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 attention. Trade associations are non-profit organizations whose members are companies in the associated industry, in contrast to professional organizations that aggregate individuals within a profession . Participation in these business leagues is voluntary. The primary roles and functions of industry trade associations are: advocacy, standard setting or best practices, training or education, and research . Manufacturing is central to the United States economy as it is the third largest contributor to national gross domestic product – trailing only the finance industry and government . Manufacturing contributes about 12% to the national gross domestic product and provides more than 12 million direct domestic jobs (Bureau of Economic Analysis, 2014). This is in stark contrast to the industry peak reached in 1979 of 19.55 million jobs (Perry, 2009). Though unlikely ever to reach the employment levels achieved during that period, the collective industry goes out of its way to promote a resurrection of domestic manufacturing and, as such, lobby for favorable domestic and/or trade policy to enable such resurgence. Manufacturer trade associations are integral to both the industry resurgence and to these lobbying efforts.
Trade Associations Defined
Trade associations are defined as non-profit organizations whose
members are other organizations in contrast to professional organizations that aggregate individuals within a profession. Further, these associations do not operate a business or conduct business activity in a for-profit manner. Trade associations are not labor unions, although a union may represent a specific industry like the United Auto Workers’ Union. Likewise, trade association members may include a unionized work force. Trade associations may be vertical in focus and accommodate different levels in the supply chain (e.g. American Dental Trade Association), or horizontal in focus and involve a broader scope in function and industry representation (such as the National Association of Manufacturers). Further, trade associations are classified as generalist, serving all the interests of all manufacturers, or specialists, serving the interests of one group, such as commercial truck repair persons. Although trade associations and Chambers of Commerce share the same tax code status as a 501(c) 6, Chambers of Commerce are not trade associations as their membership can include individuals, politicians, community organizations or companies seeking to further the Chamber of Commerce goals .
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.