Research offers the opportunity to bring together topics otherwise
unexplored. The work presented here attempts to do that. This exploratory research integrates aspects of my broad professional background, my interest in sustainability, and my imminent completion of a policy + planning program: Industry Trade Associations, Manufacturing and Sustainability. Industry trade associations, while long in existence, are an immature area of academic research. Manufacturing is deeply entrenched in the American psyche, and is frequently used to frame the nation’s economic health. Sustainability at the citizenry level has roots in the environmental movement of the early 1960s, yet the topic of sustainability in the corporate domain has only recently gained broader attention in the institutional arena. It is the convergence of these three subjects through which I will explore the efforts and the extent to which manufacturer industry trade associations influence sustainability efforts for their organization and of their member companies. Industry trade associations are an underdeveloped but evolving research topic for both social and business historians. Bradley (1965), and Aldrich and Staber (1988) were instrumental in their groundbreaking research to identify trade association form, function and role in the ecology of business. Ogilvy (2011) contributed to contemporary literature with an economic historical perspective of guilds, which are perceived to be early incarnations of trade associations. Most recently, Lyn Spillman examined trade associations from a contemporary political economy and business view. The literature suggests that broad examination of trade associations in the modern day context is unexplored, but gaining
Trade Association History
Trade association formation in the United States can be traced to the
early 1700s with a surge in originations in the mid 1800s resulting from the industrial revolution. The first association is thought to be the Philadelphian House Carpenters formed in 1724 . The creation of the National Industrial Recovery Act in 1933, whose intention was to stimulate prices and business following the Great Depression, resulted in a significant increase in trade association formation. A subsequent Supreme Court decision held the act to be unconstitutional and, essentially, abolished all associations created under the guise of the act. Two additional peaks in association origination occurred, first in the 1950-1960s, and then in the mid 1980s. Literature suggests that trade associations have gained more power and are larger in number in the United States than in Europe, given the pre-dominance of free market behavior over corporatism .
Theories of Origination
There is a paucity of literature on the origins and history of trade
associations. Literature that does examine them is dated, and there is
consensus that more research would benefit the literature carried out in-depth historical and organizational research of U.S. trade associations. Their early research examines three models by which trade associations originated. The first suggests that due to social differentiation given social or cultural norms, we intrinsically organize and seek to elevate the differentiated group around those norms . The early days of the Consumer Goods Forum illustrates this model, as private shop owners sought to organize networking events for themselves and the heirs to their businesses. The second model couples niche theory and competitive isomorphism as a result of skills development or competition within an industry, the industry will further specialize and create niche markets by which they operate and organize. An example of this specialization is the Cashmere and Camel Hair Manufacturers Institute. This research didn’t afford the opportunity to investigate whether this organization was previously part of a larger non-specialized textile manufacturing association that sought to specialize in association form due to intricacies of cashmere and camel hair in the manufacturing process. The final model offered by Aldrich and Staber ties to the theory of government intervention in the economy. Essentially, trade associations will form, grow, and/or dissolve in response to government policy .
Within the United States Internal Revenue Service taxonomy, trade
associations are non-profits and organized as tax-exempt 501(c) 6 entities. As a tax-exempt entity, they are subject to IRS reporting obligations and are prohibited from accumulating equity and assets for private use (American Society of Association Executives, n.d.). The notion of association assets for public use has origins in the U.S. tax code from 1913, whereby Congress provided exempt status to trade associations providing services to the public in lieu of the government providing those services .
Governance & Function
Trade associations generally organize in two forms. The first model
involves association leadership in the form of an executive director or president, with supporting staff who lead the primary functional areas such as regulatory/legal affairs, membership services, human resources, communications, etc. This model is often supported by a board of directors composed of executives from the member firms. The second model involves executive governance from member companies, which sets the strategy for the association. In addition to this governance, an executive director and associated staff manage the operations of the association. For example, the Consumer Goods Forum, which represents manufacturers and retailers of consumer goods, has a 50-person operating board whose members are the top senior executives of companies such as PepsiCo, Walmart, and Cargill. These operating boards are frequently the form of governance for such large associations, whereby they establish the 2 to 5 year agenda and develop supporting strategies to execute that agenda. Additional committees carry out the work within the secretariat. Association functions align around five areas: lobbying/advocacy, education, standard setting or best practices, networking, and marketing and public relations, with lobbying being the primary activity of large industry groups.
The notion of sustainable development is a result of the Report of
the World Commission on Environment and Development: Our Common Future, a 1987 United Nations report commonly referred to as Our Common Future or “the Brundtland report” . In that report, the authors make the link between economic development and the environment. That is, sustained economic development is not possible without considering the environmental degradation of such development and, likewise, erosion of the environment has an impact on economic development . Sustainable development has widely come to be defined as “ ..development that meets the needs of the present without compromising the ability of future generations to meet their own needs” . In contrast, corporate social responsibility is a term used to consider and assess the effect of business behavior on three pillars previously not bundled together: economic, social and environmental .
Corporate Sustainability Reporting and Motivations
According to the Global Reporting Initiative (GRI), in the United
States more than 75% of the top 100 companies report on corporate
responsibility performance . Although GRI does not define how it measures the top 100 companies, the Governance & Accountability Institute, Inc., a global research, analysis and advisory services firm is the exclusive data partner for GRI (Global Reporting Initiative, the Governance & Accountability Institute, Inc., reported that over 72% of companies listed on the Standard and Poor’s 500 Index are reporting sustainability information . Further, KPMG, a large international accounting and advisory services firm, states in its 2013 report that 86% of the largest U.S. companies (based on revenue) produce a corporate sustainability report .
Challenges with Corporate Sustainability Metrics
What are some of the challenges in reporting corporate
sustainability efforts? Schneider and Meins (2012) propose three related elements that make corporate sustainability reporting challenging as compared to traditional financial reporting. First, there is a lack of agreement on exactly what metrics should be reported, and
correspondingly, how to measure those metrics. This lack of definition is widely agreed on in the literature . Second, data collection for the corresponding metrics is influenced by the experience and capacity of the assessor. And finally, the purpose of a sustainability report informs the tone or sentiment expressed in any given report .