One for all, and trade associations for …?!

Especially in these challenging times trade associations should look beyond the interests of their members and seek cooperation with other stakeholders. This is in their own interest, because when the government will oblige cooperation this could lead to undesirable outcomes.

Since te start of the COVID-19 crisis the role of trade associations has become more visible as these organizations draw up sector protocols, assess how companies and sectors are affected and should be supported. What was very striking is that in the Netherlands most sectors are almost exclusively focusing on the interests of their own members. A good example is the debate about the rents for retail spaces regarding which different trade associations were fighting each other, rather than working together.

Recently, historian Bas van Bavel of Utrecht University held a plea (Telegraaf, 13 March 2020) for associative and cooperative solutions, referring to the cooperation between farmers’ unions and housing corporations. Immediately it reminded me of the former product and business partnerships. These semi-governmental organisations acted as trade associations, but with compulsory levies and with representatives of trade unions in the board of directors. Many businesses, especially in the agri-sector opposed the compulsory nature of the cooperation, which resulted in the dissolvement of these product and business boards five years ago. Nonetheless, these product and business boards would have been useful in these crisis times as their set up and structure creates a place for cooperation in the chain. After all, this crisis is affecting every entrepreneur in every sector, and not just retail, catering and ornamental horticulture sectors. Thus, shifting problems from entrepreneurs in one sector to suppliers, landlords or other parties, does much better align with the current prevailing sentiment in society. The Cabinet of Prime Minister Rutte is therefore right to emphasize the fact that as a society we can only tackle this together.

Although I don’t blame entrepreneurs for focusing on their own business interests during times of crisis, I believe that trade associations in particular should not only focus on the interests of their members, but rather opt for the stakeholder approach. This approach means that directors consider the interests of other stakeholders in the chain and offer solutions that would also serve stakeholders like trade unions, suppliers, landlords and the logistics chain. Such a stakeholder approach is in contrast with an approach that is mostly about exchanging positions, but is aimed at realizing long-term solutions, for example the future of a city center, or the expected challenge of supplying pharmaceuticals.

The stakeholder approach requires courage of the directors of trade asociations, simply because focusing on your own interest seems the fastest way of scoring points, at least in the short term. However, I am convinced that trade associations that listen carefully to their members will find out that most entrepreneurs are well aware that cooperation is in their own interest, in both the long and short term.

If trade associations are really protecting the interests of their members, they would use the current sense of unity to create lasting cooperations between trade associations. Because if chains do not succeed in this, there is a chance this will be obliged by the government again, which could lead to the return of a system such as the product and business boards. As an entrepreneur you will need to ask yourself the question if you are better off in that case.