EXPLAINING THE MEMBERSHIP OF VOLUNTARY LOCAL BUSINESS ASSOCIATIONS - THE EXAMPLE OF BRITISH CHAMBERS-OF-COMMERCE

This paper presents an analytical model which seeks to explain the siz e of Chamber of Commerce membership and the depth of market penetratio n. This model is applied to British Chambers of Commerce which are a l argely voluntary system of private law bodies. The model demonstrates high explanatory power for the size of Chamber membership, particularl y arising from the service levels and size oi potential market (number of potential business members). The model of market penetration is le ss satisfactory in terms of variance explained, but demonstrates the i mportance of the same explanatory variables. The models also confirm t he importance of differentiating two different, but overlapping, types of Chamber in a voluntary system. Large Chambers, those 'approved' as quality service providers by the national Association of British Cham bers Commerce (ABCC), have little significant influence on them from t he geographical size of their catchment, although they do receive bene fit from a relatively more concentrated location of businesses within their catchment. Small (and non-approved) Chambers, however, are stron gly influenced by geographical area and cannot sustain high market pen etration except over small areas. An area of about 1,000 km(2) is foun d to be a rough maximum for small Chamber development. The results are used to confirm that Olson's conjectures on the logic of collective a ction are limited to small geographical areas. Implications are also d rawn for ABCC and government policy.