The Competitive Advantage of Business Associations

Author:

Mr Visty Banaji 

Chief Executive Officer

Banner Global Consulting Limited

Business Associations have been known for their advocacy of enlightened

business needs with the Government. Increasingly, however, their contribution

to upgrading the competitive advantage of their members is becoming more

important.

Associations of businessmen have a long history in our country. No, I am not

referring to the banding together of (mainly foreign-owned) corporates during colonial

rule, mainly for the purpose of petitioning the authorities to grant some concession or

ease some restriction on their businesses. I am going back a thousand years earlier,

to a confederation of business owners called the Ainurruvars or the Five Hundred

Swamis (Lords). "The Five Hundred, as an organization of merchants, originated in

the eighth century AD in Aihole … to institutionalize control of the existing commerce

of that region, thus providing an institutional base for organized commerce."  1 . I

speculate that they must also have petitioned successive rulers of the territories

where they operated for various forms of patronage and protection. Over a period of

time (spanning centuries) they expanded the benefits they provided and "… helped

connect producers and markets, and moved goods across vast geographical

extents. Such organizations could mobilize large amounts of capital, insulate

members against the risk of banditry, piracy or natural disaster; and hire mercenaries

to protect their depots and caravans. They could also …. use their political networks

to connect international traders and Indian merchants…. By this point, the Five

Hundred Lords of Aihole had evolved into a vast organization… and had brought

together 'all possible specialist merchant groups, itinerant and sedentary, local and

foreign'…. To defend their diverse and spread-out interests, merchant groups like

'The Five Hundred' hobnobbed not only with emperors, but with other medieval

power centres as well: local kings, administrators of minor cities, and temples."  2

The Business Associations (BAs) of today could pat themselves on the back for not

taking quite as many decades to progress beyond their initial advocacy agenda.

Then again, they need to remind themselves that their portfolio of services to

members is not quite as extensive as the Ainurruvars’. If any BAs have been hiring

mercenaries, at least I haven’t heard of it!

The Purpose of Business Associations

In thinking of the post-advocacy purposes of BAs today, I find it useful to use the

analogy of a modern city being planned from scratch. A lot of private builders would

be keen to get in on the action and design their architectural offerings for commercial

or residential purposes. It would be in their mutual interest and those of the ultimate

residents of the city, however, to agree to follow certain disciplines and carry out

some activities jointly. We can divide these mutually beneficial projects under three

heads:

• Standards: For instance, building codes, safety / fire defence minima,aesthetic guidelines.
•  Support Services and Systems: These would include power plants, waterutilities, sewage treatment plants, public roads, parks etc. that are available for the use of all.
•  Shared Learning: The gamut of learnings that enterprises could acquire from one another or from others in the city.

Ideally this exposition should be generic to all BAs, spanning all management

functions and drawing on cutting edge expertise in each. Unfortunately, my

capabilities and experience don’t permit me to be so versatile. I shall, therefore,

confine my illustrations in the rest of this article mainly to:

 One BA i.e CII, with which I have been privileged to associate for decades.

 One function i.e. HR, which has been my home base for nearly half a

century.

 One person’s thoughts i.e. mine, since I already have crystallized and

conveyed my thinking on many of these suggestions in the columns I have

published.

The sequence in which I expand on the three key domains of delivery for forward-

looking BAs is different from the one in the city-planning analogy. The intention now

is to move from well-traversed domains to newer ones that have become feasible /

necessary only with the current state of information technology but which are no less

important (and potentially far more profitable) for all their novelty.

Shared Learning

A well-performing BA can help catapult entire industries into international orbit while

making the ones focused on domestic markets fully capable of facing competition

from anywhere in the world. It is time BAs gave centre stage to:

 Shared learning

 Standards of conduct and

 Support service platforms

Notes:

1 R Champaklakshmi, Trade Ideology and Urbanization: South India 300 Bs To Ad 1300, OUP India,

1999.

2 Anirudh Kanisetti, Lords of the Deccan: Southern India from the Chalukyas to the Cholas,

Juggernaut, 2022.

3 Sheilagh Ogilvie, Institutions and European Trade: Merchant Guilds, 1000-1800, Cambridge

University Press, 2011.

4 Visty Banaji, Fairness is Fundamental, NHRD Network Journal, Volume 7 Issue 4, October 2014,

5 Visty Banaji, A hippocratic oath for HR, People Matters, 31 October 2019,

(https://www.peoplematters.in/article/life-at-work/a-hippocratic-oath-for-hr-23589).

6 Visty Banaji, The (funny) business of HR awards, People Matters, 18 February 2020,

(https://www.peoplematters.in/blog/strategic-hr/the-funny-business-of-hr-awards-24718).

7 Joost Rietveld and Melissa Schilling, Platform Competition – A Systematic and Interdisciplinary

Review of the Literature, Journal of Management, Vol. 47 No. 6, July 2021.

8 Piper Thomson, The Complete History of ERP: Its Rise to a Powerful Solution, 23 January 2020,

(https://www.g2.com/articles/history-of-erp).

9 Adam Alter, Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked,

Penguin, 2017.

10 Visty Banaji, The unforgiving minute, People Matters, 15 September 2021,

(https://www.peoplematters.in/article/life-at-work/the-unforgiving-minute-30874).

11 Visty Banaji, The GIGantic opportunity of the shrinking corporation, People Matters, 28 May 2019,

(https://www.peoplematters.in/article/life-at-work/the-gigantic-opportunity-of-the-shrinking-

corporation-21828).

12 Visty Banaji, Corporate India's mental health crisis, People Matters, 15 January 2020,

(https://www.peoplematters.in/article/wellness/corporate-indias-mental-health-crisis-24337).