Monday, October 05, 2015

Exit and Voice in Higher Education

Rajiv Sethi, Professor of Economics at Columbia University, calls Albert Hirschman's book, Exit, Voice and Loyalty Responses to Decline in Firms, Organizations and States, one of the finest books ever written by an economist. However, while by that description this short treatise stands alongside Keynes General Theory or Adam Smiths The Wealth of Nations, it has none of the glamour and recognition of these peers. Yet, in some ways, Hirschman's work has a timeless quality about it - its topic and its exposition appears strangely contemporary despite the frantic transformation of our world and our thinking since the book was published in 1970. 

Hirschman was dealing with an unconventional subject in Economics - decline in firms, when they do not do things well - and therefore, his work stood outside the mainstream economics. Mainstream economics, as Hirschman himself pointed out, operates on the basis of 'Consistent Rationality', which means decline of operating performance of an organisation leads to its exit from the market. As Professor Sethi quotes Hirschman

While moralists and political scientists have been much concerned with rescuing individuals from immoral behavior, societies from corruption, and governments from decay, economists have paid little attention to repairable lapses of economic actors. There are two reasons for this neglect. 

First, in economics one assumes either fully and undeviatingly rational behavior, or, at the very least, an unchanging level of rationality... In other words, economists have typically assumed that a firm that falls behind... does so "for a good reason"; the concept... of a... "repairable lapse" has been alien to their reasoning. 

The second cause of the economist's unconcern about lapses is related to the first. In the traditional model of the competitive economy, recovery from any lapse is not really essential. As one firm loses out in the struggle, its market share is taken up and its factors are hired by others... in the upshot, total resources may well be better allocated. With this picture in mind, the economist can afford to watch lapses of any one of his patients... with far greater equanimity than either the moralist who is convinced of the intrinsic worth of every one of his patients (individuals) or the political scientist whose patient (the state) is unique and irreplaceable. 

Hirschman pointed out that this neglect is not justified, as we have an economy which has consistently produced surpluses since the Second World War - an observation which is even more true today than it was when Hirschman was writing - and the existence of the surplus points to the existence of slack, by definition, at any point of time. This means sub-par performers can exist, and the responses to the sub-optimal is worth studying.

Now, my object here is not to reproduce Professor Sethi's arguments, or that of Hirschman, but rather look at it from another angle - Higher Education! Hirschman's central thesis was that members of a community (or customers for a company) facing sub-optimal service levels have essentially two choices - either they leave (exit) or they protest (voice). In Hirschman's scheme, these two are related - people protest when they feel they think they can change things and there is enough avenues to protest. But, if they are not listened to, or voice is discouraged, they exit - which may mean moving to another firm or, in case of nations, emigrating.

This has enormous relevance for management, as we can see - in this schema - a consumer has more options than to silently leave. In fact, that was one of Hirschman's key point, that by effectively encouraging voice, an organisation can reduce exits - and increase loyalty. This is a rather radical departure from conventional economics where the exit is the only possible consequence. In this scheme, there is an overlap of the economic and the political, and, as one could paraphrase Hirschman to say, encouraging the political can salvage the economic prospects of a firm.

There could be interesting outcomes if we apply this scheme to Higher Education, where the opposite - that students will always resort to Voice - is taken for granted. Higher Education institutions have, over many years, developed cultures of student voice, and there are clear institutions and rituals to enable this to happen. Exit is not a reality Higher Education sector readily accepts - one leaves school at great cost and long term consequence - and often there is no formal provision of exit from the Higher Education system.

Hirschman explored exit and voice in the context of nations, and how people choose to immigrate when a repressive regime takes away the voice. But, the current trend in Higher Education, when, uneasy with political participation of students, different regimes use monetisation and vocationalisation of Higher Education to limit student voice, opens up the possibility of a different kind of exit - of the passive exit of a consumer! If the college is a place one goes to for a job, then one just leaves when things are not going well, just as the employees of a commercial organisation or customers of a shop would leave. However, the Exit from Higher Education is an undefined territory, something that requires as much attention as incident of Exit and Voice has been given in Business Management in recent years.
Indeed, the very practical implication of all this is how to create loyalty, and the road to loyalty lies in converting exit to voice. In everyday terms, if I care for something, I shall try to fix it. Otherwise, I would just leave. The challenge of monetised and vocationalised Higher Ed is exactly that - how to make students a participant, rather than a passive consumer. Because, if we can not, we would have too many substandard colleges survive because of the surplus demand and regulatory roadblocks on new entrants, and create a bigger and bigger mess for ourselves.

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