Exit, Voice, and Loyalty
Encyclopedia
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”.
In many regards, the treatise is a polemical piece; Hirschman uses his analysis of “exit” and “voice” in order to strike at the foundational assumptions of liberalism as supported by Friedrich Hayek
and Milton Friedman
.
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).
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.
, 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 party nor were they willing to voice their dissatisfaction (except for noted times of dissent, e.g., 1956 in Hungary, 1968 in Prague
and the Revolutions of 1989
) 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).
Albert O. Hirschman
Albert Otto Hirschman is an influential economist who has authored several books on political economy and political ideology. His first major contribution was in the area of development economics. Here he emphasized the need for unbalanced growth...
. The work hinges on a conceptual ultimatum that confronts consumers in the face of deteriorating quality of goods: either “exit” or “voice”.
In many regards, the treatise is a polemical piece; Hirschman uses his analysis of “exit” and “voice” in order to strike at the foundational assumptions of liberalism as supported by Friedrich Hayek
Friedrich Hayek
Friedrich August Hayek CH , born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought...
and Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
.
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 repressionPolitical repression
Political repression is the persecution of an individual or group for political reasons, particularly for the purpose of restricting or preventing their ability to take political life of society....
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
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
's invisible hand
Invisible hand
In economics, invisible hand or invisible hand of the market is the term economists use to describe the self-regulating nature of the marketplace. This is a metaphor first coined by the economist Adam Smith...
, in which buyers and sellers are free to move silently through the market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
, 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
Feedback
Feedback describes the situation when output from an event or phenomenon in the past will influence an occurrence or occurrences of the same Feedback describes the situation when output from (or information about the result of) an event or phenomenon in the past will influence an occurrence or...
and criticism
Criticism
Criticism is the judgement of the merits and faults of the work or actions of an individual or group by another . To criticize does not necessarily imply to find fault, but the word is often taken to mean the simple expression of an objection against prejudice, or a disapproval.Another meaning of...
, 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
Loyalty
Loyalty is faithfulness or a devotion to a person, country, group, or cause There are many aspects to...
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
Patriotism
Patriotism is a devotion to one's country, excluding differences caused by the dependencies of the term's meaning upon context, geography and philosophy...
politically, or brand loyalty
Brand loyalty
The American Marketing Association defines brand loyalty as:# The situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category .# The degree to which a consumer consistently...
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).
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 to maintain the necessary information for the organization to adapt to its members' needs.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, under communismCommunism
Communism is a social, political and economic ideology that aims at the establishment of a classless, moneyless, revolutionary and stateless socialist society structured upon common ownership of the means of production...
, 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 party nor were they willing to voice their dissatisfaction (except for noted times of dissent, e.g., 1956 in Hungary, 1968 in Prague
Prague Spring
The Prague Spring was a period of political liberalization in Czechoslovakia during the era of its domination by the Soviet Union after World War II...
and the Revolutions of 1989
Revolutions of 1989
The Revolutions of 1989 were the revolutions which overthrew the communist regimes in various Central and Eastern European countries.The events began in Poland in 1989, and continued in Hungary, East Germany, Bulgaria, Czechoslovakia and...
) 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).