ENTREPRENEURIAL EXIT RESPONSE TO DISSATISFACTION WITH PUBLIC SERVICES
| Date | 01 December 2012 |
| DOI | http://doi.org/10.1111/j.1467-9299.2011.02021.x |
| Author | ANAT GOFEN |
| Published date | 01 December 2012 |
doi: 10.1111/j.1467-9299.2011.02021.x
ENTREPRENEURIAL EXIT RESPONSE
TO DISSATISFACTION WITH PUBLIC SERVICES
ANAT GOFEN
Following Hirschman’s seminal Exit,VoiceandLoyalty, an exit response to dissatisfaction with
public services is often portrayed as a replacement of one service provider with another, depending
on the availability of alternatives. This article enriches Hirschman’s typology by conceptualising
an ‘entrepreneurial exit’ response referring to citizens who exit proactively by creating a viable
alternative themselves. The practical aspects of entrepreneurial exit are analysed based on five
manifestations: planned homebirth, homeschooling, urban self-defence groups, children with
disabilities, and claim clubs in the American West. Whereas citizens’ roles within the public
service sphere are referred to as ‘participators’, ‘customers’, and ‘co-producers’, entrepreneurial
exit indicates the entrepreneurial role citizens may play. Similar to the additional forms of exit,
entrepreneurial exit becomes meaningful if the newly introduced form of service gains social
acceptance, especially when it reflects policy non-compliance within which laymen are transformed
into providers of professional services.
‘But, in truth, there is constant improvement precisely because there is constant discontent’
(Thomas B. Macaulay, 1848)
A key to successful management of public services is to satisfy citizens’ needs, wants, and
expectations (Denhardt and Denhardt 2007; L¨
offler et al. 2008; Osborne 2010). Satisfaction
with public services reflects citizens’ perceptions of their quality of life (Michalos and
Zumbo 1999) and is linked to their trust in government (Van Ryzin 2007). Hence, measures
of citizens’ satisfaction are considered a central indicator for service quality (Kelly and
Swindell 2002; Osborne 2010), and scholars have devoted considerable attention to the
question of how citizens’ dissatisfaction is manifested in action (Tiebout 1956; Orbell and
Uno 1972; Lyons and Lowery 1989; Lyons et al. 1992; Dowding and John 1996, 2008, 2012;
James and John 2007). Citizens’ responses to dissatisfaction with public services have been
characterised mainly in terms of exit and voice, based on Albert O. Hirschman’s seminal
typology (Hirschman 1970), which distinguishes between exit, an economic action, and
voice, a political act. Loyalty was introduced to explain the inter-relationships between
exit and voice, and as a mechanism to suppress exit and encourage voice: [loyalty] ‘holds
exit at bay and activates voice’ (Hirschman 1970, p. 78; henceforth, EVL).
EVL was subsequently refined, extended, and changed. For example, later loyalty was
offered as an additional behavioural response and EVL was extended to EVLN, with
an additional response, neglect (Rusbult et al. 1982; Lyons and Lowery 1989). Whereas
loyalty and neglect reflect a passive response to dissatisfaction, voice and exit reflect an
active one: voice denotes an attempt to improve the existing service through expressions
of dissatisfaction, either on the individual level (e.g., filing a complaint with a relevant
authority) or on the collective level (e.g., joining interest groups and demonstrations),
whereas exit refers to replacing one service provider with another and thus presupposes
availability of alternatives.
Although not explicitly defined as choosing among existing alternatives, exit is by and
large discussed as such. One form of evidence for exit as dependent on existing alternatives
Anat Gofen is at the Hebrew University of Jerusalem, School of Public Policy and Government, Jerusalem, Israel.
Public Administration Vol. 90, No. 4, 2012 (1088–1106)
©2012 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden,
MA 02148, USA.
ENTREPRENEURIAL EXIT RESPONSE TO DISSATISFACTION WITH PUBLIC SERVICES 1089
are Hirschman’s (1970) examples for exit response: exit from Nigerian railroad to trucks
and buses; exit from a public school to a private school; exit from one investment
opportunity to another; exit from one neighbourhood to another; exit from one political
party to another; and exit from one union to another. Moreover, Dowding and John (2008,
2012) specify different forms of exit, each of which depends upon existing alternatives
and they explicitly argue that exit response is replacing one provider with another ‘where
one is available’ (p. 45). Hence, the common and accepted meaning of exit is a reactive
response to existing available alternatives.
Nonetheless, citizens may exit proactively by initiating, producing, and delivering
alternative services, mainly for their own use (e.g., deciding to home school). This
reaction, termed here as ‘entrepreneurial exit’ response, does not align with the accepted
reactive sense of exit, which depends on the availability of viable alternatives. In an
attempt to enrich Hirschman’s notion of exit, this article focuses on exit response to
dissatisfaction that reflects a proactive approach on the part of citizens, as they undertake
responsibility for a service – often specialised and complex – that traditionally was borne
by a governmental organisation with professional expertise. Citizens who engage in an
entrepreneurial exit endeavour may choose to forgo subsidised government supply and
may display policy non-compliance, i.e., behaviour that is not consistent with, and may
at times contravene, the objectives of current policy.
Practising entrepreneurial exit involves a renegotiation of the status quo as it concerns
social and political arrangements, a process that has three main implications. First,
traditionally, citizens have been ‘clients’, ‘customers’, or ‘co-producers’, and recently they
have been ‘participators’ in the public service sphere. Nevertheless, they may play an
entrepreneurial role as well, as initiators and to some extent as competitors to existing
governmental services. Second, entrepreneurial exit embodies a transformation of laymen
into providers of professional service, and thus undermines the authority and hierarchical
superiority of professional public services. Third, entrepreneurial exit gives a new meaning
to the notion of choice as through the initiation of new forms of service citizens actively
broaden the variety of available alternatives. Importantly, the scope of this study is
to suggest that citizens may play a proactive role in public services provision, and to
introduce entrepreneurial exit as additional form of exit response. Hence entrepreneurial
exit is discussed theoretically and empirically, whereas normative discussion as regards
entrepreneurial exit should be further discussed in future research.
The article proceeds as follows. The next section reviews the literature on public
services, focusing on citizens’ satisfaction, dissatisfaction, and expectations regarding
public services. This review elaborates on responses to dissatisfaction and points to the
absence in the literature of a proactive exit response category. The following section
introduces the concept of entrepreneurial exit in both theoretical and practical aspects.
The practical aspects of entrepreneurial exit are discussed through cases where it has
challenged common public services, namely childbirth, schooling, policing, and property
rights legalisation. The final section discusses possible implications.
CITIZENS’ DISSATISFACTION WITH PUBLIC SERVICES
Although public services affect the daily lives of virtually everyone (Savas 1978) and
are a key element in political and social life, this concept is ‘seldom defined, and then
usually only in relation to specific disputes’ (Hood and Miller 2009, p. 2). The process
of public service delivery is regarded as intrinsically valuable, as it involves the kind
Public Administration Vol. 90, No. 4, 2012 (1088–1106)
©2012 Blackwell Publishing Ltd.
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