Decision-making influences of trade association membership

Trade associations affect a significant portion of the U.S. economy and are present in almost every industry. The central question of this dissertation is---How do trade associations affect the firms that join them? In exploring this question I rely the behavioral theory of the firm and focus on three aspects of this theory: reference groups, standard operating procedures, and search procedures. I also rely on the distributed cognition perspective. According to this perspective cognition does not occur exclusively in the mind but in the interaction between the mind and the environment. The distributed cognition perspective extends the more traditional information processing perspective by emphasizing the importance of external influences on decision-making. I call these external influences "scaffolding." Building on this behavior model of trade association activity, I develop a set of hypotheses about how one particular trade association will affect the firms that join it. The trade association I have chosen to study is the Semiconductor Equipment Manufacturers International (SEMI), a trade association with about 2,500 members around the world. The primary difficulty in assessing the effect of joining a trade association is establishing a legitimate counterfactual. What would have happened to the firm if it had not joined the trade association? I use the propensity score matching method to estimate the "treatment effect" that SEMI has on the firms that join it. I find that joining SEMI affects how firms perceive and process information about the industry as measured by firms' employment forecasts. This effect is larger and more statistically significant after outliers are removed. Joining SEMI affects how firms function as measured by the allocation of duties to top managers. However, contrary to expectations, SEMI membership does not appear to affect the use of job titles. Finally, joining SEMI affects firm performance, although this effect is only statistically significant after removing outliers. These results contribute to a better understanding of trade associations, managerial decision-making, and industry structure.