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Costs and Revenues of Organised Interests – A Framework for Measuring Interest Group Efficiency in Policy-Making Processes

Frank Wittmann
FernUniversität in Hagen
Frank Wittmann
FernUniversität in Hagen
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Abstract

Due to an increasing number of lobby groups, organised interests are striving for political influence on a highly competitive market. In this context, interest groups have developed from idealistically motivated grass-root associations into profit-oriented, hierarchical organisations. Along with the economisation and professionalisation of interest groups, the question how to spend resources efficiently became central. Consequently, interest group action has mainly been driven by rational interests prioritising efficiency. Thus, the problem how efficiency can be measured arises. The aim of this paper is to propose a framework for measuring interest group efficiency. On the basis of a resource-oriented approach to interest intermediation and by means of production theory, the concept of economic efficiency will be applied to the field of political interest representation. Efficiency is understood as the ratio of an interest group’s effective influence and the resources spent. Thus, the paper focuses on three questions: (1) By which means are organised interests gaining influence in policy-making processes, (2) How efficient are they and (3) What conclusions can be drawn from the findings to come to the core of their logic of action? Based on the assumption that interest groups are rational actors seeking to maximise their profit, the profit function provides useful information on interest group action. In economical terms, profit is defined as revenues minus costs. In order to quantify profit, a testable cost theory must therefore also be applied to the process of interest representation. Hence, by means of the network analysis, the paper operationalises costs and revenues of organised interests. Furthermore, it provides an insight into their logic of action in terms of gaining influence.