The work hinges on a conceptual ultimatum that confronts consumers in the face of deteriorating quality of goods and services: either exit or voice.
The framework presented in the book has been applied to topics such as protest movements, migration, political parties, and interest groups, as well as to personal relationships.
[1] The Exit, Voice and Loyalty model states that 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).
Similarly, employees can choose to quit their unpleasant job, or express their concerns in an effort to improve the situation.
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.
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.
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.
Particularly when examining dispute resolution in contexts with limited exit opportunities, increased entry costs make workers' voice more likely.
"Latin American powerholders have long encouraged their political enemies and potential critics to remove themselves from the scene through voluntary exile.
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 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.
[8] Hirschman provides an example simplified here: Consider a publicly funded school where the quality of education declined.
Hirschman notes that in this and similar cases ("connoisseur goods"), a "tight monopoly could be preferable", preventing exit of quality-conscious consumers.
For the case of increased taxation by the state, examples of credible exit threats include having the economic resources to flee or the ability to easily evade taxes.
When both of these criteria are met, the model would predict that the state would not pursue a policy that would encourage citizens to exit or to use voice.
[5]: 92 In the case of the newly-created Chinese middle class, which is mostly employed by the state, loyalty to the authoritarian government is very high.
Their loyalty is bought through the difficulty in being admitted to their positions of relative financial prosperity and because emigration from China would result in losing significant status and income.
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).
Gunnarsdóttir described a situation in which middle managers on welfare professions were able to maintain effective autonomy and their perceived sense of loyalty by dispersing opposing outlooks among the group.