Strategic schizophrenia: The strategic use of trade associations in New Zealand

Abstract

This paper draws on and extends corporate political strategic theory through examination of how trade associations were used in reaction to ratification of the Kyoto Protocol in New Zealand. It is well established that firms can influence the legislative and regulatory process either individually and/or collectively via trade associations. The findings of this research reinforce current theory by demonstrating that firms use their membership in trade associations to gain expertise they lack, and to leverage their influence through collective advocacy. Large firms were found to be more likely to engage in collective action than small firms, and collective action was more likely on high profile issues than issues that were not receiving significant public and political scrutiny. The findings, however, also necessitated an extension of existing theory to explain firms’ response when faced with competing stakeholder demands. When the social and economic objectives of a firm diverged, trade associations were utilised in the dual and contradictory strategies of protecting a firm’s positive environmental image while simultaneously advocating less stringent environmental regulatory outcomes.