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The impact of the logic of collective action by Mancur Olson in the automobile industry : an approach to the European automobile economy

Ljika, T. (2011) The impact of the logic of collective action by Mancur Olson in the automobile industry : an approach to the European automobile economy.

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Abstract:The subject of my paper concentrates on the implications of Europe’s automobile industry process of internationalization and the logic of collective action inside this context. The initial point is the development of associations from a national into a transnational division. In this field associations of different nature and character have become an essential part of national corporative structures. Concurrently the process of internationalization influences our national societal structures considerably. More precisely processes of internationalization influence our state, our markets and companies. Although the meaning of transnational associations has grown significantly, research and statistics on the impact of Mancur Olson’s theory of groups for these associations are not well established yet. It is attached too little value to the marginal number of abstract and hypothetical models on the consequences of Mancur Olson’s theory. The aim of this paper is to indicate more specific how associations in the automobile industry develop under the influence of internationalization and why some of these groups are able to have a larger influence on government policy than others. Thereby I will take advantage of Mancur Olson’s Theory of Collective Action. We would expect that if a group of people have a common interest that they will naturally get together and fight for the common goal. That means groups of individuals with common interests are expected to act on behalf of their common interests much as single individuals are often expected to act on behalf of their personal interest. Olson states, however, that this is generally not the case. Instead of taking advantage of rational action, which follows logically from the premise of rational and self-interested behavior, a group of firms will not reach a collusive agreement in the marketplace. This means: They will be unable to form a group and lobby the government for help. In doing so M. Olson gives some reasons for this failure, which mainly depend on the group size, perceptibility of the actions of individual actors, organization costs, possibility of selective sanctioning of group members and the asymmetry of interests of individual group members by achieving the objectives. Associations like the German VDA, who nationally and internationally promote the interests of the entire German automotive industry, arose since the beginning of the industrial society. Since the industrialization traditional market structures decomposed and lead to new social, political and economical challenges for the state. As a consequence a new level between state and individual has developed: groups. Associations are one of these groups. The question is whether the mentioned issues in the procurement of public goods by Olson in the area of the automobile industry even exist or the logic of collective action in this area has to be extended. Thereby I will analyze in this framework whether the term “group size” is advisable as a criterion for the success of a group within the automobile industry. Moreover I will examine the relevance of other indicators like the perceptibility of the achievements of an individual.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration BSc (56834)
Link to this item:http://purl.utwente.nl/essays/62619
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