Hirschman says he got the idea for Exit, Voice, and Loyalty when studying the failure of the Nigerian railroad system to improve quality despite the availability of trucking as a substitute for long-range shipping. Conventional wisdom among economists at the time was that the quality of a good would suffer when it was provisioned by a monopoly. But why would a business that faced healthy competition not undergo the management changes needed to improve quality?
Hirschman’s answer is that because the trucking option was so readily available as an alternative, there wasn’t a need for consumers to develop their capacity for voice. The railroads weren’t hearing the complaints about their service, they were just seeing a decline in use as their customers exited. Meanwhile, because it was a monopoly, loss in revenue wasn’t “of utmost gravity” to the railway managers either.
The upshot of this is that it’s only when customers are locked in that voice plays a critical role in the recuperation mechanism.
This is interesting for me because I’m interested in the role of lock-in in software development. In particular, one argument made in favor of open source software is that because it is not technology held by a single firm, users of the software are not locked-in. Their switching costs are reduced, making the market more liquid and, in theory favorable.
You can contrast this with proprietary enterprise software, where vendor lock-in is a principle part of the business model as this establishes the “installed base” and customer support armies are necessary for managing disgruntled customer voice. Or, in the case of social media such as Facebook, network effects create a kind of perceived consumer lock-in and consumer voice gets articulated by everybody from Twitter activists to journalists to high-profile academics.
As much as it pains me to admit it, this is one good explanation for why the user interfaces of a lot of open source software projects are so bad specifically if you combine this mechanism with the idea that user-centered design is important for user interfaces. Open source projects generally make it easy to complain about the software. If they know what they are doing at all, they make it clear how to engage the developers as a user. There is a kind of rumor out there that open source developers are unfriendly towards users and this is perhaps true when users are used to the kind of customer support that’s available on a product for which there is customer lock-in. It’s precisely this difference between exit culture and voice culture, driven by the fundamental economics of the industry, that creates this perception. Enterprise open source business models (I’m thinking about models like the Pentaho ‘beekeeper’) theoretically provide a corrective to this by being an intermediary between consumer voice and developer exit.
A testable hypothesis is whether and to what extent a software project’s responsiveness to tickets scales with the number of downstream dependent projects. In software development, technical architecture is a reasonable proxy for industrial organization. A widely used project has network effects that increasing switching costs for its downstream users. How do exit and voice work in this context?