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 economic 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.

Those in the military are sometimes faced with things that they might not morally agree with. They have a sense of "patriotic obligation" to their country, even if they feel the war they are fighting is "unjust." This patriotic obligation stems from their loyalty to their government and country. They feel that they need to do as their told in order to be a loyal citizen.

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: 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) 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.

According to Dako-gyeke 2016, Ghana students intended to migrate for a chance at an overall better quality of life, more career options, and a possibility of continuing their education. These students hope to ‘exit’ their current situation due to their lack of resources, lack of income, or lack of job opportunities. They are ‘withdrawing their relationship’ with their current community/home country to try and prosper somewhere new.

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.

Research is limited on whether exiting is a strategy for those who hold powerful positions. Holbein 2016. In China, the middle-class people did not voice their opinions for political change, and instead used an approach called "remonstrations." They instead pledge their loyalty and blame the lower level officials.

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).

There was a point in time when women were not able to voice their political opinion. Their ‘voice’ was shut down because they were not able to vote or take part in political positions. Interjurisdictional competition played a role in helping women with property rights where they would be able to seek education, occupations, and investments. Lemke 2016. Voting can be considered a type of voice for citizens. Their vote can affect who has power in political positions. When a government is showing signs of downfall, people may use both voice and exit strategies. Exiting seems to be a stronger strategy when it comes to democratic accountability. High numbers of exiting can be detrimental for government officials. It is shown as a sign of incompetency, and those officials are less likely to be re elected. Exiting can have crucial impact on government officials.

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). 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), 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), 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; Farrell 1983).

According to Choi & Chung 2016 some feel as though the competent wages given in teacher unions are responsible for fewer turnovers. Unions provide a platform for their employees to voice their concerns, and in turn, employees are able to voice how they feel rather than try to retreat from or ‘exit’ their union. The findings show, that the schools with greater policies for voicing concerns have lower rates of turnover. The article used a 2014 Bureau of Labor report to find that 4.5 million of local government unions are teacher unions. With that number being so large, this information would be useful to those who want insight on how to keep their union workers happy. This information would also be useful for those looking for better grievance policies. According to Gunnarsdóttir, 2016, middle managers in welfare positions are feeling emotional tension in their duties from having to receive and enforce organizational change. This leaves them susceptible to having their loyalty doubted. Due to this they feel like they aren’t able to ‘voice’ their concerns. They were able to execute strategies that evenly dispersed opposing outlooks while remaining autonomous during a radical change. O'Meara, Bennett & Neihaus. 2016, discuss what might "pull" staff members away from their job, one example being better wages. They also discuss what might "push" them away from their job, one example being that they are unhappy with their current work circumstances. These faculty members are leaving for a number of reasons. Money and uncomfortable working circumstances are examples. Some might not be able to tolerate new leadership, or changes in the way they are expected to work. Saifullah & Shahida 2016 suggests that both professional respect and employer-employee relation influenced the employees’ loyalty, but the effect of employer-employee was larger. Having a good relationship with employees has real reactions on their loyalty. To conclude, voice mechanisms have influence on turnover. New York State teacher unions were used for this specific data. Some feel as though the competent wages given in teacher unions are responsible for fewer turnovers. Unions provide a platform for their employees to voice their concerns, and in turn, employees are able to voice how they feel rather than try to retreat from or ‘exit’ their union. The findings show, that the schools with greater policies for voicing concerns have lower rates of turnover. Choi, Yujin and Il H. Chung. 2016

Editions

• Albert O. Hirschman. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge, MA: Harvard University Press. ISBN 0-674-27660-4 (paper).

See also

• Dollar voting
• Exit-Voice-Loyalty-Neglect Model
• Foot voting
• The Other Invisible Hand

References

• Sethi, Rajiv. 2010. "The Astounding Voice of Albert O. Hirschman."

Choi, Yujin and Il H. Chung. 2016. "Voice Effects of Public Sector Unions on Turnover: Evidence from Teacher Contracts." Public Personnel Management 45(2):213-233 (http://search.proquest.com/docview/1796599679). doi:10.1177/0091026016645063

Dako-gyeke, Mavis. 2016. "Exploring the Migration Intentions of Ghanaian Youth: A Qualitative Study." Journal of International Migration and Integration 17(3):723-744 (http://search.proquest.com/docview/1811200507). doi:10.1007/s12134-015-0435-z

Gunnarsdóttir, Hulda M. 2016. "Autonomy and Emotion Management: Middle Managers in Welfare Professions during Radical Organizational Change." Nordic Journal of Working Life Studies 6:87-108 (http://search.proquest.com/docview/1776186343).

O'Meara, KerryAnn, Jessica C. Bennett and Elizabeth Neihaus. 2016. "Left Unsaid: The Role of Work Expectations and Psychological Contracts in Faculty Careers and Departure." Review of Higher Education 39(2):269-297 (http://search.proquest.com/docview/1749657149).

Saifullah, Aamir and Shahida Sajjad. 2016. "Intra Organizational Factors that Impact Employee's Loyalty." Journal of Business Strategies 10(1):129-146 (http://search.proquest.com/docview/1815438193).