Hirschman and Olson
In this article, I briefly mentioned a problem that Hirschman had overlooked with respect to the use of voice in improving school quality. Upon starting to read Olson, two more occur to me.
The first has little to do with Olson. It has to do with Hirschman's oversight. In Exit, Voice and Loyalty, he makes the case that as quality declines, consumers differ in their responses to that decline. The work overall is brilliant and addresses a set of issues that economists have inadequately treated: the mechanisms by which consumers respond to declines and by which those responses affect the declining organization. But it seems to me that Hirschman similarly has overlooked a key point: how does decline occur in the first place? Is it due to a set of decisions carefully crafted and acted upon, or to outside factors, or to gradual shifts in the organization's attention?
The implications are serious. If, for example, the organization has decided to take a new direction, those decisions could be reversed when the customers' exercise of exit or voice has the intended effect; the more explicit the link, the easier to reverse course. On the other hand, if the decline is due to outside factors, then management may not know how to respond: there is no decision to reverse, and the outside factors could be causing the problem in a non-obvious way. For example, it could be that society itself is creating more difficult conditions in which to conduct education, with less emphasis on study and discipline and more emphasis on distractions. Or the quality decline could be a perceived decline in comparison to other, similar products, in which case the organization needs to research the underlying comparison and formulate a responding change.
Finally, the decline in quality may be due to a shift in the organization's attention (their mission) toward, for example, greater employee morale rather than toward greater productive outcome. If that is the case, it could be difficult to reverse because the shift was probably determined by other real problems such as high turnover, increasing costs of retention, and increasing costs of recruitment. Reversing course here is in fact a requirement for more resources so that, in the common example, both more guns and more butter be produced.
Quality changes - real or perceived - that result from poor decisions, new environments, and new organizational motivations all require a different set of management responses to the resulting expressions of dissatisfaction. I suggest that exit and voice may interact with each of them with differential success. For example, voice would seem to interact very simply with poor decisions, possibly even preemptively. On the other hand, voice may inform decision-making in the new environment problem, but exit would inform experimental entrepreneurs searching for a better answer. Neither exit nor voice would seem to help in the third case (mission shift), since the organization might discount the voice as uninformed about the true nature of the problem, while exit would only serve to starve the organization of the "required" new resources and thwart the proof of what they have already decided is the correct answer. Please note that this list of possible causes and responses is not exhaustive or even representative or realistic. These were merely the first three I thought of; a true set of causes for decline might be much larger, but perhaps only a few dominate the history of failure.
The second problem has much to do with Olson. In the introductory material to The Logic of Collective Action, Olson makes the case that small groups are more likely to achieve the desired outcomes, and that groups will tend to sustain costs until the outcome desired by the participant with the largest share is achieved. Hence, group members will tend to exploit the largest member. This seems to support Hirschman, since it supports his thesis that the rest of the community will rely on the parents with the greatest interest in quality to lobby for the restoration of quality. However, the problem is that once that person gets what they want, the group will tend to fall apart because that person will then stop contributing. We might find, for example, that one parent insists on getting AP classes in the high school, and stops lobbying when they get them. That works great for that person, but what does it do for parents with special needs children? The school, with limited resources, cannot choose both without an increase in resources, but the most effective lobbyist has now exited just as effectively as if they had gone to another school. If they had *actually* gone to another school, the additional resources would now be available for the parents of the special needs student - oops!
The first has little to do with Olson. It has to do with Hirschman's oversight. In Exit, Voice and Loyalty, he makes the case that as quality declines, consumers differ in their responses to that decline. The work overall is brilliant and addresses a set of issues that economists have inadequately treated: the mechanisms by which consumers respond to declines and by which those responses affect the declining organization. But it seems to me that Hirschman similarly has overlooked a key point: how does decline occur in the first place? Is it due to a set of decisions carefully crafted and acted upon, or to outside factors, or to gradual shifts in the organization's attention?
The implications are serious. If, for example, the organization has decided to take a new direction, those decisions could be reversed when the customers' exercise of exit or voice has the intended effect; the more explicit the link, the easier to reverse course. On the other hand, if the decline is due to outside factors, then management may not know how to respond: there is no decision to reverse, and the outside factors could be causing the problem in a non-obvious way. For example, it could be that society itself is creating more difficult conditions in which to conduct education, with less emphasis on study and discipline and more emphasis on distractions. Or the quality decline could be a perceived decline in comparison to other, similar products, in which case the organization needs to research the underlying comparison and formulate a responding change.
Finally, the decline in quality may be due to a shift in the organization's attention (their mission) toward, for example, greater employee morale rather than toward greater productive outcome. If that is the case, it could be difficult to reverse because the shift was probably determined by other real problems such as high turnover, increasing costs of retention, and increasing costs of recruitment. Reversing course here is in fact a requirement for more resources so that, in the common example, both more guns and more butter be produced.
Quality changes - real or perceived - that result from poor decisions, new environments, and new organizational motivations all require a different set of management responses to the resulting expressions of dissatisfaction. I suggest that exit and voice may interact with each of them with differential success. For example, voice would seem to interact very simply with poor decisions, possibly even preemptively. On the other hand, voice may inform decision-making in the new environment problem, but exit would inform experimental entrepreneurs searching for a better answer. Neither exit nor voice would seem to help in the third case (mission shift), since the organization might discount the voice as uninformed about the true nature of the problem, while exit would only serve to starve the organization of the "required" new resources and thwart the proof of what they have already decided is the correct answer. Please note that this list of possible causes and responses is not exhaustive or even representative or realistic. These were merely the first three I thought of; a true set of causes for decline might be much larger, but perhaps only a few dominate the history of failure.
The second problem has much to do with Olson. In the introductory material to The Logic of Collective Action, Olson makes the case that small groups are more likely to achieve the desired outcomes, and that groups will tend to sustain costs until the outcome desired by the participant with the largest share is achieved. Hence, group members will tend to exploit the largest member. This seems to support Hirschman, since it supports his thesis that the rest of the community will rely on the parents with the greatest interest in quality to lobby for the restoration of quality. However, the problem is that once that person gets what they want, the group will tend to fall apart because that person will then stop contributing. We might find, for example, that one parent insists on getting AP classes in the high school, and stops lobbying when they get them. That works great for that person, but what does it do for parents with special needs children? The school, with limited resources, cannot choose both without an increase in resources, but the most effective lobbyist has now exited just as effectively as if they had gone to another school. If they had *actually* gone to another school, the additional resources would now be available for the parents of the special needs student - oops!
Labels: education, management, philosophy
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