“Hirshman aims to delineate people’s options when they are no longer satisfied with their employer, organization, or country. The two key options are exit and voice:
There is a continuum of voice, ranging from faint grumbling to violent rioting. Rather than just switching over to support the competition, dissatisfied members of an organization can “kick up a fuss” in an attempt to force the organization to respond.
If, in response to decline, discontented members use voice rather than exit, then voice will become more effective. But only up to a point. However, voice, like exit, can be overdone. This is less true in the relationship between businesses and customers.
But in the realm of politics—where voice is most likely to be used—there can be negative returns to “too much” voice (e.g., violent protests tend to reduce support for social movements).
For exit to work as a mechanism of recuperation from decline, it is ideal for an organization to have a mixture of “alert” and “inert” members. The exit of alert members provides feedback to the firm — “People are leaving, maybe we should figure out why.”
Inert members provide the firm with time and financial cushion for the recuperation to take place. In other words, it’s best if most members are unaware of, or unperturbed by, decay.
If every person was a determined comparison shopper, instability would inevitably result. Organizations would lose the chance to recover from their lapses.
…People’s decisions to exit are often determined by the effectiveness of voice.
If organization members believe that voice works, then they’ll postpone exit. But voice relies on the threat of exit.
It’s important to understand that if you use voice, you can always exit later. But if you use exit, you’ve usually lost the opportunity to use voice—you’re no longer a member, so the organization no longer cares what you think.
So in some situations, exit is a last resort only after voice has failed.
…Exit can also accelerate decline. This is because, oftentimes, those who exit are the most quality-conscious and resourceful members.”
Whilst he goes on to elaborate on Exit and Voice, his take on Loyalty, something that can suppress exit and encourage voice, is interesting:
“Loyalty is often at its most functional when it looks most irrational. Loyalty means strong attachment to an organization that doesn’t deserve it, because an equally appealing or superior alternative is available.
Put differently, when an organization is obviously superior, it doesn’t need loyalty to keep its members. Loyalty is only needed when the organization has serious competitors.
Intriguingly (remember, this book was released in 1970), Hirschman suggests that as countries start to resemble one another because of advances in technology and communication, the dangers of excessive and premature exit will arise.
Developments in technology have risen in tandem with a decline in loyalty. I would imagine the typical American today is less loyal to their country than in Hirschman’s day.”
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