Choice, voice, and exit: Consumer power and the self-regulation of the private security industry

Abstract

Promoting Private Security Company (PSC) self-regulation has become a key focus due to high profile scandals during the military interventions in Iraq and Afghanistan. Related efforts include the Montreux Document, the International Code of Conduct for Private Security Service Providers (ICoC), American National Standards Institute/ASIS certification, and the new International Standards Organization (ISO) Management System Standard for Private Security Operations. Implicit in industry self-regulation, however, is the assumption that the consumers of private security services will help facilitate and enforce professional standards by shifting their custom to PSCs which have signed up to these codes of conduct or certification schemes. This article investigates the validity of this assumption with regard to government contracting. To what degree are public agencies able - and willing - to let professional standards guide their contracting behaviour? To answer this question, this article develops a general framework for the analysis of public consumer influence through choice, voice, and exit which draws on insights from microeconomics and Albert Hirschman's classical treatise Exit, Voice, Loyalty. Taking the United States government as an illustrative example, the analysis observes several obstacles to encouraging security industry self-regulation through consumer power.