What do business associations do?

Abstract

This article provides a review of the literature on business associations (BAs) in line with the following questions: (1) What are the economic roles of BAs, (2) How are BAs institutionalized, and (3) What drives BAs to engage in socially beneficial or harmful activities? Challenging the popular distinction between beneficial, market-supporting and harmful, rent-seeking (lobbying) goals of BAs, we 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 socially beneficial or harmful. We also challenge the proposition that institutional strength is needed for BAs to fulfil beneficial economic roles, highlighting that BAs have three main institutional functions, and the level of institutionalization of each of the functions can be different in relation to their beneficial economic roles. We suggest that whether BAs tend toward engage in in socially beneficial or harmful activities depends on their private-order and public-order institutional limitations.