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 size of Chamber of Commerce membership and the depth of market penetration. This model is applied to British Chambers of Commerce which are a largely voluntary system of private law bodies. The model demonstrates high explanatory power for the size of Chamber membership, particularly arising from the service levels and size of potential market (number of potential business members). The model of market penetration is less satisfactory in terms of variance explained, but demonstrates the importance of the same explanatory variables. The models also confirm the 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 Chambers Commerce (ABCC), have little significant influence on them from the geographical size of their catchment, although they do receive benefit from a relatively more concentrated location of businesses within their catchment. Small (and non-approved) Chambers, however, are strongly influenced by geographical area and cannot sustain high market penetration except over small areas. An area of about 1,000 km(2) is found to be a rough maximum for small Chamber development. The results are used to confirm that Olson's conjectures on the logic of collective action are limited to small geographical areas. Implications are also drawn for ABCC and government policy.