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Are Trade Associations Really Necessary?


AuthorHenri Azibert

It seems to be a ritual every spring and fall.  Some of the major players in a particular industry get together at some venue, and meet as members of a Trade Association to discuss topics of common interest.  The venues can range from luxurious resorts to run down airport hotels.  The activities can vary from arduous meetings on obscure technical matters to golf along the sea side. The luxurious resorts and the golf outings might seem like a judicious reason to overlook your competitive differences, but what could be the benefits of meeting by an airport to go over narrow specialized questions?

The basic reason is that there are some things that can be achieved as a group that cannot be done in an individual organization capacity.  There are many facets of this particular capability, but probably the most important one is participation in advancing a generic voice, one devoid of narrow self-interest.  Here are some of the main areas where great benefit can be obtained.

The realm of education is a prime example. Many manufacturers have training programs to educate their customers about the basic principles and specific aspects of a certain technology on which their products are based.  Yet, in the mind of the customer/student, there is always a bit of a doubt as to whether this is valid trustworthy information, or maybe way too much of a sales pitch.  When the information is provided from a Trade Association, there is the assurance that the material provided is based on an industry consensus which has been agreed to by experts in the field.  For each member company, their ability to present the generally accepted technology, and then to single out their proprietary advantages can be much more effective, as the understanding and foundation of the subject matter has been established.  The differentiation of advanced exclusive technology can be made on a rational and reasonable basis.  This can be most effective.

There are many times when certain public policies can have a beneficial or negative impact on a market sector.  At that point, it is quite important to be able to present the industry’s point of view.  Most of the time is comes back to educating policy makers as to the merits of the technology.   There also, providing an industry wide perspective is essential.  An individual company’s point of view will not only be viewed as self-serving, but cannot even be entertained as it could unduly favor a specific interest instead of the general public.

In order to maintain fair competition, there are minimum standards that must be adhered to.  These can be quality, test, or performance standards that have been agreed to by users, experts in the field, and manufacturers from Trade Associations.  They protect primarily the end users and customers.  In industry, a defective product can have catastrophic consequences.  So, insisting on proven technology with minimum operating requirements is essential.   But standards also benefit the trade association members.  Besides insuring a fair competitive field, the participation of their technical experts in the development of the standards allows them to make sure that all requirements are reasonable.   Furthermore, it brings to the member companies advanced knowledge of the requirements before they are generally available.

Of course, the benefits of Trade Associations are different for different companies.  Large companies may have more interest in government affairs than in having access to basic training material.  There are many other aspects that can be useful to member companies that would be too laborious to detail here.  But one that needs mention is the much touted, although not particularly well-defined, networking opportunities.

The advantages of networking opportunities can be rather nebulous.  Certainly, you can get a sense of what is going on in the industry.  You can share management strategies by communicating with CEOs, and find out the state of the art by participating in highly technical endeavors.  There is, over time, the forming of friendships with like-minded individuals, even though, back to the office, the friends return to be fierce competitors.  And then there are the social functions like rounds of golf or cocktail hours.  I cannot comment too much about the rounds of golf as I always had difficulty in seeing the point of striking as hard as possible a small white ball that never did anything to me, (and more truthfully because I am terrible at it). But I can attest that the networking session before dinner can be quite informative as a few drinks can lead to gathering much intelligence, as long as you imbibe less than the other participants.

Indeed, there are many benefits to belonging to a Trade Association and participating in its activities.



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