Industry associations

Introduction

Since their rapid formation in the post-war period, employers' and trade associations have played an important role as intermediary in business-government relations, not to mention economic performance, research and development, education and training in industrial and commercial society.

Trade associations are formed and made up of a number of organizations, usually companies, with common interests that operate in the same market or sector. They exist to represent and promote the interests of their members and provide collective services to businesses. They may also provide a number of commercial services, which may be available from other providers.

There are several hundred trade associations operating in the UK, plus many hundreds more, smaller organizations that operate without full time staff.

Purpose

Trade associations generally exist to promote the interests of the industry. According to the Trade Association Forum¹, their services include:

• working proactively to improve members'/sectors' profitability and competitiveness
• representing members'/sectors' interests at all levels of the legislative and regulatory process
• supplying information and providing advice to members
• public relations and communications
• promotion of market opportunities
• training and education
• promotion of standards and quality of service
• promotion of innovation and technology transfer
• offering commercial benefits

There are a number of essential characteristics of a trade association (Boleat, 2003²):

• A member-based organization, the members being businesses not individuals
• The ultimate governing body comprises representatives of members, and members are involved more generally in the decision-making process
• The members must have a common interest
• A representative body, putting forward the collective position of the members, generally to government departments and agencies and regulators, but also to the media and to other opinion formers
• Information is provided to members based on this representative work

Trade associations are usually companies limited by guarantee with member companies providing the finance, governing body and often volunteer resource which supplements full time administrative staff.

Although the model is now changing, associations have, typically, derived their income from members' subscriptions and only earned a minority of revenue from commercial services. Increasingly however, associations, whilst still being not-for-profit, are expected to maximise revenue-earning opportunities.

Role

Companies join trade associations for the benefits that they bring and because it is in their financial interest to do so. Crucially to attract and retain members, associations must be able to offer economies of scale and provide services either not available elsewhere or at a cheaper rate.

At the heart of trade associations is the provision of a number of services which benefit from the collaboration between companies. This implies that an association can offer its members:

• representation and influence - the ability to be seen as 'the voice of the sector', able to present the views of a sector without favouring any one member
• economies of scale – where an association can act more efficiently on behalf of all members, rather than individual companies having to independently contract lawyers, lobbyists, etc.
• trust - so that networking and other non-competitive discussion may take place freely and information provided by the association can be relied upon
• collaboration between companies – is areas such as technology diffusion and standardisation

Due to these characteristics, it follows that members regard associations as natural suppliers of allied commercial services, such as:

• publications, workshops, seminars and conferences dealing with current issues, linked to representational work ie areas where the association has been heavily involved and is likely to have specialist knowledge
• promotion of new business opportunities, eg by providing a portal to members' products and services, trade fairs/ exhibitions, specific export drives, etc
• generic business services required by the membership, which may be provided at specially negotiated discount rates
• consultancy and advisory services

Types

The Trade Association Forum is a gateway to UK trade associations for buyers, government departments, researchers, the public and others who are seeking information about UK trade associations. The forum 'encourages the sharing of best practice among UK trade associations and promotes the role of effective trade associations to government, industry and the wider public'. Its website has a directory of trade associations, searchable by name or type of activity http://www.taforum.org/

There are a number of different types of association and although the dividing lines between them are not clear, the following represents the most commonly recognised types:

• European associations – traditionally formed by the membership of national associations. Although not industry associations as such, some online organizations now provide similar services to their traditional counterparts, eg www.euractiv.com
• National associations – the most notable example being the Confederation of British Industry (CBI). Founded in 1965, the CBI is an independent, non-party political organization funded entirely by its members in industry and commerce. 'The CBI's mission is to help create and sustain the conditions in which businesses in the United Kingdom can compete and prosper for the benefit of all.' It has a network of offices round the world. In common with trade associations, the CBI offers lobbying, networking, information and other services - http://www.cbi.org.uk/ The Federation of Small Businesses and the Forum for Private Business represent the interests of small businesses in all industries
• Sector associations – the most common type of association, usually representing a particular industry or interest group. Variants of this type of association include horizontal associations, representing particular process or functions across industry boundaries and geographically-based associations
• Federation – a term traditionally used to denote an association of associations, representing a group of like interests. In practice some federations are directly comprised of individual company members and act as sector associations

More information on the types of trade associations and other industry associations is available to members in the member area of the site.

1 Bean S (2006), A 'Best Practice Guide' for Trade Associations, Trade Association Forum

2 Boleat M (2003) Managing Trade Associations, Trade Associations Forum