Exit, Voice, and Loyalty

Exit, Voice, and Loyalty
Author Albert O. Hirschman
Publication date
 1970
Pages 162
ISBN 0-674-27660-4

Exit, Voice, and Loyalty (1970) is a treatise written by Albert O. Hirschman. The work hinges on a conceptual ultimatum that confronts consumers in the face of deteriorating quality of goods: either “exit” or “voice”.

Summary

The basic concept is as follows: members of an organization, whether a business, a nation or any other form of human grouping, have essentially two possible responses when they perceive that the organization is demonstrating a decrease in quality or benefit to the member: they can exit (withdraw from the relationship); or, they can voice (attempt to repair or improve the relationship through communication of the complaint, grievance or proposal for change). For example, the citizens of a country may respond to increasing political repression in two ways: emigrate or protest. Similarly, employees can choose to quit their unpleasant job, or express their concerns in an effort to improve the situation. Disgruntled customers ask for the manager, or they choose to shop elsewhere.

The implications of the above concept can be enormous and can allow for a new perspective on daily examples of social interaction. Exit and voice themselves represent a union between economical and political action. Exit is associated with Adam Smith's invisible hand, in which buyers and sellers are free to move silently through the market, constantly forming and destroying relationships. Voice, on the other hand, is by nature political and at times confrontational.

While both exit and voice can be used to measure a decline in an organization, voice is by nature more informative in that it also provides reasons for the decline. Exit, taken alone, only provides the warning sign of decline. Exit and voice also interact in unique and sometimes unexpected ways; by providing greater opportunity for feedback and criticism, exit can be reduced; conversely, stifling of dissent leads to increased pressure for members of the organization to use the only other means available to express discontent, departure. The general principle, therefore, is that the greater the availability of exit, the less likely voice will be used. However, the interplay of loyalty can affect the cost-benefit analysis of whether to use exit or voice. Where there is loyalty to the organization (as evidenced by strong patriotism politically, or brand loyalty for consumers), exit may be reduced, especially where options to exit are not so appealing (small job market, political or financial hurdles to emigration or moving). Loyal members become especially devoted to the organization's success when their voice will be heard and that they can reform it.

By understanding the relationship between exit and voice, and the interplay that loyalty has with these choices, organizations can craft the means to better address their members' concerns and issues, and thereby effect improvement. Failure to understand these competing pressures can lead to organizational decline and possible failure.

Applying the theory to membership organizations

Membership organizations, whether they be professional, community-based or business-oriented, face the perpetual challenge of knowing how engaged members are; how likely they are to remain members; and when they might cease to be members. Exit, Voice and Loyalty can be observed, reviewed and addressed as a matter of course, and in a learning organization, can result in reduced member "churn" and increased growth in member satisfaction, loyalty, referrals and growth. This usually entails some sort of survey efforts, social media inquiries, polling and individual interviews and/or group to maintain the necessary information for the organization to adapt to its members' needs.

Applying the theory to emigration

A key application of Hirschman's scheme of exit, voice and loyalty has been emigration. Drawing on the analogy of discontent consumers buying elsewhere, “exit” translated into leaving a country and migrating to a different nation-state, while “voice” described the option of articulating discontent, which as Hirschman (1970: 16) noted, “can be graduated, all the way from faint grumbling to violent protest”. Hirschman modeled these options as mutually exclusive and postulated a seesaw mechanism: the easier available the exit option, the lower the likelihood of voice. For rulers, emigration served as a safety-valve, by which the discontent renounced on their possibility to articulate protest. “Latin American powerholders have long encouraged their political enemies and potential critics to remove themselves from the scene through voluntary exile. The right of asylum, so generously practiced by all Latin American republics, could almost be considered as a ‘conspiracy in restraint of voice’.” (Hirschman 1970: 60f.) However, not always did "exit subvert voice", as Hirschman himself acknowledged in a 1993 article:[1] In 1989, in the GDR it was the escalating dynamic of out-migration that led those who wanted to stay to take to the streets to demand change. Exit triggered voice, and both worked in tandem.

Moreover, Hirschman's scheme assumes a model of nation-states as a jigsaw puzzle of clearly delimited “containers”, and migration as the process of unidirectionally moving from one container to another. The emergence of transnational migration diagnosed since the 1990s has challenged this assumption. As emigrants increasingly maintain strong social ties (loyalty) to their country of origin, including a claim to have a say in its public affairs (voice) - Hoffmann (2010)[2] argues- in transnational migration exit, voice and loyalty are no longer exclusive options; the nature of migrant transnationalism is defined precisely by the overlapping and simultaneity of these categories.

Special problems

Hirschman provides an example simplified here: Consider a publicly funded school where the quality of education declined. Quality-conscious parents would increasingly remove their child to a privately funded school, given that they are relatively indifferent to the cost. A price-conscious parent, being similarly indifferent to the quality, would not notice that decline. At some point then, the school would know there was a problem, having been abandoned, but have no parents left who cared sufficiently about the quality to point to exactly where it had failed, locking the school into that state. Hirschman notes that in this and similar fields ("connoisseur goods"), a "tight monopoly could be preferable", preventing parents from moving. This would be better for the school, if not the child, by keeping an active voice among the parents.

Applying the theory to political situations

Exit need not be physical, but can be mental or emotional. For example, in totalitarian countries, many could not physically exit the country, but did not want to participate in the system either. In these cases, citizens could be said to exit from civic or political participation, as they were neither loyal to the government nor were they willing to voice their dissatisfaction because doing so could lead to imprisonment, exile, or even death. Many thus mentally and emotionally exited their countries for the duration of a repressive regime they did not agree with but felt they could not fight or topple. The consequences of this exit can sometimes provide an explanation for why voter turnout is often low in countries where free elections are being held for the first time in years (or ever).

Applying the theory to employment relations

Hirschman’s exit, voice, and loyalty analytical framework has underpinned important research within employment relations. Hirschman’s insights that exit and voice are often, but not always, mutually exclusive and that loyalty will moderate a consumer’s chances of voicing any misgivings (Hirschman 1970: 77-78) are useful in explaining the link between workplace policies and outcomes.

There are different forms of employee voice, including individual voice, such as employee surveys, and collective voice, typically unions, as well as combinations of them. Contrasting forms of voice have different degrees of power (Allen 2014).[3] An assumption that consumers have power underpins Hirschman's original framework. For instance, Hirschman (1970: 4, 40-1) argued that, in most instances, once consumers or ‘customer-members’ of an organization had voiced their concerns, decision makers within the selling organization could be expected to search for the sources of those misgivings and attempt to remedy the situation.

In comparison to competitive consumer markets, the employment relationship requires a different approach to power as managers have more authority than lower level employees (Hamilton and Feenstra 1997),[4] leading to important implications for how exit, voice, and loyalty are treated within the employment context. For instance, in sharp contrast to Hirschman’s (1970: 77) argument that, where exit is possible, voice is likely to be determined by ‘the extent to which customer-members are willing to trade off the certainty of exit against the uncertainties of an improvement in a deteriorated product’, within the context of employment, how willing employees are to trade off the uncertainties and costs of exit against the certainties of staying will strongly influence employees’ decisions to quit as well as to voice their opinions (Allen 2014). Similarly, loyalty and voice are not positively related in the employment context. In Hirschman’s original formulation, consumers with higher levels of loyalty are more likely to voice their preferences to the selling organization rather than stop buying a product or service (exit). However, employees who voice their concerns may be seen as disloyal or as a disruptive influence by managers (Upchurch et al, 1996),[5] leading loyal employees to remain silent. For this and other reasons, a concept of ‘neglect’ needs to supplement Hirschman’s exit, voice, and loyalty framework within the employment context (Donaghey et al. 2011;[6] Farrell 1983[7]).

Editions

See also

References

  1. ↑ Hirschman, Albert O. (1993): Exit, Voice, and the Fate of the German Democratic Republic: An Essay in Conceptual History, in: World Politics, 45(2): 173-202
  2. ↑ Hoffmann, Bert (2010): Bringing Hirschman Back In: “Exit”, “Voice”, and “Loyalty” in the Politics of Transnational Migration; in: The Latin Americanist, 54, 2010, 2, 57-73
  3. ↑ Allen, M. M. C. (2014), ‘Hirschman and Voice’, in A. Wilkinson, J. Donaghey, T. Dundon and R. Freeman (eds), The Handbook of Research on Employee Voice, Cheltenham and New York: Edward Elgar Press, pp. 36-51. DOI: 10.4337/9780857939272.00010
  4. ↑ Hamilton, G.G. and Feenstra, R.C. (1997) ‘Varieties of Hierarchies and Markets: An Introduction’, in M. Orru, N.W. Biggart and G.G. Hamilton (eds) The Economic Organization of East Asian Capitalism, Thousand Oaks, CA: Sage, pp. 55-96.
  5. ↑ Upchurch, M., M. Richardson, Tailby, S. Danford, A. and Stewart, P. (2006) ‘Employee Representation and Partnership in the Non-Union Sector: a Paradox of Intention?’ Human Resource Management Journal, 16(4): 393-410.
  6. ↑ Donaghey, J., Cullinane, N., Dundon, T. and Wilkinson, A. (2011), ‘Reconceptualising Employee Silence: Problems and Prognosis’, Work, Employment and Society, 25(1): 51-67.
  7. ↑ Farrell, D. (1983) ‘Exit, Voice, Loyalty, and Neglect as Responses to Job Dissatisfaction: a Multidimensional Scaling Study’, The Academy of Management Journal, 26(4): 596-607.
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