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Accounting, Organizations and Society 26 (2001) 643–672

A Bangladesh soap opera: privatisation, accounting, and

regimes of control in a less developed country
Shahzad Uddina, Trevor Hopperb,*
School of Management and Economics, Queen’s University Belfast, Belfast BT7 1NN, UK
Manchester School of Accounting and Finance, University of Manchester, Manchester M13 9PL, UK

This paper reports an intensive case study of a soap manufacturing company in Bangladesh that was nationalised
upon Bangladesh’s independence in 1971 and privatised in 1993. Theoretically it is informed by Burawoy’s contribu-
tions to labour process theory, especially how the consent of labour is manufactured through internal states, internal
labour markets and games, and how regimes of control in less developed ex-colonial countries are transformed by state
and production politics. How the role of accounting systems may shape and be shaped by these processes is traced.
Nationalisation brought state attempts to manufacture consent by the methods described in Burawoy’s depiction of
hegemonic regimes. However, idealistic attempts to secure accountability, rational planning and control, and consent
through bureaucratic means were subverted and transformed into a regime of political hegemony. Here control was
secured by political interventions, often at the behest of trade unions, for party political rather than commercial ends.
Detailed systems of accounting for control and accountability were maintained but became marginal, ritualistic, and
de-coupled from operations. Privatisation brought changes consistent with Burawoy’s prediction of coercive controls
within a new despotic regime. New owners destroyed the internal state and internal labour markets and, following
widespread redundancies, most workers were hired through internal subcontracting. The changes heightened worker
divisions and rendered workers powerless to resist. Gaming was observed but this relieved the pressures of work
intensification and proved functional to management. Significant changes to accounting controls were made. External
reporting ceased in violation of legal requirements — financial accounting became the preserve of the owning family
and was beset with irregularities. Budgets became more market oriented and were transmitted downwards in a physical
form to reinforce coercive pressures upon managers and thence the shop floor. The paper concludes by relating the
findings to a revised model of transformation of control regimes in Bangladesh # 2001 Elsevier Science Ltd. All rights

1. Introduction exists on management accounting in less devel-

oped countries (LDCs) rests on brief interviews
This research stems from an interest in account- with senior managers and surveys (for example,
ing and development policy in poor countries, Abdeen, 1980; Anderson & Lanen, 1999; Frucot &
especially Bangladesh. The little research that Shearon, 1991; Rahman & Scapens, 1986). There
are few intensive case studies and an almost total
neglect of participatory observation (an exception
* Corresponding author. Tel.: +44-161-275-4014.
is Ansari & Bell, 1991). Thus the aim is to give a
E-mail addresses: (S. Uddin), trevor. grounded account of controls in a Bangladeshi (T. Hopper). soap factory (anonymised as PC).
0361-3682/01/$ - see front matter # 2001 Elsevier Science Ltd. All rights reserved.
PII: S0361-3682(01)00019-8
644 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

The paper has theoretical ambitions. Burawoy’s programmes of privatisation with varying degrees
(1979, 1985) theorisation of management controls of enthusiasm. This fuelled intense political debate
of labour processes is used to develop a political and industrial conflict within Bangladesh.
economy of accounting in LDCs to addresses: Given the importance of political institutions
and workers’ resistance in accounting in Bangla-
1. How, if at all, did accounting help achieve
desh, a political economy approach to research
control at the point of production, whether
was adopted (Armstrong, 1987, 1991; Burchell,
based on consent or coercion?
Clubb, Hopwood, Hughes, & Nahapiet, 1980;
2. How did state politics involving political
Hopper, Cooper, Lowe, Capps, & Mouritsen,
parties, classes, trade unions, and external
1986; Hopper, Storey, & Willmot, 1986, 1987;
financial institutions interact with labour
Hopwood & Miller, 1994; Neimark & Tinker,
resistance at the point of production to
1986; Tinker, 1980). The work of Burawoy (1979,
transform controls, including accounting?
1984, 1985) on management control was especially
3. Can the historical transformation of
apt, despite its neglect in accounting research.1 It
accounting in enterprises in LDCs, especially
traces how shop floor conflicts, industrial rela-
ex-British colonies, be modelled?
tions, domestic politics, external finance, and
The paper is structured as follows. First, the management controls shape regimes of controls in
theoretical constructs underpinning the research enterprises. These factors are all important in
are outlined. These draw from Burawoy’s (1979, Bangladesh. Burawoy’s early work at Allied Cor-
1984, 1985) work on the control of labour pro- poration2 was based on an intensive case study,
cesses, especially the manufacture of consent and which was subsequently compared with case stud-
the historical transformation of controls inter- ies from other countries, including LDCs not dis-
nationally. Contextual information about Bangla- similar to Bangladesh. As this research was case
desh, the firm researched (PC), and its changing study based, utilising Burawoy offered possibilities
ownership is woven into the section. The research of comparative analysis.
methods are then described followed by the case In contrast to most labour process theorists who
study. The first part examines control in PC after focus upon conflicts within capitalist enterprises,
nationalisation and then partial privatisation. The Burawoy sought to explain why workers normally
second part examines how controls changed upon co-operate. He recognises that coercive controls
privatisation. The paper concludes by returning to form the basis of labour process analysis but he
the original research questions and offers a model argues that the increased power of labour meant
of accounting transformation in LDCs. firms had to supplement coercion by the organi-
sation of consent. Thus Burawoy addresses a
major criticism of labour process theory, namely
2. Burawoy, control, consent and coercion its neglect of subjectivity and how consent is pro-
duced. This is relevant to accounting, given claims
Previous research demonstrates how industrial that accounting data shapes workers’ definition of
relations and trade unions are central to under-
standing accounting within the Bangladeshi public Burawoy conducted his participant observation study
sector (Alam, 1990, 1997; Hoque & Hopper, 1994, (1979) of shop floor controls by working for 10 months as a
miscellaneous machine operator in the engine division of a
1997; Uddin, 1987). Interventions by politicians USA multinational — Allied Corporation [coincidentally the
and trade union leaders rendered technically site of Roy’s, (1952, 1953, 1954, 1958) classic work on shop-
sound accounting systems ineffective, leading to floor behaviour.
public sector deficits and state financial crises. Braverman (1974) consciously viewed subjects as deter-
Public enterprises became an impediment to eco- mined by the objective class structure leaving the examination
of subjectivity to others. His neglect of the subject is a major
nomic development. Bangladeshi governments, criticism of labour process theory (Aronowitz, 1978; Cressey &
spurred on external funding agencies such as the MacInnes, 1980; Elgar, 1979; Knights, 1990; Knights & Col-
World Bank and the IMF, subsequently adopted linson, 1985; Littler & Salaman, 1982).
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 645

situations and hence their compliance with man- Marx’s analysis of the labour process emphasised
agerial demands (Berry, Capps, Cooper, Fergu- coercion and ignored the organisation of consent,
son, Hopper, & Lowe, 1985; Knights & Collinson, possibly because this was not significant for nine-
1987). However, Burawoy (nor Roy who pre- teenth century capitalism. Burawoy argues that
viously researched the same site — Allied Cor- the increased power of labour in rich economies
poration) reported that accounting was significant has led to wages being increasingly independent of
in securing shop-floor control. Accounting and individual effort. Thus coercion must be supple-
sociological research appear to conflict regarding mented by consent. Consent is defined as ‘‘the
the significance of accounting for securing the necessity to elicit a willingness to co-operate in the
control of labour. The research adopted Bur- translation of labor power into labor’’ (Burawoy,
awoy’s key constructs — coercion, consent, the 1979, p. 27). Consent flows from the organisation
internal state, internal labour markets, and gam- of activities rather than workers’ beliefs. Beliefs,
ing, plus the apparently problematical construct of Burawoy claims, are determined primarily by
accounting control systems — to create an analy- experiences outside the factory. Thus consent
tical framework to investigate this. results from tangible management actions that
present the worker with the appearance of choice,
2.1. Coercion and consent albeit within a narrow range congruent with man-
agerial aims. Consent or self-discipline is not pro-
Burawoy does not deny the possibility of man- duced from ideological inculcation or socialisation
agement using coercion, for example by with- but, paradoxically, through workplace participa-
drawing minimum wage limits or hiring and firing tion (Sturdy, 1992, p. 117). Burawoy identifies
in violation of collective bargaining. Coercion three sets of activities crucial to the manufacture
occurs when ‘‘For their economic survival, work- of consent: internal labour markets, the internal
ers are presumed to be totally at the mercy of the state, and games.
capitalist or his agent, the overseer, who can arbi-
trarily intensify the work, provided that his 2.2. Internal labour markets
demands are compatible with the reappearance of
the worker the next day (and sometimes not even Burawoy noted how shop-floor consent since
then) and that they remain within certain broad World War Two was facilitated by internal labour
and often unenforced legal limits’’ (Burawoy, markets, partly as a consequence of larger, more
1979, p. 27). Coercion is likely to occur during concentrated firms. Internal labour markets have
periods of uncertainty, profitability crises, and six aspects:‘‘a differentiated job structure, an
diminished state protection to workers and trade institutionalised means of disseminating informa-
unions, or when workers’ resistance is weak. This tion about submitting applications for vacancies,
is relevant in poor ex-colonial countries vulnerable non-arbitrary criteria for selecting employees for
to currency fluctuations and fiscal crises of the vacancies, a system of training on the job, ways of
state. Unemployment, weak trade unionism, weak generating a commitment to the firm that makes
regulation, the state’s dependence upon external jobs in other firms unattractive, and, finally,
capital, and the nature of political elites can render maintaining the allegiance of employees after they
workers powerless and unprotected. have been laid off’’ (Burawoy, 1979, p. 98).
Burawoy’s concern is to explain, without resort
to economic determinism, how capitalism con- 3
Burawoy’s work has its critics, e.g. Littler (1990); Warde
tinuously secures increasing volumes of surplus (1992) and Thompson (1990). Nevertheless Burawoy probably
value in potentially antagonistic labour–capital offers the most cohesive recent analysis of production, man-
agement controls and state politics in the Third World and
relationships. Burawoy’s basic premise is that
colonised countries: hence its centrality to this research. Bur-
whilst capital may coerce workers it must also awoy’s claims that controls over labour processes are related to
secure their co-operation by obscuring the exploi- the obscuration of surplus value rather than the de-skilling
tative character of its control.3 He argues that thesis of Braverman are not considered here.
646 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

Neo-classical economists examine internal offenders against contractual obligations (Bur-

labour markets in terms of organisational effi- awoy, 1979, p. 113; Flanders, 1970). The internal
ciency and whether they are more efficient than state has similar functions to internal labour mar-
external labour markets (Doeringer & Piore, kets. It constrains managerial prerogatives and
1971). To Burawoy internal and external labour endows workers with rights as well as obligations.
markets are similar: each reproduces competitive Collective bargaining reconstitutes shop-floor
individualism. However, internal labour markets conflict into a framework of negotiation (Reuther,
also bring systematic, objective job mobility that 1958) that generates a common interest between
cements workers’ commitment to enterprises. the union and company based on the survival and
Thus internal labour markets expand workers’ growth of the enterprise (Przeworski, 1978).
choices with the prospect of greater reward but However, by negotiating on marginal changes, it
constrain behaviour within narrower managerial deflects workers’ attention from more funda-
limits. The ensuing individualism and competition mental capitalist relations of ownership and con-
between workers redistributes conflict, thereby trol. Burawoy (1979) saw collective bargaining as
obscuring and helping secure surplus value another game — ‘‘this time a game about rules
(Braverman, 1974; Doeringer & Piore; Edwards, and outcomes of other games, such as making
1975, 1979; Polanyi, 1944). Thus the collective out’’ (p. 115).
mobilisation of workers as a class is frustrated and
worker/management tensions are reduced. 2.4. Gaming behaviour

2.3. The internal state Taylor argued that piece rate systems co-ordi-
nate the interests of management and worker
Prior to the cessation of World War Two, the through a mutual interest in financial gain (Tay-
activities of organised labour were curtailed and lor, 1947). Scientific Management brought control
often resisted by firms such as Allied systems separating the conception and execution
Corporation — the site of Burawoy’s research. of work, and shop floor rewards based on piece
After the war this changed rapidly: companies rates, subsequently reinforced by production tech-
recognised trade unions and instituted formal col- nologies that limit autonomy.5 Burawoy argues
lective bargaining and grievance procedures. They that the increased power of labour rendered such
created internal states4 (normally incorporating control problematical and firms had to use con-
trade unions through collective bargaining and sent. Thus, collective bargaining governed grie-
grievance procedures). Such states are relatively vances and rewards, for example piece rates
autonomous, so long as they protect management became set in nationally negotiated labour con-
from itself — especially making arbitrary inter- tracts rather than by time and motion study and
ventions that undermine consent. Companies local negotiation. Yet these factors give only a
maintain the relative autonomy of union leader- partial explanation of how consent is produced.
ship and legitimise the union as a bargaining Burawoy observed that managers did not con-
instrument providing it co-ordinates union and tinuously intensify work, rigidly apply contract
management interests within the rules and regula- rates and duties, or seek further separation of
tions of labour contracts. This must expand the conception and execution of work in the machine
profits that provide the source of concessions to shop of Allied Corporation. Instead they relaxed
labour (Burawoy, 1979, p. 119). Thus the union the enforcement of some controls to permit
acts as an umpire: protecting the rights of indus- greater worker autonomy. He argued that this was
trial citizens and overseeing the punishment of
Burawoy acknowledges the importance of technology but
There is a vast literature in the British tradition of indus- does not examine it in detail as it was constant in his studies of
trial relations pluralism on trade unions and governance within Allied. This research has ignored technology for similar rea-
the internal state (e.g. Flanders, 1970). sons.
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 647

functional to management as it promoted indivi- consent. It acknowledges the importance of

dualism and ‘gaming’ amongst workers that games, for example, Hofstede’s (1968) research on
diverted labour conflict from management into budgeting as a game bears empirical similarities to
petty local disputes with fellow workers. Bur- Burawoy’s observations. However, how each
awoy’s identification of gaming behaviour was not author traces its significance differ markedly.
new to the labour process literature (see for Hofstede, in a Human Relations tradition, argues:
example, Baldamus, 1961; Crozier, 1964; Hanri
De Man, 1927; Roethlisberger & Dickson, 1939).
His contribution was linking it to the manufacture . . . planning and control, essential factors for
of shop-floor consent and management control. any organisation, can be seen as a game by
Burawoy’s study in Allied Corporation con- managers. The trick, then, is to get managers
firmed Roy’s observations of ‘‘norming’’, ‘‘chisel- to approach the budget as if it were a game —
ling’’ and ‘‘making out’’ by production workers. in a positive and high-spirited way. A well-
This is normally interpreted as worker resistance played budget game means involvement, co-
to mitigate managerial pressures and to gain easier operation, excitement, and a positive con-
rates and greater autonomy. In contrast, Burawoy tribution (Macintosh, 1985, p. 16).
observes that such behaviour stems from manage-
rial choices and reinforces managerial control. To a labour process theorist such as Burawoy,
Managers deliberately promote shop-floor games, this produces compliance to exploitation. Yet in
relax workplace rules over matters such as inspec- Burawoy’s writings accounting plays no direct role
tion procedures and rate fixing, and enhance in shop floor gaming or the control of labour. This
worker autonomy (Buroway, 1979, pp. 71–72) as may be because financial budgets stop at first line
practices permitting worker manipulations pro- supervisors or earlier, and shop floor targets are
mote individual performance and effort, and co- based on physical extrapolations of budgets. If so,
operation between foremen and workers, and managerial gaming associated with budgets may
ultimately mask potential sources of conflict. be associated with shop floor gaming based on
Individualistic rather than collective reward sys- physical targets. The issue is how and when (if at
tems reinforce this, as they generate competition all) are management budget games and shop floor
and conflict amongst workers. Labour’s partici- games connected, and does this help secure con-
pation in capitalist choices within games generates trol through consent?
consent to capitalist rules. Burawoy did not explicitly study accounting
though others have subsequently done so from a
2.5. Accounting information systems labour process perspective (Armstrong 1985, 1991;
Hopper et al., 1986, 1987; Hopper & Armstrong,
There is little evidence directly associating 1991). Such studies claim that accounting techni-
accounting with coercive control of shop floor ques manufacture worker consent by reproducing
labour. Managers that can operate arbitrary sectional interests and a mystificatory ideology of
regimes due to unequal power relations need not efficiency. Accounting provides ideological rein-
financially justify their actions to workers or tie forcement of the priorities of capital, reproduces
shop floor targets and rewards to financial hierarchical relations within enterprises, and
expressions of production such as budgets — institutionalises labour subordination through
physical (non-financial) targets, rules, penalties, purportedly objective analyses and reports
and direct supervision will produce effort. How- (Roslender, 1996, pp. 471–472). However, explicit
ever, tight budgets imposed on managers can demonstrations of how accounting affects work-
transmit pressure downwards to intensify pressure ers’ beliefs and their actions at work are sparse.
and coercion on the shop floor. An exception is an analysis of shop floor beha-
Most research on accounting and labour control viour by Knights and Collinson (1987) that claims
is on accounting’s contribution to manufacturing accounting reports reproduce notions of economic
648 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

imperatives and individual accountability that within negotiations (Batstone, 1979; Gray, Owen,
tally with worker attitudes of masculinity and & Maunders, 1987; Owen & Lloyd, 1985). How-
their discourses conducive to managerial practices. ever, much of this work lay in an era of hegemonic
Knights (1990) subsequently claimed that control characterised by internal labour markets
accounting is an invisible hand that subjectively and an internal state. As will be argued below,
justifies controls such as bonus systems to work- capitalist relations may be different in more global
ers, whose voluntarily engagement in practices economies where managers have greater powers.
reproducing existing social orders prevents them Armstrong et al. (1996) claim that budgeting in
advancing a revolutionary political praxis. large UK companies is connected to the control of
The implications of the small number of studies labour: budgets being most used when manage-
on accounting and shop floor control that exist is ment has the freedom to act on the information.
that accounting helps constitute subjectivity and This normally occurs when the power of labour is
workplace consent. However, few studies trace weakest. If so, then accounting should be more
how accounting directly and tangibly does this. If prominent within weakened internal states. In
so, is it through gaming or just an inculcation of deregulated market situations external labour
attitudes favourable to management? Both propo- markets may become more prominent and
sitions have problems. If worker beliefs are deter- accounting may become less concerned with fac-
mined outside the enterprise, as Burawoy claims, tors producing consent. Instead it may reproduce
then the effects of managers using accounting external labour markets by converting direct
reports to inculcate favourable attitudes amongst labour to a variable cost through subcontracting
factory workers may be marginal. Also, the evi- and tying economic rewards to production
dence is slight that accounting manufactures con- volumes. Studies of organisations undergoing cri-
sent through shop floor gaming, either directly or sis and transformation in the past two decades
via budget games of managers. Armstrong, Mar- suggest that this may be so (Berry et al., 1985;
ginson, Edwards, and Purcell (1996), imply that Miller & O’Leary, 1987, 1994).
this is more likely under conditions of managerial To summarise, the relationship of accounting
weakness. If so how management uses accounting controls to shop floor control is poorly under-
to control labour may be contingent, for example, stood under either coercive or consensual regimes
gaming associated with accounting may disappear of control. Moreover, academic accountants and
when management is strong and/or uses coercive sociologists differ over accounting’s import in this
controls. respect. These issues motivated this research.
The relationship of accounting to internal However, the researchers had to extend their ana-
labour markets, the internal state, and hence lysis beyond production to state politics.
labour control is similarly poorly understood.
Hopper et al. (1987, p. 446) argue that accounting
provides an ideological reinforcement of labour 3. Regimes of control in Bangladesh
relations through the way it portrays organisa-
tions, their goals, employment contracts, and the Burawoy’s later work (1985) is a historical ana-
necessity of hierarchy. Prima facie, accounting and lysis of control in advanced capitalist,6 socialist
internal labour markets appear inter-related. (communist),7 and ex-colonial developing coun-
Accounting can reveal the scope for material con- tries. It builds on theoretical constructs from the
cessions in labour contracts, and assumptions Allied Corporation study but substitutes the
underlying its calculations can legitimate manage- internal state with the ‘‘politics of production’’
rial practices and obscure capitalist relations of because the former is too focussed on the factory.
production. Nevertheless, research on accounting The politics of production links the factory to the
and the internal state indicates that accounting has state and ultimately global politics8 and it is used,
played a minor role in industrial relations, though inter alia, to analyse when and why controls are
it may be used opportunistically or tactically based on coercion or consent.
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 649

Burawoy’s work analyses the historical trans- tions of controls in LDCs to study PC — the sub-
formation of controls in LDCs sharing a legacy of ject of this paper. Three ‘ideal-type’ production
British colonialism with Bangladesh: hence its regimes in post-colonial LDCs are identified:
attraction and pertinence here. Burawoy criticises colonial despotism, hegemonic, and new despotic.
economists and sociologists for neglecting Fig. 1 summarises how control veers from coer-
LDCs — ‘‘the hidden abode of production’’ — cion to consent and the nature of accounting
and, when they do, their over-emphasis on market under each regime. Conflicts and contradictions of
relations and neglect of labour processes, class domestic and state politics within each regime lead
struggles, and state politics. Burawoy’s delineation to its demise and its replacement by another. Fig. 1
of regimes of control in LDCs is adopted in figure identifies how and when each regime relates to
one to build an analytical model of transforma- changed forms of ownership of PC. The dynamics
of this model and its relationship to accounting
Burawoy describes how factory control regimes within are explored in the following section.
capitalist societies are transformed initially from market des-
potic regimes — characterised as patriarchal, paternalistic, and 3.1. Colonial despotism and the private ownership
market-based - as in the UK and USA prior to the early twen-
tieth century, to hegemonic regimes — based on the manu- of PC (1959–1971)
facture of consent as noted in Allied Corporation. However,
under the pressure of global competition and weakened states Colonial despotism occurs where foreign capital
these are now giving way to hegemonic despotism, char- has complete control over labour with little state
acterised by coercive controls and collective bargaining that
intervention. Control tends to be coercive, arbitrary,
extracts concessions from workers through threats such as fac-
tory closure. Fractions of the working class compete to be physical, sometimes violent, racist, and often extends
attractive to international capital. Their powerlessness is accel- to workers’ family lives. Colonial governments exer-
erated by a decline in popular and state support for working ted little control over companies, giving rise to com-
class institutions. The major difference between hegemonic pany states where companies governed their
despotic regimes in developed countries and new despotic
employees and possessions. Accounting was unne-
regimes in LDCs is that trade union rights, state compensation
schemes and other protections for workers continue to func- cessary for controlling employees but financial
tion, albeit in a weakened form, in richer countries. reports were important for controlling overall per-
Burawoy noted differences in Eastern European commu- formance, securing remittances to company head-
nist states compared to advanced capitalist ones. He argues quarters overseas, and satisfying external reporting
that bureaucratic despotism rather than hegemonic regimes of
requirements of the parent company (Borkowski,
capitalism prevailed during communism. Enterprises were arms
of the state and controlled through a state central plan. How- 1997; Rahman & Scapens, 1986). However, over
ever, enterprises had to bargain with the centre for resources time nascent trade unionism and labour resistance
whilst constantly improvising in the face of shortages. This led in factories and mines, manifest in riots and
to enterprises having two sets of controls: the official central strikes, often led colonial powers to grant limited
plan and less formal dealings between the enterprise and state
collective bargaining and labour rights. This
officials. This gave rise to a core and periphery labour force.
The core (often party members and trade union officials) man- occurred in Bangladesh when it was part of British
aged tensions between the economic plan and curried favours India (Bhattacharjee, 1986; Murshed, 1989).
from state bureaucrats and political officers, leaving peripheral After World War Two, many colonies were
workers to execute their tasks under coercive conditions. Pre- granted independence following domestic libera-
vious research on nationalised firms in Bangladesh operating tion struggles led by coalitions of middle class
within central planning had revealed similar splits between for-
mal and political controls — though they did not result in intellectuals and labour leaders (Murshed, 1989).
coercive controls. In Bangladesh this occurred in two phases. Fol-
For analytical purposes, the category of the internal state lowing Indian independence, Pakistan was created
is retained to enable comparative analysis with Allied. As in 1947 consisting of East (Bangladesh) and West
events will show, Burawoy was justified in extending this to the
Pakistan. This provoked a Bangladesh indepen-
politics of production. How production and state apparatuses
interact and bear upon control are discussed under the category dence movement seeking separation from West
of regimes of control. This is consistent with Burawoy’s intent, Pakistan. Independence came in 1971 following a
if slightly different from his later model. brief war.
650 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

Fig. 1. Possible regimes of control in Bangladesh enterprises.

PC was established in 1959, during this transi- vacuum. The government responded by nationa-
tory period of colonialism,9 at its present premises lising abandoned property and hundreds of
as a private company to produce a cold cream. PC industrial and commercial enterprises. PC was
was profitable immediately: it faced little domestic nationalised in March 1972, becoming part of a
competition and was protected from multi- centralised formal planning and control structure
nationals by government import restrictions. PC running from the Ministry of Industries, through
rapidly expanded and by 1971 it had increased its corporation boards, to enterprises such as PC.
product range, production, and profits. Given the
difficulties of obtaining data about PC during 3.2. Hegemonic regimes and the public ownership
colonialism, events then could not be researched of PC (1971–1993)
but their legacy was an important backcloth to
subsequent events. Burawoy argues that colonial despotism was
Significant industrial restructuring was essential often replaced with a hegemonic regime modelled
after the independence of Bangladesh as fleeing on practices in richer Western economies. Legal-
West Pakistanis, including PC’s owners, aban- rational bureaucratic controls regulated by the
doned their enterprises leaving a managerial state10 based on internal states and internal labour
markets within enterprises were introduced to
Although it is contentious, the paper assumes colonialism control labour through persuasion and consent
ended in Bangladesh in 1971. (Alam, 1990, 1997; Hoque & Hopper, 1994, 1997).
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 651

Through a combination of idealism, ideology, (Government of Bangladesh, 1976, 1985, 1990),

external advice from development experts, and influenced by World Bank and IMF pressures to
pragmatic necessity, the post-independence socia- adopt programs of market liberalisation and pri-
list government in Bangladesh embarked on a vatisation. PC came on to the privatisation lists of
programme of nationalisation and central state government in the late 1980s and it was partially
planning. Trade unions were recognised and for- privatised in 1988: officially to rectify its ineffi-
mal systems of collective bargaining, recruitment, ciencies and to increase private participation in the
promotion and job grading were introduced into manufacturing sector. Unofficially, it was argued
state enterprises. Public sector enterprises were that it was to placate World Bank pressure to
made legally accountable to responsible Ministers reform public enterprises. Paradoxically, PC’s
within a democratic parliament. Accounting was profitability and relative efficiency made it a can-
central to this. Budgets from enterprises in state didate for privatisation, as it was saleable (Uddin
corporations to ministries were central to state & Hopper, 1999). Moreover, being relatively
planning and each state corporation had to pre- small, it was not as politically sensitive as other
sent financial accounts to Parliament (based on large loss-making public enterprises.12 PC was
generally accepted accounting principles and made a public limited company: 34% of its shares
audited by state officials) for accountability to the were offered to the public and 15% to employees.
populace. However, the government through its majority
In 1975, the government leader, Mujib, was (51%) shareholding still controlled PC, giving rise
murdered and his government overthrown in a to conflicts amongst directors and delayed deci-
military coup. Bangladesh politics became more sions. The chief executive officer was changed four
turbulent and governance increasingly became times in the 5 years and a significant number of
based on patronage and political expediency. middle level managers left the company due to
Politicians stepped up their interventions into state frustration and the uncertainty over the future of
enterprises for political rather than commercial the company stemming from these conflicts. PC’s
ends. Trade union leaders assumed positions of profitability, sales, and productivity plummeted
power through their access to political patronage. and it started to make large financial losses. This
The policies of the government resulted in serious was exacerbated by workers’ resistance to
macroeconomic difficulties. Public enterprises impending full privatisation through demonstra-
were responsible for 25% of gross domestic capital tions, strikes, and a lockout, which dovetailed
formation and their inefficiency had a direct with other popular struggles against the govern-
impact on the allocation and quality of public ment.
investment (World Bank, 1993). Large invest-
ments in the public sector failed to make them 3.3. New despotic regimes and the privatisation of
profitable and their losses contributed to public PC (1993–1999)
sector budget deficits rising alarmingly leading to
state fiscal crises.11 Nevertheless, PC flourished Burawoy argues that in LDCs, the convergence
during nationalisation: its products were popular of production and state politics, the ensuing con-
and cheap; it had 70% capacity utilisation, grow- flicts, fiscal crises, and pressures from agents of
ing sales, and was profitable.
After 1975, Bangladesh governments increas- 11
A World Bank report, Government that Works —
ingly turned to structural adjustment policies Reforming the Public Sector (1996) indicated that annual losses
of public enterprises represented 2% of gross domestic product
10 (GDP) and their outstanding debts (much of which is non-per-
Burawoy’s analysis of control regimes in LDCs after
independence is relatively slight and not as clearly categorised forming and would have to be absorbed by government bud-
as here. Whilst our labelling of regimes of control may be gets) was equivalent to 90% of annual GDP.
debatable we believe that their features and dynamics corre- PC employed circa 1100 workers during its nationalisation
spond to Burawoy’s arguments about controls in post-colonial whereas large nationalised enterprises such as the Adamjee Jute
LDCs. Mills employed over 20,000 (Hoque & Hopper, 1994).
652 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

international capital for market reforms, cause property rights into failing public enterprises will
hegemonic regimes to decline. Instead economic- increase efficiency through better controls (includ-
ally peripheral states often turn to programmes of ing accounting ones) and personalised economic
economic liberalisation based on export proces- incentives, and this will increase capital invest-
sing zones, privatisation, and touting the attrac- ment, profits, government revenues, employment,
tions of cheap, economically weak, unprotected and improve managerial technologies. Markets
labour to foreign capital. Burawoy argues that this will ensure that inefficient enterprises will either fail
leads to new despotic regimes of control in LDCs or be taken over. However, neo-classical econo-
based not merely on the subjection of workers but mists do not study in detail whether the controls
on the mobility of capital. The need to maintain or within enterprises that are integral to their pre-
attract capital instigates competition amongst scriptive models actually materialise and operate as
enterprises, their labour forces, communities, and they predict. Internal states, internal labour mar-
governments, resulting in policies that undermine kets, the nature of control, and accounting prac-
protection and concessions from the previous tices are ignored in the presumption that efficiency
hegemonic regime. Workers must accede to coer- gains following privatisation will trickle down to
cive and unilateral management control under the employees and society through market forces.
threat of the relocation of capital. This is espe- This research sought to establish empirically
cially acute in LDCs given the poverty of their which version of events rang true. Did privatisa-
states and populace. tion mark a return to coercion in new despotic
This pattern of events was discernable in Ban- regimes as claimed by Burawoy or market-based
gladesh. Given its aid dependence, the Bangladesh regimes as some development economists and
state was vulnerable to World Bank pressures to policy advisors claim? Whatever, how is account-
liberalise its economy — including extensive pri- ing implicated in such changes? PC was studied to
vatisation (World Bank 1983, 1993, 1995, 1996a, investigate these competing claims.
1996b, 1996c). Despite the problems of partial
privatisation, the government accelerated its pri-
vatisation programme. PC was fully privatised in 4. Research methods
1993 through a block tender of government
shares. Its workers, through their trade unions, The research triangulated various types of data
attempted to buy the company through the including interviews, participation observation,
Workers’ Provident Fund but to no avail. Allega- analysis of relevant documents, and examination
tions that the main (government party) trade of newspaper reports. Participant observation has
union collaborated with the eventual owners to been a method of social inquiry in cultural anthro-
thwart the workers’ bid were rife. The outcome pology (Friedrichs, 1975) and organisation studies
was that the government’s shares were transferred for some time, e.g. Dalton (1964) and Roethlisberger
to one person. PC became family-controlled, as and Dickson (1939), though it is less common in
one family now owned 75% of its shares. accounting research. The data was gathered over 7
Burawoy’s prognosis for privatisation is months (from February to September 1995).
gloomy: it argues that coercive controls in a new To obtain an experiential understanding of the
despotic regime are likely to ensue. This is in sharp behaviour of managers and workers the leading
contrast to the claims of the proponents of priva- author worked in the soap division of PC for 1
tisation, whose market-based policies are under- month as a casual worker. Time, access and
pinned by prescriptions from development resources precluded a longer period. Personal and
economists, especially neo-classical adherents company anonymity was a condition of research
drawing on theories of agency, property rights and access. As a participant observer it was neither
allocative efficiency (Adam, Cavendish, & Mistry, practicable nor desirable to keep notes during
1992; Cook & Kirkpatrick, 1995; Uddin & Hop- work or in front of fellow workers as it might
per, 1999). The assumption is that infusing private inhibit them from talking freely. Consequently,
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 653

observation notes on incidents and conversations, and did not significantly change controls in PC,
including the researchers’ feelings and reactions, therefore events then are discussed alongside those
were written up upon returning home. during nationalisation.) It traces how controls
Fifty-five interviews were conducted with man- designed to produce consent based on internal
agers (past and present), accounting staff, fore- labour markets, the internal state, and formal
men, and trade union leaders from PC. In accounting systems actually operated in the con-
addition, interviews were held with civil servants text of production and state politics in Bangladesh.
(two each from the Ministries of Industries and (Given the limitations of retrospective research the
Labour, two from the Privatisation Board and one relevance of gaming can only be surmised.) The
from the Ministry of Planning), two Bangladesh intended hegemonic regime was transformed into
Bank and one World Bank officials, and two one subsequently defined as political despotic, with
national trade union leaders. Questions were marked consequences for accounting controls.
asked in an open-ended fashion to help inter-
viewees respond freely and to avoid predefinition 5.1. Accounting systems
of issues. Normally, interviews lasted between one
and two hours. Notes were taken during each The Nationalisation Order and subsequent Pre-
interview and the interviewer’s reactions and sidential Orders made PC accountable to a range
cross-referencing of similar points were noted of public institutions. The Ministry of Industries
immediately after. Reports, many unpublished, controlled PC via a holding company but financial
were collected from government offices, the World authority lay with the Ministry of Finance. This
Bank, trade unions and PC itself, in addition to dual authority impeded proper financing decisions
library and newspaper searches to validate and and controls. Each public sector enterprise had to
supplement the interview and observational data. submit annual accounts to the government fol-
During summer 1999, the researcher conducted lowing the accounting and auditing provisions of
a follow up study. Seven interviews were con- the Bangladesh Industrial Enterprises Act (Pre-
ducted with senior managers in PC and some cle- sident’s Order No. 27, 1972, Nationalisation
rical staff. Permission was not granted to talk to Order). The Comptroller and Auditor-General
workers or trade union leaders due to industrial fulfilled an audit role through the Office of the
relations disturbances. Some trade union leaders Director of Commercial Audit. Rigid rules and
had just been sacked and security was tight due to regulations governed the preparation and
demonstrations and the explosion of several approval of accounts. Accounts were published
bombs outside the factory gates. and PC’s accounts came under stricter, formal
scrutiny at several levels, especially the Sponsoring
Ministry, and the Ministries of Finance and Plan-
5. Control under public ownership and partial ning. However, though Parliament was theoreti-
privatisation cally the highest tier of control, performance
reports were rarely presented there and when they
This section analyses controls in PC when it was were, politicians took no action. In Bangladesh,
nationalised and partially privatised.13 (Partial the political process lay in personal relationships
privatisation retained majority public ownership and direct patronage: often based on extended
families and associates.14
Events within PC during public ownership can only be
constructed retrospectively from the field data, especially the Dyball and Valcarel (1999) note in a study of accounting
interviews with obvious problems of selective retention and in the Philippines that the ‘‘traditionalist/familial culture med-
retrospective rationalisation. However, the descriptions match iates the ‘rationalist/legalist corporate framework of accounting
those in other Bangladesh public enterprises in the same period regulation . . . ‘family’ ties cut across the categories of analysis
(Alam, 1990; Hoque & Hopper, 1994, 1997), except that PC implicit in the corporatist model, thereby tending to subvert it’’
was profitable. Whether this was due to its innate competitive- (Dyball & Valcarel, p. 304). Similar patterns emerged in this
ness or protection from imports is difficult to discern. study.
654 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

As in all Bangladesh state enterprises, PC monitor production. However, given the unreality
maintained a detailed budgetary control system of official plans these duties were light and not of
as part of a central state economic planning sys- major import. For example, supervisors did not
tem. However, interviews revealed that whilst allocate tasks as they were fixed in trade union
managers prepared the necessary reports, they negotiations. As a worker commented, ‘‘Very few
rarely used them, as they were perceived as unre- supervisors and foremen used to be present during
liable and not reflecting normal daily uncertain- the shift period.’’ Another commented, ‘‘In those
ties. Managers’ budgeting behaviour was rule- days . . . supervisors always tried to allocate over-
bound and ritualistic. When preparing budgets, time to us rather than urging us to work hard.’’
they often merely took the previous years’ figures Supervisors, often active trade unionists on trade
and dutifully followed regulations from Head- union committees, approached supervision indul-
quarters, with little consideration of actual or gently (Gouldner, 1954): securing votes from
likely circumstances. Sometimes, accountants used workers was more important. Trade unions in the
approximations because of the unavailability of plant were based on rival political parties. The
relevant data. annual elections of collective bargaining agents
Government and Head Office officials con- were crucial for supervisors seeking advantage for
stantly sought higher production to demonstrate the political party their union represented and
their achievements to Parliament and the popu- thence reaping the political patronage this affor-
lace. A bonus system for managers and workers ded.
purporting to reward enterprises that exceeded To placate their workforce by achieving bonu-
production budgets replaced an annual lump sum ses, managers had to prioritise physical targets.
and two festival bonuses. However, the proposals Moreover, as one manager remarked, ‘‘We were
lacked specification and production targets afraid of taking any actions against workers. If any
became negotiable between unions (wishing to manager confronted the workers, his life was in
protect the custom and practice of non-perfor- danger.’’ Consequently, financial budgets became
mance related lump sums) and ministers (sensitive insignificant to operations or for securing
to industrial relations disturbances threatening accountability. Managers coped by balancing
their political survival). Production targets for decisions between rival trade unions, granting
bonuses became detached from the budget targets unnecessary overtime, reducing or halting
of managers. Nevertheless, managers had to pro- machine speeds, or by falsifying reports to indicate
tect their reputations by ensuring that their bud- achievement of physical targets. Trade union lea-
gets were compatible with central instructions, ders and managers co-operated in such activities
satisfying seniors by achieving budget targets, and as each had a vested interest in doing so.
satisfying workers by achieving production tar- Few managers condoned this state of affairs,
gets. To cope, managers followed rules selectively and some resisted granting undue benefits to trade
and found unofficial means of circumventing these unions on ethical and/or commercial grounds.
procedures. For example, managers frequently However, other managers made illicit deals with
granted overtime to workers to achieve bonuses trade union leaders, for example, accepting nomi-
despite the extra production being unnecessary to nations on who should be official distributors, and
meet either the budget or demand. the prices and quantities they should be supplied
Internal control was problematic as external at. Whatever, the situation provided a market for
interventions were rarely related to budget alloca- excuses. Managers could legitimise failure to
tions and financial targets, which in turn were de- achieve budget targets by blaming unrealistic
coupled from the production targets for bonuses. bureaucratic rules and targets, or ill-judged exter-
Shop management had a long chain of command nal interventions, or by indulging in budget
and managers were not prominent on the shop manipulation, or — as many did — by disregard-
floor: trade union leaders dominated events ing formal controls claiming they lacked commer-
there. Officially supervisors should supervise and cial credibility.
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 655

Just as Burawoy found in Allied Corporation, 5.2. The internal state and internal labour
managers sought to manufacture the consent of markets
workers through games and associated unofficial
deals. However, in PC this was done from a posi- Upon nationalisation Bangladesh enterprises
tion of management weakness compared to their had to recognise trade unions as collective bar-
counterparts in Allied Corporation. PC’s workers gaining agents and form consultative committees.
participated in this: it brought benefits, they Legally, labour relations became governed by
enjoyed circumventing managerial prerogatives, labour contracts negotiated between management
and it helped alleviate boredom. However, within and trade unions. Government rules and regula-
the limitations of our data, neither games nor tions determined wages and promotions. All per-
accounting data were significant for manu- manent workers were paid on a salaried basis,
facturing consent. Essentially, consent lay in supplemented by the production bonus.
securing concessions through the politicised inter- An internal labour market was created within
nal state and workers’ preoccupations were PC. Seventy-five percent of the work was classified
centred on the quotas and bonuses for materi- as unskilled. A production manager explained:
alistic reasons. ‘‘The industry has provided easy access for all
The failure and irrelevance of formal accounting workers who are physically strong because it needs
controls in the face of politics and their substitu- very few technical people. We train general workers
tion by unofficial transactions occurred in other to have technical knowledge of operations during
control systems including marketing, pricing, their works.’’ Nevertheless, job classification at PC
financing, and procurement (Uddin, 1997). The was considerable. In terms of functional titles,
ostensibly rational legal bureaucracy established there were operators, general, service, and main-
upon nationalisation, with a belief in centrally tenance workers.15 In skill terms, there were tech-
planned development, proved inadequate in the nical and non-technical workers. Technical
face of politics (Sobhan & Ahmad, 1980). Partial workers included operators and some service and
privatisation simply made such controls more maintenance workers. They were the lifeblood of
problematic. For example, trade union militancy PC as they possessed a broad range of skills
persuaded politicians to grant a production bonus whereas non-technical workers needed few skills.
for workers in PC despite production deteriorat- Foremen (who also had technical knowledge)
ing. As one accountant remarked with a laugh, supervised technical workers whereas supervisors
‘‘Accounting and budgeting systems were only from the ranks of general workers monitored non-
changed in terms of its amount of reporting. technical workers.
Now we had to make several reports to gov- Virtually all workers were permanent and were
ernments as well as to private directors, which categorised into six grades based on seniority of
only increased our workload.’’ Interviews sup- service and everyone could be promoted to the
ported Sobhan and Ahmad’s comments that dur- next grade. Such promotions only affected
ing public ownership and partial privatisation of salary — not authority, power, and responsibility.
PC budgets operated like other Bangladeshi public There were also hierarchical promotional oppor-
enterprises: tunities, for example, operators could be pro-
moted to superintendent — a managerial post.
The budget usually fails to serve the role of a However, whilst this elaborate job classification
communication and planning instrument . . . existed, its enactment was often not through
the corporations do not seem to take it ser- bureaucratic rules. From PC’s inception as a
iously . . . they [managers] generally take little
interest in it . . . all they are interested in is the 15
Operators ran machines; general workers were mainly
flow of funds to meet the bills, particularly stores personnel and production labourers; service workers
salary and wage bills (Sobhan & Ahmad, pp. were mainly clerical workers; and maintenance staff were
332–333). responsible for the upkeep of machines and buildings.
656 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

public enterprise, the direct intervention of gov- component), internal labour markets, and the
ernment parties and the politicisation of appoint- internal state. The independence movement of
ments became the norm. This gave rise to a quasi- Bangladesh was led by a coalition of intellectuals
internal labour market and a quasi-internal state. and trade unionists. The new hegemonic arrange-
Both veered intermittently between apparently ments reflected their idealistic ideologies and their
bureaucratised rule-bound governance and unoffi- desire for rational development within a demo-
cial interventions by politicians. Trade union lea- cratic state that recognised trade unions.
ders influenced managerial promotions and The hegemonic regime soon withered in sig-
appointments through their political connections nificance (though not presence) as political
with Ministers. Appointees of politicians worked rationality, exercised by politicians and trade
as political workers making it difficult for super- union leaders, superseded commercial rationality
visors to exercise authority for fear of repercus- exercised by managers and government officials.
sions. Changes of government brought new Accounting systems became de-coupled: formal
political appointees to work for the government financial accounting was adhered to but was lar-
party’s trade union, which gave rise to shop-floor gely ignored by those in the chain of account-
factionalism and over-manning. Workers had to ability. Planners divorced from operations set
be a member of one or other union to secure wage budgets centrally to radiate political optimism.
increments or promotions. Past managers descri- Given the unreality of budgets and political inter-
bed how promotions and appointments had to be ventions into operations, it is unsurprising that
balanced between trade unions to prevent major budgets played neither a planning nor a scorecard
disputes. As Burawoy (1985) argued, one could role within management. Nevertheless, 25
not satisfactorily understand the role of the inter- accounting managers and a large number of clerks
nal state without recourse to the broader politics within the largest administrative department of
of production. PC ceremoniously maintained accounting records
Trade union leaders became even more powerful and procedures, giving the appearance of ration-
when the already frequent workers’ strikes and ality and accountability and thereby helping foster
lockouts dovetailed with broader political resis- external legitimacy.
tance against the Ershad government during the The hegemonic regime was transformed due to
partial privatisation period. The labour federation the convergence of state and production politics.
mobilised workers against the government, raising The entrepreneurial vacuum following indepen-
broader political issues including the impending dence made politicians powerful in Bangladesh
full privatisation of PC. PC’s elected trade union compared to many other de-colonialised countries
leaders had to join the workers’ resistance and where metropolitan entrepreneurs commanded the
fight for workers’ welfare despite being the labour economy (Sobhan, 1993). The government’s com-
wing of the government party. It transpired that mitment to socialism ceased after the military
this was just a strategic step to maintain their coup of 1975. Subsequent coups, changes of mili-
influence over workers. tary governments, and the eventual restoration of
democracy reflect the turbulence and volatility of
5.3. Transformation of regimes of control: Bangladesh politics. Maintaining popularity and
idealised hegemony to political hegemony power was a preoccupation of politicians and
organised workers’ support was crucial to this
The evidence from PC is supportive of Bur- end. Politicians realised that central planning and
awoy’s suggestion that post-colonial LDCs the accountability systems of public enterprises
created hegemonic regimes of control upon inde- enabled them to intervene in enterprises to placate
pendence. Through public ownership and legisla- workers and secure party advantage. This
tion the state sought to regulate large enterprises increased as politics became more factional. The
and control workers by consent based on central furtherance of political interests rather than com-
state planning (of which accounting was a crucial mercial criteria became the modus operandi of PC.
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 657

As a World Bank report indicated, ‘‘Though behalf. Not joining a union was impractical as it
autonomous in theory, public enterprises are still excluded workers from political patronage and
de facto under government control and govern- could carry sanctions. The allegiance of workers
ment interference is the rule rather than the was based on instrumental necessities and the
exception.’’ (Bangladesh Observer, 24 March 1992) attractions of political leaders. (Political parties in
On the other hand, the same politicians faced with Bangladesh tend to be based on charismatic lea-
poor public sector performance, state deficits, and ders rather than ideologies.) The result was poli-
the need for Western support of their unpopular tical control in state enterprises. As Burawoy
governments increasingly adopted market-based noted in Eastern European communist enterprises,
policies. Thus there was political schizophrenia — a set of (normally) elected local trade union lea-
politicians achieved popular support by interven- ders (usually foremen and supervisors) emerged as
ing into the public sector, yet they had to purport vital intermediaries between workers and trade
to destroy this to secure Western approval and union who could access state organs and politi-
hence access to global capital. cians. However, the coercive controls in Eastern
The transformation from public ownership to Europe described by Burawoy during communism
partial privatisation in PC and the destruction of did not appear in Bangladesh, possibly due to the
the hegemonic regime needs to be understood in less totalitarian nature of Bangladesh politics and
the context of post-independence class struggles the political strength of workers.
and the role of trade unions. Bangladesh society is Given the difference between the idealised forms
relatively homogenous and can be divided into of control and their manifestation during the pri-
three classes: upper bourgeoisie, petty bourgeoisie, vatisation and partial privatisation of PC it is
and peasant-worker (Sobhan & Ahmad, 1980). analytically advantageous to split Burawoy’s
After the flight of capital following independence hegemonic regime into two, namely idealised
the upper bourgeoisie were weak. The petty bour- hegemony and political hegemony. Idealised hege-
geoisie dominated politics and government mony is identical to the means of consent within
institutions such as the army, government Burawoy’s hegemonic regimes of control descri-
bureaucracies, and universities. Over time, how- bed earlier. This captures how political leaders in
ever, the upper bourgeoisie benefited from the Bangladesh upon independence legislated for new
gradual restoration of the private sector and poli- rational bureaucratic structures of accounting,
tical parties had to accommodate them and their planning, accountability, and industrial relations.
pressures for privatisation. For example, in the However, hegemonic control did not operate as
1996 election, 25% of members of Parliament intended, instead there was political hegemony.
were industrialists (Daily Star, 15 June 1996). Here, domestic party politics permeated not only
Peasants remained largely untouched by trans- state politics but also the politics of production.
fers of power, being unable to resist the higher Politicians grabbed the levers of power offered by
classes. However, the urban working class in state the apparatus of the hegemonic regime to pursue
organisations and organised in trade unions could their political agenda within enterprises such as
effect changes in government. Even military gov- PC. The divisions of domestic politics were repli-
ernments had to be sensitive and responsive to cated in party trade unions within enterprises and
their demands. However, trade unions were bran- worker resistance was funnelled into domestic
ches of political parties with leaders, normally political strife. Shop floor consent became manu-
party members from the educated petty bourgeoi- factured primarily through political intervention
sie. This led to multi-unionism in plants and inter- and negotiation: commercial ends within public
union rivalries that mirrored and embraced enterprises became secondary to political ones.
broader party struggles. Workers looked to edu- Bureaucratic structures resonant of hegemonic
cated and legislatively skilled trade union leaders control remained, but the triumph of political
to protect them against management victimisation hegemony over legal rationality gave rise to de-
and to exploit political connections on their coupled accounting controls.
658 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

Armstrong et al. (1996) claim that when the upon political parties believing it meets their ends.
power of labour and trade unions is high then The virtual elimination of trade unionism at PC
accounting controls are less significant for con- with state support after PC was fully privatised is
trolling labour. This was so at PC where the con- testament to this.
sent of its workers ultimately resided in political-
trade union accords.16 Viewed from a position of
hindsight after full privatisation, workers regarded 6. Controls after full privatisation
the partial and full public ownership periods as
halcyon days. Workers reminisced about the shop The intensive case study and interviews took
floor solidarity with remarks such as, ‘‘We worked place in 1993, 2 years after PC was fully privatised.
together though we had problems with each other. The researcher chose to work in the Soap Divi-
We worked as SKOP17 workers,’’ and, ‘‘In the old sion, as it was the largest production department
days they always fought with management for their in PC. Three kinds of soaps (laundry, toilet and
demands.’’ A worker’s leader recalled, ‘‘That was glycerine) were made in separate plants. Each
our ‘golden time’. Nobody controlled us, rather we processed the raw materials in boiling kettles
controlled them. Then everything had to be con- transferring it to soap storage tanks as liquid
sulted about with trade union leaders.’’ Trade soaps. The tanks were connected to machines that
unions were the major organised force within PC. converted liquid soap into a hard form. The Soap
However, it is wrong to assume that this indi- Division had three shifts: morning (6 a.m. to 2
cated the domination of the working class over p.m.), evening (2 p.m. to 10 p.m.) and night (10
other classes. As described previously, the trade p.m. to 6 a.m.).
unions served political leaders and parties and its The following report draws from the participant
leaders were not drawn from the ranks of workers observation, the interviews, and documentary
(Hoque, 1993; Murshed, 1989; Wickramasinghe, studies. The aim was to identify what effect full
1996). Worker membership of trade unions tended privatisation had upon accounting systems, inter-
to be based on expediency rather any identifica- nal labour markets, and the internal state, and
tion with broader class based struggles. Para- whether this ushered in coercive controls and des-
doxically, the satisfaction workers derived from potism as predicted by Burawoy or market-based
their struggles with management produced an controls as advocates of privatisation predict?
illusion of power whilst reinforcing their sub-
ordination to Bangladesh ruling elites. PC’s 6.1. Accounting information system changes
workers’ instrumental involvement in struggles to
ultimately benefit socially elite leaders meant that Pressure for privatisation in Bangladesh came
they could not fundamentally question basic pro- from external sources, especially World Bank
duction relations. Instead, their efforts were diver- recommendations for economic liberalisation pro-
ted towards petty economic benefits and they grammes opening up the economy to foreign
became compelled to accede to political masters. capital. World Bank reports (1995, 1996b) argued
Thus they found themselves in game, albeit a dif- that public sector problems were due to a lack of
ferent one from Allied Corporation’s workers accountability and transparency, partly because of
studied by Burawoy. In PC, the workers’ use of weak accounting controls. Consistent with claims
political avenues manufactured their consent to of some development economists it was argued the
the prevailing form of state capitalism. However, discipline of markets and regulation, coupled to
top-down trade unionism is fragile and contingent changes in property rights, would herald
improvements in productivity, profitability, and
16 efficiency (Hanke, 1986) brought about by private
This bears similarities to other studies of management
control in LDCs (Ouibrahim & Scapens, 1989; Wickrama- owners having greater incentives to adopt modern
singhe, 1996). management controls linking production to mar-
SKOP was a combined trade union organisation kets, reinforced by economic incentives linked to
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 659

business rather than political goals (Uddin & The marketing function was increased from 22
Hopper, 1999). If they fail to do so then financial to 32 managers. Its field-based sales forecasts
reports should prompt take-overs and/or share- formed the basis of the production budget. A
holder action to remove recalcitrant managers. marketing official commented, ‘‘Accounting infor-
The research examined whether this was so. mation comes through late although it is correct.
But we prepare our sales budget on the basis of
6.1.1. Budgets sales-force indicators and market trends, which is
According to the conventional literature, bud- very dynamic.’’ The budget committee consisted of
gets evolve from rational co-ordinated processes eight members: one from accounting, production,
of delegated management within central control, administration, marketing, and purchasing plus
providing forward plans, co-ordination, targets, the three directors. The annual budget expressed
performance evaluation, and a basis for rewards. in physical terms was reviewed monthly or even
Such transparent, delegated accounting was not occasionally weekly. Following telephone con-
found in PC, though accounting changed sub- versations with production and marketing man-
stantially after full privatisation but not as pre- agers, ED would reshuffle budgets and then meet
dicted by policy makers (Uddin & Hopper, 1999). marketing officials and production managers to fix
After privatisation, there were significant man- revised targets or change product lines. A senior
agerial changes. The majority shareholder became production manager remarked, ‘‘We revise targets
the managing director (MD) of PC and his as new information comes through. In this case ED
younger brothers held the other two directorships plays the vital role.’’
of executive director (ED) and marketing director. Production managers were there to execute the
ED took control of the production department, commands of ED who monitored them through a
decreasing the chain of command, cutting man- new reporting system based on logbooks, quick
agers from fifteen to six, but retaining technical informal feedback of results, and frequent unan-
and experienced officials to run operations whilst nounced shop visits. ED explained, ‘‘It is easy to
appointing new managers to lower managerial control. I don’t have to oversee the long chain. All
positions. The technically sound but politically heads of the department keep in touch with me every
corrupted accounting systems were not day. Therefore, decisions are not delayed at all.’’
reformed — rather, they disappeared from view. Decisions were centred on ED. A department
Cost information was still collected through head commented, ‘‘We don’t have to give final
accounting systems and the owner-managers’ per- decisions. We merely give advice. ED gives us deci-
sonal contacts but the research revealed no pro- sions which we must follow.’’ The direct, centralised
fessional cost accountant or associated systems controls put heavy demands upon mid-level man-
dedicated to providing cost information to man- agers to meet budget: ‘‘We have no choice but to
agers outside of the family. produce. We get a very tight schedule for production
Managers had little idea whether the organisa- since the production budget is even reshuffled daily
tion was running profitably, which is unsurprising due to the market situation. It is possible now
as no internal, financial reports were distributed because we don’t have any labour problems’’ (Pro-
after 1993. Budgets in the normal sense of routine, duction Manager). Despite not receiving cost data,
regular, downwards financial reporting to man- cost reduction became the language of managers
agers disappeared. However, the private financial who relayed this message to foremen and super-
budgets of the owners were translated into physi- visors. Redundancy programmes were the main
cal budgets passed down to production managers source of cost reductions, aided by cuts to benefits
who transmitted their messages (and pressures) to and allowances.
first line managers (foremen and supervisors). Line Top management used physical budget figures
managers were not given financial data but they to evaluate the performance of production man-
were subjected to rhetoric on the need to cut costs agers. Feedback systems were improved in terms
to increase profitability. of accuracy and speed but they were essentially ad
660 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

hoc with arbitrary imposed targets. Production and power they no longer needed harmonious
managers had to justify deviations from budget to relationships with supervisors. Mindful of their
ED. The budgetary controls disciplined produc- temporary job tenure, supervisors sought to
tion managers not because of any accepted logic demonstrate good performance to senior manage-
and reasonableness of numbers, or their reinfor- ment by increasing production on their shift but
cement by rewards, but because of power rela- this was difficult given their section’s inter-
tions. The owner/managers were the final dependence with other units, and their lack of
authority on recruitment, punishments, promo- authority over permanent operators responsible to
tions, dismissals, and all other company matters, foremen (also permanent). Supervisors had to
including budget targets. indulge in shop floor deals with workers to show
Production managers realised targets by pres- attainment of output targets. This not only cov-
surising supervisors who in turn had to wrestle ered securing their effort to produce but also their
with the problem of securing worker effort. After co-operation in ‘chiselling’ practices to inflate the
privatisation supervisors and foremen had greater output of their section per shift.
responsibility for allocating tasks, achieving pro- Packaging workers started work early before the
duction targets, and extracting worker effort. shift began. All packages were numbered to indi-
Their previous role within the politics of produc- cate the shift number and date. Supervisors were
tion lubricating political interventions withered. careful about this because the number of packages
Now most supervisors were temporary: permanent (each containing 72 soaps) indicated their pro-
supervisors being transferred to other jobs or laid ductivity. To maximise their recorded output,
off (except for some with strong relationships with supervisors ‘chiselled’ data by getting another
the remaining trade union leaders). Failures to shift’s output attributed to their shift, and stealing
reach production targets brought sanctions, often time by continuing their shift a bit longer. Since
dismissal or non-retention. In contrast, foremen workers and operators had less interest in main-
were kept on as permanent workers as they had taining actual production and ‘chiselling’ produc-
technical skills. The responsibility for finishing tion figures, supervisors had to make deals with
jobs on time fell on the shoulders of supervisors them to secure their co-operation.
rather than on foremen or superintendents.
New reporting systems for supervisors and 6.1.2. Financial reporting
foremen were introduced. Each day they sub- When PC was partially privatised it became a
mitted their logbook to DCC containing shift public limited company quoted on the Dhaka
information such as volume of production, work- Stock Exchange and thence liable to the Company
ing hours of machines, causes of stoppages, the Act of 1994 (which replaced the Company Act of
number of casual workers used, and wastage. 1913), Stock Exchange listing requirements, and
However, as a supervisor commented: ‘‘As long as Security Exchange Rules (1987). These require
the volume of production is right managers have standards of disclosure similar to Western
nothing to say.’’ DCC was proud of how logbooks accounting requirements for listed companies,
had increased the visibility of operations, com- including annual audited published accounts.
menting that, ‘‘I personally developed this reporting Transgressions, according to the rules, can bring
system under the present management. By the virtue heavy sanctions (see section 181–6, Company Act,
of this system, I can understand what went on dur- 1994), even imprisonment in extreme cases. How-
ing the shift. There is no scope for supervisors and ever, the legislated financial reporting regime
foremen to conceal the facts.’’ essential for lubricating markets did not emerge in
He under-rated the powers of human agency PC as anticipated by advocates of privatisation.
and ingenuity. Participant observations revealed PC retained the external reporting system of the
that foremen and workers participated in ‘chisel- pre-privatisation periods but its internal financial
ling’ practices to improve their reported perfor- accounting changed greatly. New computerised
mance. Since shop managers had more authority systems speeded up information for directors. An
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 661

accountant reported, ‘‘We have to send a daily result in fines calculated on a daily basis. This has
report regarding cash and other transactions to the not been enforced, though interviews in 1999 with
owner-managers of the company. The Executive Stock Exchange officials revealed that letters to
Director (ED) and Managing Director (MD) PC requesting publication of overdue reports and
receive these daily reports for their clear under- payment of fines for delay. These had had no suc-
standing about the financial condition of the com- cess but a case had been filed in the High Court
pany.’’ Financial accounting information was the against PC for not holding Annual General Meet-
preserve of the three directors. An accountant ings. The owner-managers used their majority
remarked: ‘‘We record the bills or memo’s which shareholding to their advantage and to inhibit
are signed by MD or ED. All departmental expen- accountability to other stakeholders,18 especially
ditures and income have to be signed by these two minority shareholders and creditors [see company
directors. Otherwise we refer the bills back.’’ The law section 181 (1&2)]. This was not merely an
financial accounting system rather than becoming issue of technical compliance: in 1999 the bankers
a vehicle for external accountability and transpar- of PC filed a case for non-repayment of a loan and
ency degenerated into a private system of book- custom officers discovered that PC had evaded
keeping. value-added tax and supplementary duties for
All financial information was processed accord- several years (Daily Star News, 24th March 2000).
ing to the directors’ instructions. A senior The Commissioner of Customs, Excise and VAT
accountant observed, ‘‘We have two systems for ordered PC to pay Tk. 13,01,871 (approx.
accounting information. One is informal which is a US$26,000) for unpaid duty and taxes including
restricted area only usable with the permission of fines.
ED. The other system is external reporting which is
for other shareholders, the bank, the Tax Authority 6.1.3. The nature of accounting changes
and the Stock Exchange.’’ Another accountant After full privatisation, accounting systems
admitted, ‘‘We have to maintain many informal became the personal fiefdom of the family. The
systems. You know — business is competitive. You nature of ownership and control, especially family
can’t maintain all of them in a straightforward ownership, was significant in this study (Espeland
way.’’ The perception was that the owner-man- & Hirsch, 1990; Scott, 1985) as in the Ansari and
agers manipulated accounting information to Bell (1991) case study of accounting controls in a
lubricate less regular business activities, rather Pakistan firm. In countries with weak capital
than for rational delegated management with markets, a small entrepreneurial class, and incli-
transparent accountability to capital markets. One nations to crony capitalism, privatisation can
individual commented, ‘‘Some informal transac- result in accounting and accountability different
tions are kept in the IOU fund account for irregular from that envisaged by development advisors
payments to trade union leaders and bribery of adopting mythical assumptions of efficient capital
government and tax officials. These transactions markets.
were usually shown under other headings in the Nevertheless, changes in property rights upon
annual reports.’’ A senior accountant commented, privatisation did herald changes to internal con-
‘‘I don’t know what the real transactions were in the trols. Instead of the previously politicised budgets,
IOU fund. It was alleged by some individual that systems made production more responsive to
sometimes the headings of transactions were chan- market changes and there was modest computer-
ged to evade tax such as increasing the amount of isation of information systems but there was no
tax exempted items.’’ evidence of more sophisticated incentive systems.
PC has not published audited yearly accounting
reports since 1995 when the delayed 1993–1994 18
Shareholders can take the company to the court as per
Annual Reports were published. (Accounting section 181-2 (Company Law 94) about the lack of general
managers at PC confirmed that no audited meetings and accounts. However, being scattered, they do not
accounts after 1995 existed). Failure to do so can do so.
662 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

The family monitored cost reduction by measuring owner’s bid. Financial benefits for workers such as
managers’ performance against physical targets provident contributions, bonuses and the work-
and regular feedback from logbooks. These played men participation fund were withdrawn. The
a vital role in arbitrary family-based controls over remaining trade union leadership was managed
managers and thence supervisors and workers. through a mix of tangible and covert actions —
Despite accounting numbers being rarely revealed, including excusing union leaders from work and
the directors’ rhetoric on the need for improved giving them lump sum payments. This was a con-
financial performance justified their dictates to stant cause of complaint by workers and trade union
managers who transmitted similar messages influence evaporated on the shop floor. For example,
downwards. Faced with severe consequences of trade union offices could not open during shifts.
budget failure supervisors entered deals with When the researcher wanted to interview trade union
workers to manipulate information though these leaders they had to find another location.
were of marginal significance to operations as a Trade union activities became limited to formal
whole. As is explored below, the implementation negotiations with the executive director (ED) but
of the physical budgets flowed from the destruc- to little effect. Management reigned supreme. A
tion of the internal state and internal labour mar- production manager commented, ‘‘We can use
kets, a repressive sub-contracting system, work workers in what ways we want. Before privatisation,
intensification, lower wages, and coercive controls this wasn’t possible at all since trade union leaders
resonant of unbridled nineteenth century Western and workers had a strong influence over target pro-
capitalism.19 duction and operations.’’ A trade union leader
admitted, ‘‘We have now limited power because of
6.2. Changes to the internal state the job insecurity. Workers are not interested in
taking part in any demonstrations although we have
Workers initially resisted full privatisation. been trying to get the financial benefits back for
Trade unions occupied the factory, preventing the workers.’’ The redundancy programmes and the
new owners entering their offices. Then, after long absence of trade union leaders from the shop floor
secret negotiations, management secured an reinforced budgetary control and discipline over
agreement with a faction of the trade union lea- workers. As a production manager revealed:
dership and the one-month lockout ceased. A ‘‘Presently we don’t have to face any serious pro-
worker commented, ‘‘We were stubborn about our blems from the part of workers. The deviations of
steps. But some trade union leaders came up with production budgets are mainly due to raw material
proposals such as no redundancies will be made and shortage or machinery breakdown.’’
no financial incentives will be cut off.’’ Workers repeatedly reported that their leaders
These promises never materialised. The new worked for the owners and not them. Burawoy
owners immediately made 75% of the workforce (1979) found similar complaints in Allied Cor-
redundant,20 including the leaders of the trade poration but noted that workers still turned to
union factions who allegedly did not collude in the trade unions to solve shop-floor grievances. In PC
trade unions were not significantly involved with
The authors are indebted to an anonymous reviewer for worker affairs after privatisation. Nevertheless,
much of the content of this paragraph.
their symbolic presence protected management
In 1988, the total workforce was 1261 (1091 manual and
clerical workers and 170 officers). By 1991, it was 1100 (during from legal sanctions as industrial ordinances give
the pre-privatisation period the number of employees ranged permanent workers rights to trade union recogni-
from 1100 to 1200). After privatisation, in 1994 the workforce tion.21 The representation and rights of casual
(including casual workers) declined to 710 employees (615 workers were especially parlous, being excluded
manual and clerical workers and 95 officers). Approximately
from this legislation. When the researcher pursued
700 workers and officers were made redundant after privatisa-
tion in 1993, and 310 new casual workers were gradually re- this with the General Secretary of the trade union
appointed. During the second visit to PC, production managers he was informed, ‘‘We have nothing to do with
revealed that the workforce had remained at 1993–1994 levels. casual worker matters.’’
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After the full privatisation of PC the owners, leaders then organised demonstrations and called
rather than seeking co-operation from an internal for strikes to restore the Provident Fund, and
state, destroyed it and introduced coercive con- secure increased wages and benefits. This received
trols for private accumulation brought about by no shop floor support, though the trade union
state policies of structural adjustment. The results leaders’ lobbying of political leaders resulted in
were consistent with Burawoy’s argument that de- some government pressure upon the owners. The
regulation ushers in coercive regimes of control. researchers could not investigate this dispute
Following full privatisation, collective bargaining thoroughly but it probably marked a break in the
was pushed aside for harsh coercive controls short honeymoon between the owners and the
expressed through budgetary pressure. puppet trade union rather than any significant
In their weakness, trade union leaders allowed labour resistance. Workers were terrified of losing
to remain by management pursued a managerialist their jobs for participating in trade union activities
conception of an internal state, adopting the and they placed little trust in trade unions after
owners’ rhetoric of accounting calculus. The Gen- their previous behaviour.
eral Secretary of the dominant trade union faction In summary, privatisation saw the destruction
commented that PC was over-manned and redun- of the internal state. The economic dependence of
dancy programmes were necessary to revive profit- employees upon the new owners, their loss of
ability.22 The trade unions banned demonstrations access to political influence, and the dire con-
or strikes. Trade union leaders sought to restore sequences of nonconformity, ushered in a coercive
their influence by arguing that co-operation lead- control regime based, in part, on accounting
ing to increased profits would lay the basis for rhetoric and physical budgets.
increased employee benefits. This attempt to
operate an internal state was a charade: trade 6.3. Changes to internal labour markets
union leaders could neither influence production
on the shop floor where they were denied access After privatisation, the new owner-managers
and support, nor could they wrest significant con- largely abandoned previous recruitment and wage
cessions from management. systems. Surviving permanent workers were paid
In July 1999, the owners sacked the major on the old salary structure but management with-
remaining trade union leaders (the president and drew the collective production bonus replacing it
secretary) because, according to a senior manager, with ad hoc, arbitrary rewards fixed by ED. The
‘‘The owner managers wanted to get rid of dishonest original job classification system remained for
leadership. They were putting a lot of undue pres- surviving permanent workers but the use of casual
sures on the owner managers.’’ The trade union labour eroded its effectiveness. There was little evi-
dence of privatisation benefits trickling down to
labour: wages declined and an ill paid group of
According to the 1969 industrial ordinance, every manu-
facturing or service organisation must have collective bargain-
casual workers paid around 1 US$ per 8 hour shift)
ing agents (elected from trade unions at the organisation level) emerged.23 There was little evidence that privatisa-
to protect workers’ interests. Management must meet collective tion facilitated development goals with respect to
bargaining agents monthly to discuss workers’ grievances. If broader criteria of increased employment, narrower
this is not done, the state, through the labour court, can impose income distributions, improved conditions of work,
sanctions. This is a political as well as a legal imperative: poli-
tical parties try to ensure that their trade union is present in all
or increased state revenues (Uddin & Hopper, 1999).
organisations. The symbolic presence of trade unions in PC
satisfied legal requirements and avoided political sanctions. According to the wage commission and labour laws of
It is difficult to ascertain the profitability of PC after full 1993, which would have prevailed in PC had it still been natio-
privatisation given the lack of accounts and their possible nalised, permanent workers would have been entitled to a
unreliability. The 1995 accounts showed a loss in 1994 of 38.76 minimum of US$2 per 8 hour shift, excluding other benefits. It
million taka. An accounting officer during the 1999 visit is not unreasonable to conjecture that wage levels, especially
claimed that PC had not made a profit since full privatisation for unskilled workers, declined by approximately one half after
and it was currently breaking even. privatisation.
664 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

Half the labour force became casual workers workers produced conflict between the two
hired and paid by contractors on a daily flat groups. For example, when the researcher worked
rate — approximately half that of comparable on the packaging section sticking together packa-
permanent workers. Labour contractors supplied ges containing soaps emerging from a wrapping
casual workers to PC on commission. The con- machine, the sticking material used was often thin,
tractor paid the casual workers but they liased which made the job messier. The supervisor
closely with PC’s management to avoid hiring the delighted in making the researcher responsible for
same worker for 90 days continuously, thereby improper work although it was the fault of a per-
becoming permanent under a 1969 Industrial manent worker responsible for preparing sticking
Ordinance and entitled to minimum wages, wel- materials. Such discrimination made casual work-
fare provisions, and trade union membership. ers jealous of permanent workers. Another worker
Casual workers, having few legal rights, had low placed each package behind the researcher so he
costs politically and economically. Shop managers could handle them easily. If this worker was
handled this carefully, having informal arrange- absent then the researcher had to do this task.
ments with contractors about who to hire and fire, Despite knowing that before privatisation this
and when — as instructed by ED. The contractor section had three or four workers instead of the
always honoured management preferences. Before two now allocated, the researcher’s response to the
privatisation, nearly all employees were perma- work intensification wrought by management was,
nent: after privatisation, a large proportion once again, to turn his anger upon an apparently
became casual labour and hence a commodity that failing permanent colleague.
PC’s management could contract or expand daily. Overtime allocations were a further source of
Before privatisation, appointments were politi- lateral conflict. Permanent workers were not
cised: after privatisation, they were at the whim of allowed overtime since it was costly: shop man-
the family owners acting in conjunction with con- agement tried to appoint casual workers instead.
tractors. However, permanent workers were given overtime
Arbitrary rewards and the differential treatment by supervisors wishing to gain their favour. The
of casual and permanent workers by supervisors supervisors would make false allegations of
intensified inter-worker rivalry and weakened shortages of casual workers. This embittered
shop floor solidarity. Prior to full privatisation, all casual workers. Logically, the casual workers’
workers had fixed tasks settled through union resentment should be directed at shop manager
negotiations. After privatisation this was only so and supervisors but it was diverted into conflict
for permanent workers. Casual workers were sub- with permanent workers.
ject to flexible manning: at the beginning of each The promotion system remained officially
shift they assembled in front of the office of a unchanged for permanent workers but was rarely
supervisor responsible for scheduling work. How- practised- possibly because of the lack of influence
ever, supervisors were temporary and needed the of trade union leaders. The new management
co-operation of permanent workers to show good dangled promotion opportunities for casual
performance to shop management, so permanent workers: they could become operators or technical
workers could pick the easiest jobs. Casual work- hands with the possibility of becoming permanent.
ers were exposed to harsher regimes. Before pri- The DCC told the researcher that allocating hard
vatisation, new workers got the hard and risky jobs to new casual workers was part of their
jobs often in unhealthy areas but nearly all were training — an opportunity to increase their skills
permanent. After privatisation, casual workers fil- to enhance their prospect of permanent status.
led these jobs. Whatever, many casual workers were trained to
Despite their culling and loss of rewards, per- perform technical jobs such as machine operation
manent workers felt superior to casual workers. but their grading rarely changed. This presented
Status differences on the shop floor and the dif- casual workers with a dilemma: their chances of
ferential treatment of permanent and casual retention were small and their conditions dire —
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 665

yet refusal to co-operate would only deny them Despite the work intensification, possibilities of
opportunities to become permanent or receive ad its relaxation existed. Workers had informal rest
hoc rewards. These chances, however slight, made arrangements: one worker worked continuously
many casual workers conform to managerial for the first half of the shift then another took
pressures to meet budget. over. The non-active worker would rest. This
The new internal labour market segmenting occurred before privatisation but was less pre-
workers between casual and permanent status valent because there were more workers. The
promoted worker division and strengthened man- researcher saw that shop management turned a
agers’ ability to impose budgets. Internal labour blind eye to this practice: they were content so
markets at PC after privatisation differed from long as output met budget. Indeed, workers’ desire
those described by Burawoy in Allied Corporation to attain budget to achieve unsanctioned rests was
but their consequences were similar. Both repro- functional to production managers, as everyone
duced external labour markets within organisations had to be attentive to work. If anyone lost speed,
to create uncertainty, individualism, and competi- it affected the whole shift since it was a continuous
tion amongst workers. This diverted workers’ process. Therefore, workers showed new collea-
opposition from owners to inter-worker rivalries gues tricks and techniques to finish jobs quickly so
thereby strengthening managers’ power over work- they could take unofficial rest. Workers’ desire for
ers. In PC, this was exercised primarily by coercion breaks led them to inculcate new workers with
whereas in Allied Corporation it was through man- efficient practices and operators sanctioned any-
ufacturing consent. As Burawoy emphasised, the body who made mistakes. For example, the
operation of internal labour markets under capital- researcher was transferred to the night shift with a
ism requires strong union protection for labour new (to him) job. The supervisor took the
and non-arbitrary decisions. The privatisation of researcher there telling him that you have to learn
PC diminished state protection of the workers, all the corners of this production line. However,
enabling the new management to obliterate trade on his first night shift, the researcher was execut-
union politics. Workers became so powerless that ing his job shakily, causing problems further down
management could disregard such considerations. the line. The next worker became impatient and
requested the supervisor to move the researcher.
6.4. Coercion and gaming According to the researcher’s notes: ‘‘His com-
plaint also made me more attentive and efficient in
After full privatisation, consent was no longer a doing my job. Actually, it was a kind of challenge
managerial or political imperative in PC and the for me to do the job efficiently.’’ The technology
new owners could exert coercive controls. Never- and managers’ selective tolerance of work viola-
theless, gaming, chiselling, and making out existed tions reinforced managerial budget goals through
after full privatisation: even under coercive increased worker self-policing.
regimes, they play a role in control. Burawoy Workers were conscious of their exploitation.
(1979) argues that games are neither independent Casual labourers in the Soap Processing Depart-
of, nor in opposition to management, and that ment worked hard in unpleasant conditions: the
they diminish conflicts between workers and man- plant layout was dangerous and the high tem-
agement. This was so in PC. Work avoidance peratures needed to mix soap materials produced
practices with the appearance of resistance actu- considerable dust. Workers understood the health
ally promoted budget achievement. Participant risks and their powerlessness. A worker com-
observations revealed how workers struggled to plained, ‘‘They should have paid us more than the
reach budget quotas to enjoy illicit rest periods other easy works but we are exploited.’’ Workers
tolerated by management. This was functional to occasionally made token acts of resistance, for
budget attainment as it divided workers, rein- example, by deliberately increasing wastage for, as
forced effort, and encouraged self-controls and a worker angrily exclaimed, ‘‘If they screw us, we
coaching amongst workers. will screw them.’’ However, resistance tended to be
666 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

channelled into localised acts directed at line them off? What new facility is being taken off?’’
management rather than broader capitalist rela- Casual workers were less involved in such con-
tionships. versations, possibly because they aspired to per-
Burawoy described how in Allied Corporation manent status or were unaware of lost facilities.
workers’ experience of being ‘screwed’ by man- There was little to suggest that workers in PC had
agement was expressed in terms of their bosses’ internalised gaming to manufacture consent like
failure to facilitate opportunities for making out their counterparts in Allied Corporation.
(1979, p. 66) or making fake allegations against In PC it was the shop managers who were pre-
management. Permanent workers in PC made occupied with achieving budget. Their first ques-
similar complaints about managers who violated tion to workers was invariably, ‘‘How many
established shop-floor norms such as tiffin breaks packages are finished?’’ or, ‘‘What is the speed?’’
and granting overtime. Workers silently resented Mostly workers answered them disinterestedly or
managers’ increased presence on the shop floor. with the hushed response, ‘‘Fck you.’’ One day,
The DCC moved around the shop periodically, DCC asked a permanent packaging worker how
checking the speed of machines and urging work- many packages were finished? The worker hesi-
ers to increase effort. This made workers alert as tated to answer and a casual worker smartly
he could fire them at will. His presence made answered the question. Later the permanent
workers angry — a permanent worker angrily worker was furious with the casual worker shout-
commented, ‘‘He is a mother-fcker and always ing, ‘‘Bastard, is it your father’s factory? Why did
screws us up.’’ Workers had a strong belief that you answer this question?’’
shop managers were responsible for their suffer- Burawoy and Roy observed behaviour incon-
ings. Another permanent worker complained: sistent with a thesis of monetary incentives being
‘‘Production managers always earn money by using the basis of worker co-operation, leading Burawoy
illegal ways. They did it before and now they are to argue that co-operation and consent came from
doing it with the collaboration of owners.’’ Favour- games. Shop floor values not solely explicable by
able attitudes to management and voluntary monetary rewards were found at PC: workers
worker co-operation were not shop floor norms. competed for easy jobs, were sensitive to social
One day a permanent worker was gossiping and stigmas, and they regarded operators as more
laughing with a supervisor — it seemed he had a prestigious because they were skilled — though
good relationship with management. A casual this carried no monetary advantage. However, it
worker pointed to him saying to the researcher, would be wrong to discount the role of materi-
‘‘He is a number one telbaz [someone who always alistic concerns underlying behaviour at PC where
keeps good relationship with their bosses]. That’s workers were on low wages, strove for overtime or
why that mother-fcker sometimes gets overtime double shift opportunities, and alternative
opportunities.’’ Paradoxically, though shop man- employment opportunities were sparse. Workers,
agers were subject to similar budget pressures to managers, and supervisors indulged in making out
workers after privatisation, their increased visibi- and chiselling because of physical budget pressures
lity and demonstrations of power, fuelled workers’ and repercussions of failure rather than any sub-
tendency to blame them for their woes. jective commitment to games. Informal practices
Burawoy found discussions amongst workers in in PC after privatisation were about economic
Allied Corporation were dominated by whether survival under increased budget pressures rather
individuals were ‘making out’ and games. In PC, than the manufacture of consent within capitalist
workers showed little interest in making out pos- rules (Gordon, Edwards, & Reich, 1982). Con-
sibly because there were no piece rates, the pro- fronted by their weakness, workers’ preoccupa-
duction bonus having been withdrawn. Shop floor tions centred on individual concerns rather than
conversations in PC focussed on petty economic collective action. As a worker commented, ‘‘We
struggles such as, ‘‘What benefits had been taken are appointed for doing things — not to make any
off? What managers are doing? How they fck problems. We can’t do anything against the owner
S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 667

because he is giving me money for my breads and 7. Conclusions

living’’. Workers recognised their exploitation but
were pragmatic about their powerlessness — con- The paper concludes by considering the research
fining their resistance mainly to unofficially toler- aims in the introduction namely, whether in
ated informal practices. However, this had similar enterprises within LDCs accounting facilitates
effects to the making out and gaming observed in control over labour by coercion or consent, why
Allied Corporation by Roy (1954) and Burawoy and how do socio-economic factors transform
(1979). Work avoidance formed the basis of accounting controls, and can this be modelled?
workplace behaviour: both instances shared the Fig. 2 summarises the findings of this paper with
self-defeating and paradoxical character of all respect to these questions. The major difference
such practices in that they reproduce the condi- between Figs. 1 and 2 is the distinction between
tions of their existence — the pressure of work and idealised and enacted regimes of control in Fig. 2.
conformity to managerial ends. This is introduced because of scepticism on whe-
Gaming is highly contingent: it is too easy to ther hegemonic and market-based regimes ever
assume that it is invariably about the manufacture operated as intended though their importation
of consent. Recent case study research in impacted Bangladeshi society, and accountability
accounting has concentrated on subjective issues and controls of enterprises.
concerning control; for example, Ezzamel and The basic argument underlying Fig. 2 is that
Willmott (1998) on employees’ notions of self- transformations of regimes of control shape
identity, and Miller and O’Leary (1993, 1994) on accounting. After colonialism, imported idealised
economic citizenship and corporate governance. regimes of control, firstly hegemonic and then
Such work illustrates how management uses new market-based, were transformed by production
tactics to secure employee co-operation within the and state politics, into quite different regimes of
space granted by employee resistance. Their sites control in practice, namely political hegemony and
had employees with significant collective power political despotism respectively. Accounting
resulting in a degree of management dependence underpinned both idealised regimes and it too was
upon labour. Management had to secure the transformed by politics.
voluntary compliance of labour by inculcating Colonial despotism was not studied empirically
favourable attitudes and norms of co-operation but it was an important antecedent to the idealised
through means such as gaming and teamwork. hegemonic regime. The coalition of intellectuals
However, when workers are economically depen- and trade unionists formed during independence
dent upon an employer, have no trade union pro- struggles provided members of the post-indepen-
tection, and are divided by segmented labour dence government. Also, the aftermath of war
markets, then coercive controls can prevail. Man- made nationalisation of industry a pragmatic
agement need not synchronise positive employee necessity, as was recognised by external aid agen-
attitudes with behaviour: subjectivity is irrelevant cies. The incoming government tried to build a
to effort. In PC, capital could impose its ends hegemonic regime on the ashes of colonial despot-
without legitimisation and consent. Management ism to construct a modern democratic state based
directly and explicitly stripped out labour costs on socialism, central planning, rational-legal gov-
regardless of whether labour had attitudes of co- ernance, bureaucracy, and recognised trade unions.
operation or their self-identity was threatened. Just An apparatus of collective bargaining, systematised
as the critics of Braverman (1974) rightly sought to conditions of employment, rational governance
address the deficiencies of his analysis regarding based on centralised budgets, and accountability to
subjective factors, there is a danger that an undue Parliament through financial reporting was estab-
preoccupation with subjectivity can deflect atten- lished for state enterprises such as PC. The aim was
tion from the importance of materialistic and to control labour through consent.
institutional factors (Arnold, 1998, 1999; Froud, However, the idealised hegemonic regime with-
Williams, Haslam, Johal, & Williams, 1998). ered in the face of Bangladesh’s turbulent politics.
668 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

Paradoxically, the bureaucratic powers vested in The idealised hegemonic regime withered as the
politicians through the legislation of the hege- combination of production and state politics
monic regime gave politicians the means to sub- wrought a regime of political hegemony.
vert it. The consent and support of labour was Political hegemony was characterised by poli-
essential for politicians during the pre-privatisa- tical factionalism and strife, and the domination
tion period of PC. Politicians used their statutory of political ends in state enterprises and state
powers to intervene into public enterprises for organs. Prima facie, organised labour exercised
party advantage and to achieve worker consent. power through political gaming in the workplace
Labour resistance was channelled via party-based but through constrained channels of trade unions,
trade unions into the politics of patronage and led by middle class educated party cadres, acting
party competition rather than class-based strug- as industrial arms of political parties. In their
gles. This brought concessions to PC’s workers powerlessness professional managers in state
over matters such as production bonuses. Legal- enterprises such as PC either acted honourably as
rational accounting systems of budgets for inter- best as they could, or served political masters, or
nal control of enterprises within a nexus of state pursued the letter of their duties rather than the
planning, and financial reports for accountability spirit. Similarly, state officials maintained the ves-
to ministers in Parliament formally remained but tiges of legal rational bureaucracy, or used their
were ignored by politicians and managers alike. office for personal or political advantage, or

Fig. 2. Regimes of control in a less developed ex-colonial country.

S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672 669

followed rules and procedures ritualistically and be removed, or their firms will whither or be taken
procedurally. Not surprisingly, accounting prac- over (Adam et al., 1992; Furubotn & Pejovich,
tices became de-coupled. External accounting 1972; Hanke, 1986; Rees, 1985). In brief, it is
reports and budgetary controls were prepared assumed that contemporary Western financial and
according to official rules and procedures to give managerial practices will flow from market forces
the appearance of rational governance to provide and state regulation whilst simultaneously being
external legitimacy though it was widely known the motor of transformation to markets and better
that their unreality and marginality to decisions governance.
meant they played little role in accountability, In their haste to privatise, governments and
planning or control. advisory bodies paid insufficient attention to
However, politics did not operate in a vacuum: creating effective regulatory structures and open,
issues of economics and governance bore on pop- transparent capital markets (Uddin & Hopper,
ular support, drained state coffers and, frustrated 1999; World Bank, 1995). Imposing market-based
the external financial agencies that bankrolled the policies on societies with a small capitalist class
government. Juggling these conflicting pressures inclined to transactions through familial relations,
made politicians adept at political schizophrenia, patronage, and irregular means, facilitates crony
favouring market policies on one hand and reap- capitalism rather than market capitalism. Thus ,in
ing the political benefits from controlling state PC, the majority shareholders could operate rela-
enterprises on the other. Political hegemony based tively unfettered. Weakly enforced regulation
on patronage and charisma is inherently unstable. meant that statutory rules on auditing, annual
It fuelled popular protest, led to policy failures reports, accountability to shareholders, and taxa-
such as loss making public enterprises, and it pro- tion could be ignored. Financial information
voked repeated fiscal crises. The latter were espe- became a prerogative of the family rather than
cially sensitive for Bangladesh governments’ as market players. Similarly, little consideration was
they were increasingly reliant upon external sour- paid to protecting workers through internal states
ces of capital that increasingly pressed for market- and internal labour markets. This paved the way
based reforms. A growing business class with for the new owners of PC after full privatisation to
increasing political representation supported this, abandon its internal state and internal labour
not least because they were potential beneficiaries. markets, and reduce wages and benefits, segment
Politicians were in a quandary: incrementally they labour markets, and introduce redundancies and
shifted to market-based policies, sometimes with coercive controls. Gaming did not disappear upon
the tacit support of trade union leaders. Thus PC privatisation but did not manufacture consent but
was privatised. merely relieved work pressures. As with gaming in
The idealised market-based regime derives from regimes of consent it was functional to managerial
structural adjustment policies of the World Bank aims. Financial accounting became a private
incorporating deregulation, privatisation, export information system expressed to managers as
zones, and an open economy. Proponents presume physical targets that transmitted coercive pres-
that changed property rights and market forces sures down the line. This was done in the knowl-
will diminish political interference, increase enter- edge that internal labour markets and the internal
prise efficiency, raise profits and tax revenues, state could now be ignored: labour was weak,
promote economic growth, and thus aid develop- divided, fearful of losing their job, and unpro-
ment (Cook & Kirkpatrick, 1995; World Bank, tected by weakened trade unions. There was much
1993, 1995, 1996b, 1997). This will be policed by to support Armstrong et al.’s (1996) claim that
stock markets acting on accounting information in budgets were most potent managerially when
external reports. Private owners failing to rejuve- labour was weakest.
nate enterprise rejuvenation by improved man- On the evidence of PC, controls consistent with
agement controls such as budgets and rewards market-based regimes predicted by the World
linking activities to market performance will either Bank and its advisors did not emerge — thus, our
670 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672

depiction of market-based regimes as an idealised Adam, C., Cavendish, W., & Mistry, P. S. (1992). Adjusting
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research and the CIMA Reasearch Foundation
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