Industry institutions, social capital, and firm participation in industrial development

Abstract

Industry institutions and trade associations represent the “collective interests” of an industry's constituent firms and play a prominent role in industrial development. Yet, the strength and efficacy of industry institutions to promote these “collective interests,” depends upon the active support and participation of member firms. This is essentially a collective action problem. By aligning Olson's (1971) logics of collective action framework with Nahapiet and Ghoshal's (1998) dimensions of social capital, this article uses survey data from 381 firms from across five UK manufacturing sectors to explore the factors that affect the propensity for firms to participate in industry institution led initiatives. The results suggest the propensity of firms participating in collective activities rises where “shared interests” emerge, although the over-riding factor is the extent to which firms perceive their own ability to influence and shape the direction of such activities (the logic of influence).