Hirschman meets Williamson: Relationship-specific investment and loyalty

Mike, Károly (2012) Hirschman meets Williamson: Relationship-specific investment and loyalty. Corvinus Journal of Sociology and Social Policy, 3 (2). pp. 55-81. DOI

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In Albert Hirschman’s theory, loyalty plays a key role in the equilibrium between exit and voice. This article extends economic (rational choice) analysis to the emergence of loyalty, which Hirschman considers an exogenous factor. This is accomplished by linking Williamson’s theory of specific investment to Hirschman’s model. Three cases are distinguished: (1) loyalty is due to specific investment; (2) loyalty is due to (intermediate) factors influenced by specific investment; and, (3) loyalty is independent of specific investment. A simple model formalizes the first case. A paradoxical dynamic of loyalty is identified: a lower degree of specificity may lead to a weakening of loyalty in the short run but astrengthening of loyalty in the long run. An application to the process of European integration is sketched.

Item Type:Article
Uncontrolled Keywords:loyalty, exit, voice, embeddedness, relationship-specific investment
Divisions:Faculty of Economics > Department of Public Policy and Management
ID Code:1096
Deposited By: Ádám Hoffmann
Deposited On:29 Jan 2013 10:15
Last Modified:16 Nov 2023 08:53

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