310. A framework for Fair Trade: Exit, voice and loyalty
I have moved four times since I finished graduate school more than 10 years ago. Precious few of my textbooks have traveled with me through all those long-distance moves. One that has is a slender, dog-eared volume that advances in relatively few pages an exceptionally robust conceptual framework: Albert Hirschman’s Exit, Voice and Loyalty. Applying Hirschman’s thinking to the brawl over Fair Trade coffee may help make sense of all the tumult.
- Exit and Voice
Hirschman’s elegant argument outlines and explores the two basic options we face when the institutions that serve us fail to meet our needs: exit or voice. When the consumer products we use fail to keep pace with our evolving preferences, we can switch to another brand (exit), or communicate with the company that sells them to make our preferences known in the hope it will be responsive to our voice. If a government enacts a law we find reprehensible, we can emigrate (exit) or raise our voices in protest. The options are not mutually exclusive, and indeed may be sequential: I may try to voice my dissent but reserve the right to exit if my loyalty is worn thin by continued unresponsiveness to my demands.
Hirschman further suggests that a third variable – loyalty – will shape to an important extent how we react to situations like the ones mentioned above. Steve Jobs fans are known for their fierce loyalty to Apple – a consideration that might compel them to send email complaints rather than switch to a PC. If the government that passes the law is one whose ascent to office you supported, you might opt to raise your voice in protest before packing your bags for another country. Alternatively, if you are a first-time Mac user or a voter who opposed the current government from the start, the software glitch or the odious law might be enough for you to opt out.
I have always found the dynamic relationship between voice and loyalty to be a particularly interesting aspect of Hirschman’s construct. A customer or citizen may choose voice over exit because she is loyal; but she may be loyal because she believes her voice is heard. When she chooses voice over exit and is heard again, it can increase her loyalty, influencing the choices she makes in the future.
- Exit, Voice, Loyalty and “The Brawl over Fair Trade Coffee”
A testament to the power of Hirschman’s framework is its applicability to a wide range of contexts. It seems to me that it is helpfully applied to recent exits in Fair Trade – both FTUSA’s withdrawal from FLO and the migration of FTUSA licensees to FT Canada. In both cases, the actors who chose to exit perceived a decline in the services they received, a challenge to their principles, or both.
FTUSA made it very clear that it did not feel well-served by FLO at the time it decided to break with Bonn: FTUSA suggested here that it wasn’t getting enough return on the investment of its membership dues, and was frustrated that FLO wasn’t moving to embrace rule changes that would make estates and independent smallholder farmers eligible to enter markets for coffee and other smallholder-only crops. FTUSA raised its voice within FLO and exited only after it was convinced it would be unable to achieve the changes it sought.
It could be that this decision had little to do with loyalty, and was guided by the adage that ran through the Godfather trilogy: “It’s not personal. It’s business.” So I will resist the temptation to speculate about what role loyalty may have played in those decisions. But as FLO’s U.S. affiliate gets off the ground and U.S. licensees face the choice between exit and voice, I will keep in mind Hirschman’s argument about loyalty.