers Associations (2006). Note: Academic titles (‘Doctor’ and ‘Professor’) and degrees in certain subject fields (law, engineering) do not serve as exclusive categories. 3.3 Weighting of interests The weighting of interests is a procedure which applies to members only (upon admission to membership) and also becomes relevant to those areas of employers’ interests which have been submitted to representation by the association. Weighting refers to a procedure, through which abstract member interests are emphasized or de-emphasized in terms of their impact on the association’s policies. According to Ostrom and Crawford (2005, p. 204) such ‘aggregation rules’ can be asymmetric (in extreme cases even assigning the power to decide to an individual) or symmetric (in an extreme form: unanimity). From this perspective, employers’ associations do not simply aggregate members’ interests, by including weighting procedures into their constitutions, they provide for a specific pattern by which the constitution of collective employers’ interests is to be established. Most commonly, this weighting is accomplished by assigning voting rights to specific types or classes of members. While there have not been detailed analyses on the voting rights that employers’ associations assign to their members, it has frequently been assumed that in the majority of cases such rights would reflect the size or economic power of member companies (Moser, 1990; Keller, 1999, p. 21). And indeed, if employers’ associations were devices to simply aggregate members’ interests, weighting voting rights along the lines of economic power would be what we would expect to find. However, as the results from our analysis of employers’ constitutions reveal [see Table 2, column (1)], exactly the opposite turns out to be true. Close to 59% of all associations forego any weighting of votes by establishing ‘one member, one vote’ as the general voting principle. Weighted voting-rights come in different forms but only account for less than a third of our cases: 3.8% of the associations in the database allow for weighted votes once a majority of members in an assembly has decided to do so, while another 7.5% of the associations weight voting rights according to the amount of membership dues a company has paid. Table 2 Voting rights in employers’ associations (1) (2) (3) (4) Types of voting rights All employers’ associations First order associations (members are companies/ entrepreneurs) Higher order associations (members are other associations) Mixed Associations (members are companies and other associations) (n = 358) (%) (n = 235) (%) (n = 49) (%) (n = 74) (%) No provision in the constitution 3.1 3.8 0 2.8 One member, one vote 58.9 74.0 20.4 36.5 Voting rights according to membership dues 7.5 3.8 18.4 12.2 Voting rights according to company revenue 1.7 0.4 6.1 2.7 Voting rights according to number of employees 5.6 6.8 2.0 4.1 Voting rights according to number of members/establishments 13.4 5.5 40.8 20.3 Weighted voting-right according to special decision 3.1 3.8 0 2.7 Other 6.7 1.7 12.2 18.9 (1) (2) (3) (4) Types of voting rights All employers’ associations First order associations (members are companies/ entrepreneurs) Higher order associations (members are other associations) Mixed Associations (members are companies and other associations) (n = 358) (%) (n = 235) (%) (n = 49) (%) (n = 74) (%) No provision in the constitution 3.1 3.8 0 2.8 One member, one vote 58.9 74.0 20.4 36.5 Voting rights according to membership dues 7.5 3.8 18.4 12.2 Voting rights according to company revenue 1.7 0.4 6.1 2.7 Voting rights according to number of employees 5.6 6.8 2.0 4.1 Voting rights according to number of members/establishments 13.4 5.5 40.8 20.3 Weighted voting-right according to special decision 3.1 3.8 0 2.7 Other 6.7 1.7 12.2 18.9 Source: WSI-Database on Employers Associations (2006). Table 2 Voting rights in employers’ associations (1) (2) (3) (4) Types of voting rights All employers’ associations First order associations (members are companies/ entrepreneurs) Higher order associations (members are other associations) Mixed Associations (members are companies and other associations) (n = 358) (%) (n = 235) (%) (n = 49) (%) (n = 74) (%) No provision in the constitution 3.1 3.8 0 2.8 One member, one vote 58.9 74.0 20.4 36.5 Voting rights according to membership dues 7.5 3.8 18.4 12.2 Voting rights according to company revenue 1.7 0.4 6.1 2.7 Voting rights according to number of employees 5.6 6.8 2.0 4.1 Voting rights according to number of members/establishments 13.4 5.5 40.8 20.3 Weighted voting-right according to special decision 3.1 3.8 0 2.7 Other 6.7 1.7 12.2 18.9 (1) (2) (3) (4) Types of voting rights All employers’ associations First order associations (members are companies/ entrepreneurs) Higher order associations (members are other associations) Mixed Associations (members are companies and other associations) (n = 358) (%) (n = 235) (%) (n = 49) (%) (n = 74) (%) No provision in the constitution 3.1 3.8 0 2.8 One member, one vote 58.9 74.0 20.4 36.5 Voting rights according to membership dues 7.5 3.8 18.4 12.2 Voting rights according to company revenue 1.7 0.4 6.1 2.7 Voting rights according to number of employees 5.6 6.8 2.0 4.1 Voting rights according to number of members/establishments 13.4 5.5 40.8 20.3 Weighted voting-right according to special decision 3.1 3.8 0 2.7 Other 6.7 1.7 12.2 18.9 Source: WSI-Database on Employers Associations (2006). In all, 1.7% of our associations assign voting rights based on company revenue and in 5.6% of our cases the number of votes a member can cast is based on the number of employees in a company. Finally, 13.4% of the associations included in our database assign votes based on the number of members/establishments. The latter category reminds us that employers’ associations differ substantially, in terms of the type of members they admit to membership. First-order associations admit companies, firms or even individual entrepreneurs to membership, while higher order associations organize other, mostly lower-order, associations. In addition, we find a substantial number of employers’ associations which organize both groups: companies and other associations. To account for these different constituencies, columns 2–4 of Table 2 also list the distribution of voting rights for these different subcategories of associations. As it turns out, the rather egalitarian ‘one member, one vote’ category represents the overwhelming majority of cases (74%) when only first-order associations are considered. As shown in columns 3 and 4, a substantial share of those associations with ‘voting rights according to number of members/establishments’ comes from higher order and mixed associations (the latter group allowing for membership of companies and other associations). In the case of those associations of associations (Table 2, column 3) 40.8% of associations assign voting rights according to the number of members/establishment to avoid member associations with a low number of member companies having disproportionally higher voting power when compared to member associations with a large number of members. In a setting of first-order associations ‘one member, one vote’ might be the most egalitarian voting procedure, in the case of higher-order associations, this is not necessarily the case. Rules for voting rights, or more precisely, changing voting rights tend to be contentious. In cases where egalitarian voting rules apply, even attempts to allow members to pool votes by way of allowing for transfer of votes are faced with suspicion as the following example shows. The membership assembly of an employers’ association from the building and construction industry was faced with a motion by a member to change the rules for transferring votes from absents to participating members. As a representative from a large construction firm argued Decision taking by our membership assembly can be compared to votes in parliament. Debates are important to influence the final vote. Our membership assembly has to be a body which enables real discussions before deciding on important issues. Enabling members to transfer their votes is not democratic (Minutes of the membership assembly of September 30, 1981). It is striking that in terms of associational legitimacy—at least in the case at hand—it is not economic power of members or feasibility in terms of crafting a most convenient election procedure that is vital, but democracy. As the analysis reveals, a majority among German employers’ associations applies egalitarian voting procedures, thus somewhat de-emphasizing the economic power of members. While there are some differences between different sectors and industries (weighted voting procedures more common in manufacturing and below average in services), by-and-large it seems to be that associations are hesitant to majorize small and medium-sized companies. 3.4 Activation In research into interest associations it is probably common sense that every such organization has a significant share of passive membership, albeit, its share might differ depending on the different types of associations (Blümle, 1965). Indeed, as Child et al. (1973, p. 75) have argued, members might consider an organization of which they are a member to be a ‘commodity’ and not even expect intensive participation in the organization’s affairs. Such passive members trade dues for services but they do not wish to decide on how this service is going to be produced. From the perspective of an employers’ association as a collective entity, such passive members can be either an asset or a risk factor. Passive members might benefit leadership autonomy by way of enabling them to act unilaterally and thus potentially to formulate more uniform policies for the entire association. At the same time, however, passive membership might also be harmful in that the association forgoes membership support and additional resources which would come along with an active membership. Also, a vibrant, active membership might benefit associations, enabling them to get their message across to the government and the public in general (Weber, 1987, p. 27). While the weighting of interests determines how members could pursue their interests by way of shaping associational policies, activation rules determine how an organization can contribute to systematically supporting membership participation. The major focus of such rules is on creating opportunities and structures for participation. As ‘choice rules’ (Ostrom and Crawford, 2005, p. 201) they contribute to widening or narrowing the range of actions assigned to participants. In many cases, activation is pursued through rules for the creation of mandatory commissions. Commissions which are composed of both elected officials and members, give selected members from the associations’ rank-and-file access to additional information on a certain subject matter and in many cases even allow members to take part in binding decisions. Also, commissions are the place where members argue most compassionately—as Schmölders (1965, p. 110) observes. While each employers’ association is free to create a commission (or working group) on any subject area of interest for them or not to do so, a large number of associations have included standing commissions into their constitutions, which creates a legally binding commitment to actually create such a commission. In this sense it is a binding rule to provide members with the opportunity to participate in such a commission and is not the—potentially arbitrary—decision by an association’s leadership. The most common commission provided for by employers’ associations is the collective bargaining commission, which discusses employers’ demands prior to a collective bargaining round, observes collective bargaining and in many cases has to approve the final settlement. As the director of one employers’ association revealed in an interview, his association ensures that a substantial number of representatives from the group of small and medium-sized companies are represented in the collective bargaining commission. This is to guarantee that collective bargaining settlements have a high level of legitimacy among these small and medium-sized companies (interview March 11, 1999, p. 3). In total, 54.2% of all constitutions in our database contain a provision for a mandatory collective bargaining committee while another 35.5% of constitutions contain provisions for building committees on other subjects. Further analysis also reveals that activation procedures are not simply a result of the increasing complexity of employers’ associations, as median membership numbers do not differ substantially when comparing associations with and without mandatory commissions. Commissions, however, do help to bridge the distance to membership as can be observed when comparing first-order with higher-order associations (associations of associations). While 62.7% of all first-order associations in our database have at least one mandatory commission, this share is 85.7% when we examine higher-order associations. 3.5 Conflict resolution As demonstrated in the previous sections, employers’ associations already provide for a full set of complex rules to enable them to represent the interests of market competitors and even insulate some conflict-prone issues from representation through the associations. This does not, however, keep all conflict at bay. To resolve disputes among members but also between members and the association, many constitutions provide for specific dispute resolution mechanisms to provide for procedural justice. Such ‘courts of honor’ (Ehrengerichte), ‘dispute resolution panels’ (Schiedsgerichte), ‘associational courts’ (Verbandsgerichte) or ‘commissions on competition’ (Wettbewerbskommissionen) as they are referred to in the constitutions, can be found in 27.4% of all associations in our database, with the share being somewhat higher (32.8%) within the group of first-order associations. While there are no uniform rules for these dispute resolution procedures, the majority of these ‘private courts’ share some general characteristics. First, panels are formed in lieu of the public court system. With their admission to an employers’ association (provided that the association has a dispute resolution mechanism) members commit themselves to referring their disputes on affairs regarding their membership in this association exclusively to this private dispute resolution panel. Secondly, costs of the procedure have to be borne by the defeated party (which protects the panel from excessive use), thirdly, the panel represents an equal number of members from each party with another neutral member (chair) having the tie-breaking vote. Usually the neutral chair of the panel is required to be a judge from the public court system. While in terms of the number of members, there are no significant differences between associations with and those without dispute resolution panels, it is striking that panels come along with a high level of differentiation according to forms of membership. While most associations offer just a regular, full membership status, a number of associations offer additional forms of membership—such as guest membership (with limited membership rights), membership of honor or—most controversial in recent years—the so-called OT-membership (see Völkl, 2002; Haipeter and Schilling, 2010), which excludes members from collective bargaining coverage. It is remarkable that many associations provide for dispute resolution. Such bodies serve as a last resort in the event that other rules to keep collective action problems at bay have failed. 4. How rules vary As the previous section has shown, German employers’ associations cannot simply be understood as rigid, formal and powerful interest representation bodies, aggregating the power resources given to them by their member companies. Rather employers’ associations can be considered to be somewhat fragile organizations, which have to go far to represent the interests of companies, and which actually compete against each other on product and labour markets. Correspondingly and as summarized in the following figure (Figure 1), we find an elaborated system of rules which allow employers’ associations to deal with this particular situation. When examining associations we find the ports of entry to be carefully guarded and once employers have been admitted into the organization their interests are made subject to a wide range of carefully crafted rules to insulate, weight and activate employers’ interests and to resolve conflicts which arise within the association. While employers’ associations in Germany are diverse in terms of their size, domains and resources, it can be hardly surprising that they are also diverse in terms of their particular rules to elaborate on members’ interests. As shown in the following table (Table 3), which includes first-order associations only, employers within different industries vary in terms of applying different rules to select, channel and activate members’ interests. Table 3 Diversity of rules to elaborate members’ interests Dimension for elaborating members’ interests Variable Restaurants Retail Metal industry Chemical engineering industry All (n = 11) (%) (n = 29) (%) (n = 12) (%) (n = 15) (%) (n = 235) (%) Admission Admission fee 18 28 42 47 25 Insulation Confidentiality clause 0 66 42 47 40 Weighting Weighted voting rights 0 7 25 47 16 Activation Collective bargaining committee 46 62 42 53 54 Dispute resolution Dispute resolution mechanisms 18 21 33 7 33 Dimension for elaborating members’ interests Variable Restaurants Retail Metal industry Chemical engineering industry All (n = 11) (%) (n = 29) (%) (n = 12) (%) (n = 15) (%) (n = 235) (%) Admission Admission fee 18 28 42 47 25 Insulation Confidentiality clause 0 66 42 47 40 Weighting Weighted voting rights 0 7 25 47 16 Activation Collective bargaining committee 46 62 42 53 54 Dispute resolution Dispute resolution mechanisms 18 21 33 7 33 Source: WSI-Database on Employers Associations (2006). Table 3 Diversity of rules to elaborate members’ interests Dimension for elaborating members’ interests Variable Restaurants Retail Metal industry Chemical engineering industry All (n = 11) (%) (n = 29) (%) (n = 12) (%) (n = 15) (%) (n = 235) (%) Admission Admission fee 18 28 42 47 25 Insulation Confidentiality clause 0 66 42 47 40 Weighting Weighted voting rights 0 7 25 47 16 Activation Collective bargaining committee 46 62 42 53 54 Dispute resolution Dispute resolution mechanisms 18 21 33 7 33 Dimension for elaborating members’ interests Variable Restaurants Retail Metal industry Chemical engineering industry All (n = 11) (%) (n = 29) (%) (n = 12) (%) (n = 15) (%) (n = 235) (%) Admission Admission fee 18 28 42 47 25 Insulation Confidentiality clause 0 66 42 47 40 Weighting Weighted voting rights 0 7 25 47 16 Activation Collective bargaining committee 46 62 42 53 54 Dispute resolution Dispute resolution mechanisms 18 21 33 7 33 Source: WSI-Database on Employers Associations (2006). Although confidentiality clauses are widely used by employers in retail (66% of constitutions in this industry provide for such a clause), not even one of the employers’ associations in the restaurant business has them. However, while retail employers mostly refrain from introducing weighted votes (only 7% of those associations have such a clause), 25% of metal employers and 47% of employers’ associations in the chemical engineering industry have included such a provision into their constitution. 5. How rules matter As could be shown in the previous section, admission rules, rules for interest insulation, weighting, activation and dispute resolution do not simply serve as vehicles to establish a solid associational structure, they also guarantee members’ basic rights and partial autonomy vis-à-vis the association. Whether these structures also affect the capacity of associations for effective interest representation still remains to be seen. In the following, I will analyse services which German employers’ associations offer to their members. According to previous research (see Völkl, 2002; Haipeter and Schilling, 2006; Helfen, 2006) membership services can be seen as an important tool to improve membership commitment and even serve as a powerful incentive to recruit new members into the association. As highlighted in the following figure (Figure 2), the constitutions of German employers’ associations guarantee a wide variety of different membership services. 71.8% of associations included in our data set provide for political lobbying vis-à-vis governments, parliaments, state-agencies and other associations. Of particular importance is support in the field of labour and employment law: 43.6% of constitutions guarantee members the right to legal advice and consulting, 45.5% even offer to represent members when litigating their claims in court. Many employers’ associations employ their own attorneys to provide those services, some of them are respected experts and serve as coeditors of legal textbooks. Support in the field of labour and employment law is mostly demanded by small and medium-sized firms, who cannot afford, or are too small, to maintain their own legal department. Another 40.5% of associations support their members in the field of education and training, still a substantial share offers services in the field of public relations (37.4%), technology (29.9%) and business administration (20.1%). On average, an employers’ association offers their members 3.3 of those 12 different membership services (median 3.0). Figure 1 View largeDownload slide Rules governing employers' associations. Figure 1 View largeDownload slide Rules governing employers' associations. Figure 2 View largeDownload slide Membership services guaranteed by the by laws of employers’ associations. Source: WSI-Database on Employers Associations (2006). Figure 2 View largeDownload slide Membership services guaranteed by the by laws of employers’ associations. Source: WSI-Database on Employers Associations (2006). It should be noted, however, that mentioning certain membership services in the constitutions has important legal consequences. Once a service is listed and the constitution registered with the local court, this establishes a legal claim of the member vis-à-vis the association. Table 4 now compares the average number of different membership services guaranteed by an association with different rules for safeguarding members’ interests. Associations which provide for confidentiality clauses and a standing collective bargaining committee, thus providing rules for insulating and activating members interests, offer (albeit moderately) larger number of different membership services when compared with associations without such clauses. Only in one case do more exclusive associations offer a wider variety of services than organizations with weighted voting rights—on average—3.2 different services and those under the “one member – one vote”-rule only 2.9. The largest difference, however, emerges when comparing associations which provide a mechanism for dispute resolution with those without. Associations with an arbitration panel or a similar dispute resolution body guarantee on average 3.7 different membership services, those without only 2.9. Table 4 Associational rules and number of different membership services (average for all cases 3.1) Variable Yes No Admission fee 3.3 3.1 Confidentiality clause 3.3 3.1 Weighted voting rights 3.2 2.9 Collective bargaining committee 3.2 3.1. Dispute resolution mechanism 3.7 2.9 Variable Yes No Admission fee 3.3 3.1 Confidentiality clause 3.3 3.1 Weighted voting rights 3.2 2.9 Collective bargaining committee 3.2 3.1. Dispute resolution mechanism 3.7 2.9 Source: WSI-Database on Employers Associations (2006). Table 4 Associational rules and number of different membership services (average for all cases 3.1) Variable Yes No Admission fee 3.3 3.1 Confidentiality clause 3.3 3.1 Weighted voting rights 3.2 2.9 Collective bargaining committee 3.2 3.1. Dispute resolution mechanism 3.7 2.9 Variable Yes No Admission fee 3.3 3.1 Confidentiality clause 3.3 3.1 Weighted voting rights 3.2 2.9 Collective bargaining committee 3.2 3.1. Dispute resolution mechanism 3.7 2.9 Source: WSI-Database on Employers Associations (2006). While the analysis is still limited as it does not monitor the size of an association, it suggests that providing members with rules strengthening their autonomy vis-à-vis the association does not inhibit the capacity of employers’ associations to deliver selective goods to their membership. If there is one finding in Olson’s (1965) collective action theory which many scholars in the field of research into business interest associations can concur with, it is the finding that selective goods or ‘club goods’ have proven to be a powerful vehicle for solving collective action problems (Keller, 1988; Völkl, 2002). According to this line of reasoning, safeguarding members’ interests vis-à-vis an employers’ association might even contribute to solving collective action problems and maintaining associability. 6. Concluding remarks A significant share of German employers’ associations do provide their members with meaningful rights to take part in the associations’ decision-making process. In contrast to what has been argued in large parts of the ‘competing logics’ literature, membership participation is not subordinated to the competing logic of influences (Schmitter and Streeck, 1999) or effectiveness (Weitbrecht, 1969) as the term ‘quasi-participation’ assumes. As the analysis reveals, an overwhelming majority (84%) of (first-order) employers’ associations do provide their members with equal voting rights and more than half of associations in the database activate their membership by introducing a standing collective bargaining committee, allowing members from the associations’ rank-and-file to access important information and to have a vote on the prerogatives for collective bargaining. As the findings in the previous section suggest, providing members with various forms of access, does not inhibit the capacity of the employers’ association to offer membership a wide variety of services which are considered to be crucial for stabilizing membership commitment. While at a more informal level of the day-to-day operations, selective (maybe more resourceful) members might still have some privileged access to determine associational policies, our analysis of rules to determine voting rights confirms that only a minority of associations can do without guaranteeing strong veto rights to their entire constituency. Small businesses might find it harder to have their voice heard when addressing the managing director of their particular association, but at the next membership assembly, however, it would be hard not to hear their voice. As our findings indicate, German employers’ associations do not elegantly follow along the lines of the dual-logic pattern, as developed in the heyday of corporatist thought. According to Ostrom (1990), carefully crafted sets of working rules have proven to be a powerful tool in the context of common-pool resources such as irrigation systems, forests, fishing grounds and meadows. As our analysis has shown, however, rules also have an important role to play in a context of multiple and overlapping collective action problems. Employers’ associations not only face problems arising from the need to invest substantial resources and the corresponding problems of free riding, as competitors on product and labour markets they also have to control the flow of information, services and resources within their association. As could also be established in the analysis, there is great value in having a definite set of rules and procedures. These rules, however, do not easily combine to definite combinations or sets, which could serve as a model if not ‘one best practice’ for all employers’ associations. While it is certain that rules maintaining membership access at the level of the association are positively associated with membership services, we also see some evidence for employers exercising strategic choices. As Offe and Wiesenthal (1980, p. 76) have argued elsewhere, these is some doubt on whether there is a ‘unitary and utilitarian’ logic of collective action and—driven by this suspicion—have suggested to analysing the associational practices of capital and labour separately. As the varying diffusion of specific rules within different industries and clusters of employers’ associations indicates, even within one class different practices can be found. To which degree such different combinations of rules also carry different outcomes in terms of collective bargaining practices, membership commitment or lobbying activities to be pursued by employers’ associations might be subject to future research. Footnotes 1 In the following, the term ‘employers’ association’ is used for those organizations which are involved in collective bargaining and thus are distinguished from ‘trade associations’, which do not have a bargaining function. The term ‘business interest association’ includes both types, employers’ and trade associations. 2 This somewhat resonates with Coleman’s perspective who has argued that people would only subject themselves to the rule of an organization and voluntarily transfer entitlements, resources and power to it, when they expect to gain from it (Coleman, 1974). 3 According to Schmitter (2006, p. 300) interests can be conceptualized as a ‘multi-sequential, iterative, and continuous social process’ whereby needs are transformed into concerns. 4 Ostrom and Crawford (2005, p. 191) have developed seven different categories of rules: position, boundary, choice, aggregation, information, payoff and scope rules. They also argue, however, that rules do not always exist to all elements of an action situation (ibid., p. 210). 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TI - Structure and competing logics: the art of shaping interests within German employers’ associations
JO - Socio-Economic Review
DO - 10.1093/ser/mwx037
DA - 2018-10-01
UR - https://www.deepdyve.com/lp/oxford-university-press/structure-and-competing-logics-the-art-of-shaping-interests-within-hFpLyIosIC
SP - 769
VL - 16
IS - 4
DP - DeepDyve
ER -