A Bangladesh soap opera: privatisation, accounting, and ...mail.tvec.gov.lk/cell/pdf/Bangladesh_soap_opera.pdf · A Bangladesh soap opera: privatisation, accounting, and regimes of

A Bangladesh soap opera: privatisation, accounting, andregimes of control in a less developed country

Shahzad Uddina, Trevor Hopperb,*aSchool of Management and Economics, Queen’s University Belfast, Belfast BT7 1NN, UK

bManchester School of Accounting and Finance, University of Manchester, Manchester M13 9PL, UK

Abstract

This paper reports an intensive case study of a soap manufacturing company in Bangladesh that was nationalisedupon 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 stateand 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 ofhegemonic 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 wassecured 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 controlswithin a new despotic regime. New owners destroyed the internal state and internal labour markets and, followingwidespread 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 workintensification and proved functional to management. Significant changes to accounting controls were made. Externalreporting 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 physicalform to reinforce coercive pressures upon managers and thence the shop floor. The paper concludes by relating thefindings to a revised model of transformation of control regimes in Bangladesh # 2001 Elsevier Science Ltd. All rightsreserved.

1. Introduction

This research stems from an interest in account-ing and development policy in poor countries,especially Bangladesh. The little research that

exists on management accounting in less devel-oped countries (LDCs) rests on brief interviewswith senior managers and surveys (for example,Abdeen, 1980; Anderson & Lanen, 1999; Frucot &Shearon, 1991; Rahman & Scapens, 1986). Thereare few intensive case studies and an almost totalneglect of participatory observation (an exceptionis Ansari & Bell, 1991). Thus the aim is to give agrounded account of controls in a Bangladeshisoap factory (anonymised as PC).

0361-3682/01/$ - see front matter # 2001 Elsevier Science Ltd. All rights reserved.

PI I : S0361-3682(01 )00019-8

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

www.elsevier.com/locate/aos

* Corresponding author. Tel.: +44-161-275-4014.

E-mail addresses: [email protected] (S. Uddin), trevor.

[email protected] (T. Hopper).

The paper has theoretical ambitions. Burawoy’s(1979, 1985) theorisation of management controlsof labour processes is used to develop a politicaleconomy of accounting in LDCs to addresses:

1. How, if at all, did accounting help achievecontrol at the point of production, whetherbased on consent or coercion?

2. How did state politics involving politicalparties, classes, trade unions, and externalfinancial institutions interact with labourresistance at the point of production totransform controls, including accounting?

3. Can the historical transformation ofaccounting in enterprises in LDCs, especiallyex-British colonies, be modelled?

The paper is structured as follows. First, thetheoretical constructs underpinning the researchare outlined. These draw from Burawoy’s (1979,1984, 1985) work on the control of labour pro-cesses, especially the manufacture of consent andthe historical transformation of controls inter-nationally. Contextual information about Bangla-desh, the firm researched (PC), and its changingownership is woven into the section. The researchmethods are then described followed by the casestudy. The first part examines control in PC afternationalisation and then partial privatisation. Thesecond part examines how controls changed uponprivatisation. The paper concludes by returning tothe original research questions and offers a modelof accounting transformation in LDCs.

2. Burawoy, control, consent and coercion

Previous research demonstrates how industrialrelations and trade unions are central to under-standing accounting within the Bangladeshi publicsector (Alam, 1990, 1997; Hoque & Hopper, 1994,1997; Uddin, 1987). Interventions by politiciansand trade union leaders rendered technicallysound accounting systems ineffective, leading topublic sector deficits and state financial crises.Public enterprises became an impediment to eco-nomic development. Bangladeshi governments,spurred on external funding agencies such as theWorld Bank and the IMF, subsequently adopted

programmes of privatisation with varying degreesof enthusiasm. This fuelled intense political debateand industrial conflict within Bangladesh.

Given the importance of political institutionsand workers’ resistance in accounting in Bangla-desh, a political economy approach to researchwas adopted (Armstrong, 1987, 1991; Burchell,Clubb, Hopwood, Hughes, & Nahapiet, 1980;Hopper, Cooper, Lowe, Capps, & Mouritsen,1986; Hopper, Storey, & Willmot, 1986, 1987;Hopwood & Miller, 1994; Neimark & Tinker,1986; Tinker, 1980). The work of Burawoy (1979,1984, 1985) on management control was especiallyapt, despite its neglect in accounting research.1 Ittraces how shop floor conflicts, industrial rela-tions, domestic politics, external finance, andmanagement controls shape regimes of controls inenterprises. These factors are all important inBangladesh. Burawoy’s early work at Allied Cor-poration2 was based on an intensive case study,which was subsequently compared with case stud-ies from other countries, including LDCs not dis-similar to Bangladesh. As this research was casestudy based, utilising Burawoy offered possibilitiesof comparative analysis.

In contrast to most labour process theorists whofocus upon conflicts within capitalist enterprises,Burawoy sought to explain why workers normallyco-operate. He recognises that coercive controlsform the basis of labour process analysis but heargues that the increased power of labour meantfirms had to supplement coercion by the organi-sation of consent. Thus Burawoy addresses amajor criticism of labour process theory, namelyits neglect of subjectivity and how consent is pro-duced. This is relevant to accounting, given claimsthat accounting data shapes workers’ definition of

1 Burawoy conducted his participant observation study

(1979) of shop floor controls by working for 10 months as a

miscellaneous machine operator in the engine division of a

USA multinational — Allied Corporation [coincidentally the

site of Roy’s, (1952, 1953, 1954, 1958) classic work on shop-

floor behaviour.2 Braverman (1974) consciously viewed subjects as deter-

mined by the objective class structure leaving the examination

of subjectivity to others. His neglect of the subject is a major

criticism of labour process theory (Aronowitz, 1978; Cressey &

MacInnes, 1980; Elgar, 1979; Knights, 1990; Knights & Col-

linson, 1985; Littler & Salaman, 1982).

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

situations and hence their compliance with man-agerial demands (Berry, Capps, Cooper, Fergu-son, Hopper, & Lowe, 1985; Knights & Collinson,1987). However, Burawoy (nor Roy who pre-viously researched the same site — Allied Cor-poration) reported that accounting was significantin securing shop-floor control. Accounting andsociological research appear to conflict regardingthe significance of accounting for securing thecontrol of labour. The research adopted Bur-awoy’s key constructs — coercion, consent, theinternal state, internal labour markets, and gam-ing, plus the apparently problematical construct ofaccounting control systems — to create an analy-tical framework to investigate this.

2.1. Coercion and consent

Burawoy does not deny the possibility of man-agement using coercion, for example by with-drawing minimum wage limits or hiring and firingin violation of collective bargaining. Coercionoccurs when ‘‘For their economic survival, work-ers are presumed to be totally at the mercy of thecapitalist or his agent, the overseer, who can arbi-trarily intensify the work, provided that hisdemands are compatible with the reappearance ofthe worker the next day (and sometimes not eventhen) and that they remain within certain broadand often unenforced legal limits’’ (Burawoy,1979, p. 27). Coercion is likely to occur duringperiods of uncertainty, profitability crises, anddiminished state protection to workers and tradeunions, or when workers’ resistance is weak. Thisis relevant in poor ex-colonial countries vulnerableto currency fluctuations and fiscal crises of thestate. Unemployment, weak trade unionism, weakregulation, the state’s dependence upon externalcapital, and the nature of political elites can renderworkers powerless and unprotected.

Burawoy’s concern is to explain, without resortto economic determinism, how capitalism con-tinuously secures increasing volumes of surplusvalue in potentially antagonistic labour–capitalrelationships. Burawoy’s basic premise is thatwhilst capital may coerce workers it must alsosecure their co-operation by obscuring the exploi-tative character of its control.3 He argues that

Marx’s analysis of the labour process emphasisedcoercion and ignored the organisation of consent,possibly because this was not significant for nine-teenth century capitalism. Burawoy argues thatthe increased power of labour in rich economieshas led to wages being increasingly independent ofindividual effort. Thus coercion must be supple-mented by consent. Consent is defined as ‘‘thenecessity to elicit a willingness to co-operate in thetranslation of labor power into labor’’ (Burawoy,1979, p. 27). Consent flows from the organisationof activities rather than workers’ beliefs. Beliefs,Burawoy claims, are determined primarily byexperiences outside the factory. Thus consentresults from tangible management actions thatpresent the worker with the appearance of choice,albeit within a narrow range congruent with man-agerial aims. Consent or self-discipline is not pro-duced from ideological inculcation or socialisationbut, paradoxically, through workplace participa-tion (Sturdy, 1992, p. 117). Burawoy identifiesthree sets of activities crucial to the manufactureof consent: internal labour markets, the internalstate, and games.

2.2. Internal labour markets

Burawoy noted how shop-floor consent sinceWorld War Two was facilitated by internal labourmarkets, partly as a consequence of larger, moreconcentrated firms. Internal labour markets havesix aspects:‘‘a differentiated job structure, aninstitutionalised means of disseminating informa-tion about submitting applications for vacancies,non-arbitrary criteria for selecting employees forvacancies, a system of training on the job, ways ofgenerating a commitment to the firm that makesjobs in other firms unattractive, and, finally,maintaining the allegiance of employees after theyhave been laid off’’ (Burawoy, 1979, p. 98).

3 Burawoy’s work has its critics, e.g. Littler (1990); Warde

(1992) and Thompson (1990). Nevertheless Burawoy probably

offers the most cohesive recent analysis of production, man-

agement controls and state politics in the Third World and

colonised countries: hence its centrality to this research. Bur-

awoy’s claims that controls over labour processes are related to

the obscuration of surplus value rather than the de-skilling

thesis of Braverman are not considered here.

S. Uddin, T. Hopper /Accounting, Organizations and Society 26 (2001) 643–672 645

Neo-classical economists examine internallabour markets in terms of organisational effi-ciency and whether they are more efficient thanexternal labour markets (Doeringer & Piore,1971). To Burawoy internal and external labourmarkets are similar: each reproduces competitiveindividualism. However, internal labour marketsalso bring systematic, objective job mobility thatcements workers’ commitment to enterprises.Thus internal labour markets expand workers’choices with the prospect of greater reward butconstrain behaviour within narrower manageriallimits. The ensuing individualism and competitionbetween workers redistributes conflict, therebyobscuring and helping secure surplus value(Braverman, 1974; Doeringer & Piore; Edwards,1975, 1979; Polanyi, 1944). Thus the collectivemobilisation of workers as a class is frustrated andworker/management tensions are reduced.

2.3. The internal state

Prior to the cessation of World War Two, theactivities of organised labour were curtailed andoften resisted by firms such as AlliedCorporation — the site of Burawoy’s research.After the war this changed rapidly: companiesrecognised trade unions and instituted formal col-lective bargaining and grievance procedures. Theycreated internal states4 (normally incorporatingtrade unions through collective bargaining andgrievance procedures). Such states are relativelyautonomous, so long as they protect managementfrom itself — especially making arbitrary inter-ventions that undermine consent. Companiesmaintain the relative autonomy of union leader-ship and legitimise the union as a bargaininginstrument providing it co-ordinates union andmanagement interests within the rules and regula-tions of labour contracts. This must expand theprofits that provide the source of concessions tolabour (Burawoy, 1979, p. 119). Thus the unionacts as an umpire: protecting the rights of indus-trial citizens and overseeing the punishment of

offenders against contractual obligations (Bur-awoy, 1979, p. 113; Flanders, 1970). The internalstate has similar functions to internal labour mar-kets. It constrains managerial prerogatives andendows workers with rights as well as obligations.Collective bargaining reconstitutes shop-floorconflict into a framework of negotiation (Reuther,1958) that generates a common interest betweenthe union and company based on the survival andgrowth of the enterprise (Przeworski, 1978).However, by negotiating on marginal changes, itdeflects workers’ attention from more funda-mental capitalist relations of ownership and con-trol. Burawoy (1979) saw collective bargaining asanother game — ‘‘this time a game about rulesand outcomes of other games, such as makingout’’ (p. 115).

2.4. Gaming behaviour

Taylor argued that piece rate systems co-ordi-nate the interests of management and workerthrough a mutual interest in financial gain (Tay-lor, 1947). Scientific Management brought controlsystems separating the conception and executionof work, and shop floor rewards based on piecerates, subsequently reinforced by production tech-nologies that limit autonomy.5 Burawoy arguesthat the increased power of labour rendered suchcontrol problematical and firms had to use con-sent. Thus, collective bargaining governed grie-vances and rewards, for example piece ratesbecame set in nationally negotiated labour con-tracts rather than by time and motion study andlocal negotiation. Yet these factors give only apartial explanation of how consent is produced.Burawoy observed that managers did not con-tinuously intensify work, rigidly apply contractrates and duties, or seek further separation ofconception and execution of work in the machineshop of Allied Corporation. Instead they relaxedthe enforcement of some controls to permitgreater worker autonomy. He argued that this was

4 There is a vast literature in the British tradition of indus-

trial relations pluralism on trade unions and governance within

the internal state (e.g. Flanders, 1970).

5 Burawoy acknowledges the importance of technology but

does not examine it in detail as it was constant in his studies of

Allied. This research has ignored technology for similar rea-

sons.


functional to management as it promoted indivi-dualism and ‘gaming’ amongst workers thatdiverted labour conflict from management intopetty local disputes with fellow workers. Bur-awoy’s identification of gaming behaviour was notnew to the labour process literature (see forexample, Baldamus, 1961; Crozier, 1964; HanriDe Man, 1927; Roethlisberger & Dickson, 1939).His contribution was linking it to the manufactureof shop-floor consent and management control.

Burawoy’s study in Allied Corporation con-firmed Roy’s observations of ‘‘norming’’, ‘‘chisel-ling’’ and ‘‘making out’’ by production workers.This is normally interpreted as worker resistanceto mitigate managerial pressures and to gain easierrates and greater autonomy. In contrast, Burawoyobserves that such behaviour stems from manage-rial choices and reinforces managerial control.Managers deliberately promote shop-floor games,relax workplace rules over matters such as inspec-tion procedures and rate fixing, and enhanceworker autonomy (Buroway, 1979, pp. 71–72) aspractices permitting worker manipulations pro-mote individual performance and effort, and co-operation between foremen and workers, andultimately mask potential sources of conflict.Individualistic rather than collective reward sys-tems reinforce this, as they generate competitionand conflict amongst workers. Labour’s partici-pation in capitalist choices within games generatesconsent to capitalist rules.

2.5. Accounting information systems

There is little evidence directly associatingaccounting with coercive control of shop floorlabour. Managers that can operate arbitraryregimes due to unequal power relations need notfinancially justify their actions to workers or tieshop floor targets and rewards to financialexpressions of production such as budgets —physical (non-financial) targets, rules, penalties,and direct supervision will produce effort. How-ever, tight budgets imposed on managers cantransmit pressure downwards to intensify pressureand coercion on the shop floor.

Most research on accounting and labour controlis on accounting’s contribution to manufacturing

consent. It acknowledges the importance ofgames, for example, Hofstede’s (1968) research onbudgeting as a game bears empirical similarities toBurawoy’s observations. However, how eachauthor traces its significance differ markedly.Hofstede, in a Human Relations tradition, argues:

. . . planning and control, essential factors forany organisation, can be seen as a game bymanagers. The trick, then, is to get managersto approach the budget as if it were a game —in a positive and high-spirited way. A well-played budget game means involvement, co-operation, excitement, and a positive con-tribution (Macintosh, 1985, p. 16).

To a labour process theorist such as Burawoy,this produces compliance to exploitation. Yet inBurawoy’s writings accounting plays no direct rolein shop floor gaming or the control of labour. Thismay be because financial budgets stop at first linesupervisors or earlier, and shop floor targets arebased on physical extrapolations of budgets. If so,managerial gaming associated with budgets maybe associated with shop floor gaming based onphysical targets. The issue is how and when (if atall) are management budget games and shop floorgames connected, and does this help secure con-trol through consent?

Burawoy did not explicitly study accountingthough others have subsequently done so from alabour process perspective (Armstrong 1985, 1991;Hopper et al., 1986, 1987; Hopper & Armstrong,1991). Such studies claim that accounting techni-ques manufacture worker consent by reproducingsectional interests and a mystificatory ideology ofefficiency. Accounting provides ideological rein-forcement of the priorities of capital, reproduceshierarchical relations within enterprises, andinstitutionalises labour subordination throughpurportedly objective analyses and reports(Roslender, 1996, pp. 471–472). However, explicitdemonstrations of how accounting affects work-ers’ beliefs and their actions at work are sparse.An exception is an analysis of shop floor beha-viour by Knights and Collinson (1987) that claimsaccounting reports reproduce notions of economic


imperatives and individual accountability thattally with worker attitudes of masculinity andtheir discourses conducive to managerial practices.Knights (1990) subsequently claimed thataccounting is an invisible hand that subjectivelyjustifies controls such as bonus systems to work-ers, whose voluntarily engagement in practicesreproducing existing social orders prevents themadvancing a revolutionary political praxis.

The implications of the small number of studieson accounting and shop floor control that exist isthat accounting helps constitute subjectivity andworkplace consent. However, few studies tracehow accounting directly and tangibly does this. Ifso, is it through gaming or just an inculcation ofattitudes favourable to management? Both propo-sitions have problems. If worker beliefs are deter-mined outside the enterprise, as Burawoy claims,then the effects of managers using accountingreports to inculcate favourable attitudes amongstfactory workers may be marginal. Also, the evi-dence is slight that accounting manufactures con-sent through shop floor gaming, either directly orvia budget games of managers. Armstrong, Mar-ginson, Edwards, and Purcell (1996), imply thatthis is more likely under conditions of managerialweakness. If so how management uses accountingto control labour may be contingent, for example,gaming associated with accounting may disappearwhen management is strong and/or uses coercivecontrols.

The relationship of accounting to internallabour markets, the internal state, and hencelabour control is similarly poorly understood.Hopper et al. (1987, p. 446) argue that accountingprovides an ideological reinforcement of labourrelations through the way it portrays organisa-tions, their goals, employment contracts, and thenecessity of hierarchy. Prima facie, accounting andinternal labour markets appear inter-related.Accounting can reveal the scope for material con-cessions in labour contracts, and assumptionsunderlying its calculations can legitimate manage-rial practices and obscure capitalist relations ofproduction. Nevertheless, research on accountingand the internal state indicates that accounting hasplayed a minor role in industrial relations, thoughit may be used opportunistically or tactically

within negotiations (Batstone, 1979; Gray, Owen,& Maunders, 1987; Owen & Lloyd, 1985). How-ever, much of this work lay in an era of hegemoniccontrol characterised by internal labour marketsand an internal state. As will be argued below,capitalist relations may be different in more globaleconomies where managers have greater powers.Armstrong et al. (1996) claim that budgeting inlarge UK companies is connected to the control oflabour: budgets being most used when manage-ment has the freedom to act on the information.This normally occurs when the power of labour isweakest. If so, then accounting should be moreprominent within weakened internal states. Inderegulated market situations external labourmarkets may become more prominent andaccounting may become less concerned with fac-tors producing consent. Instead it may reproduceexternal labour markets by converting directlabour to a variable cost through subcontractingand tying economic rewards to productionvolumes. Studies of organisations undergoing cri-sis and transformation in the past two decadessuggest that this may be so (Berry et al., 1985;Miller & O’Leary, 1987, 1994).

To summarise, the relationship of accountingcontrols to shop floor control is poorly under-stood under either coercive or consensual regimesof control. Moreover, academic accountants andsociologists differ over accounting’s import in thisrespect. These issues motivated this research.However, the researchers had to extend their ana-lysis beyond production to state politics.

3. Regimes of control in Bangladesh

Burawoy’s later work (1985) is a historical ana-lysis of control in advanced capitalist,6 socialist(communist),7 and ex-colonial developing coun-tries. It builds on theoretical constructs from theAllied Corporation study but substitutes theinternal state with the ‘‘politics of production’’because the former is too focussed on the factory.The politics of production links the factory to thestate and ultimately global politics8 and it is used,inter alia, to analyse when and why controls arebased on coercion or consent.


Burawoy’s work analyses the historical trans-formation of controls in LDCs sharing a legacy ofBritish colonialism with Bangladesh: hence itsattraction and pertinence here. Burawoy criticiseseconomists and sociologists for neglectingLDCs — ‘‘the hidden abode of production’’ —and, when they do, their over-emphasis on marketrelations and neglect of labour processes, classstruggles, and state politics. Burawoy’s delineationof regimes of control in LDCs is adopted in figureone to build an analytical model of transforma-

tions of controls in LDCs to study PC — the sub-ject of this paper. Three ‘ideal-type’ productionregimes in post-colonial LDCs are identified:colonial despotism, hegemonic, and new despotic.Fig. 1 summarises how control veers from coer-cion to consent and the nature of accountingunder each regime. Conflicts and contradictions ofdomestic and state politics within each regime leadto its demise and its replacement by another. Fig. 1identifies how and when each regime relates tochanged forms of ownership of PC. The dynamicsof this model and its relationship to accountingare explored in the following section.

3.1. Colonial despotism and the private ownershipof PC (1959–1971)

Colonial despotism occurs where foreign capitalhas complete control over labour with little stateintervention. Control tends to be coercive, arbitrary,physical, sometimes violent, racist, and often extendsto workers’ family lives. Colonial governments exer-ted little control over companies, giving rise to com-pany states where companies governed theiremployees and possessions. Accounting was unne-cessary for controlling employees but financialreports were important for controlling overall per-formance, securing remittances to company head-quarters overseas, and satisfying external reportingrequirements of the parent company (Borkowski,1997; Rahman & Scapens, 1986). However, overtime nascent trade unionism and labour resistancein factories and mines, manifest in riots andstrikes, often led colonial powers to grant limitedcollective bargaining and labour rights. Thisoccurred in Bangladesh when it was part of BritishIndia (Bhattacharjee, 1986; Murshed, 1989).

After World War Two, many colonies weregranted independence following domestic libera-tion struggles led by coalitions of middle classintellectuals and labour leaders (Murshed, 1989).In Bangladesh this occurred in two phases. Fol-lowing Indian independence, Pakistan was createdin 1947 consisting of East (Bangladesh) and WestPakistan. This provoked a Bangladesh indepen-dence movement seeking separation from WestPakistan. Independence came in 1971 following abrief war.

6 Burawoy describes how factory control regimes within

capitalist societies are transformed initially from market des-

potic regimes — characterised as patriarchal, paternalistic, and

market-based - as in the UK and USA prior to the early twen-

tieth century, to hegemonic regimes — based on the manu-

facture of consent as noted in Allied Corporation. However,

under the pressure of global competition and weakened states

these are now giving way to hegemonic despotism, char-

acterised by coercive controls and collective bargaining that

extracts concessions from workers through threats such as fac-

tory closure. Fractions of the working class compete to be

attractive to international capital. Their powerlessness is accel-

erated by a decline in popular and state support for working

class institutions. The major difference between hegemonic

despotic regimes in developed countries and new despotic

regimes in LDCs is that trade union rights, state compensation

schemes and other protections for workers continue to func-

tion, albeit in a weakened form, in richer countries.7 Burawoy noted differences in Eastern European commu-

nist states compared to advanced capitalist ones. He argues

that bureaucratic despotism rather than hegemonic regimes of

capitalism prevailed during communism. Enterprises were arms

of the state and controlled through a state central plan. How-

ever, enterprises had to bargain with the centre for resources

whilst constantly improvising in the face of shortages. This led

to enterprises having two sets of controls: the official central

plan and less formal dealings between the enterprise and state

officials. This gave rise to a core and periphery labour force.

The core (often party members and trade union officials) man-

aged tensions between the economic plan and curried favours

from state bureaucrats and political officers, leaving peripheral

workers to execute their tasks under coercive conditions. Pre-

vious research on nationalised firms in Bangladesh operating

within central planning had revealed similar splits between for-

mal and political controls — though they did not result in

coercive controls.8 For analytical purposes, the category of the internal state

is retained to enable comparative analysis with Allied. As

events will show, Burawoy was justified in extending this to the

politics of production. How production and state apparatuses

interact and bear upon control are discussed under the category

of regimes of control. This is consistent with Burawoy’s intent,

if slightly different from his later model.


PC was established in 1959, during this transi-tory period of colonialism,9 at its present premisesas a private company to produce a cold cream. PCwas profitable immediately: it faced little domesticcompetition and was protected from multi-nationals by government import restrictions. PCrapidly expanded and by 1971 it had increased itsproduct range, production, and profits. Given thedifficulties of obtaining data about PC duringcolonialism, events then could not be researchedbut their legacy was an important backcloth tosubsequent events.

Significant industrial restructuring was essentialafter the independence of Bangladesh as fleeingWest Pakistanis, including PC’s owners, aban-doned their enterprises leaving a managerial

vacuum. The government responded by nationa-lising abandoned property and hundreds ofindustrial and commercial enterprises. PC wasnationalised in March 1972, becoming part of acentralised formal planning and control structurerunning from the Ministry of Industries, throughcorporation boards, to enterprises such as PC.

3.2. Hegemonic regimes and the public ownershipof PC (1971–1993)

Burawoy argues that colonial despotism wasoften replaced with a hegemonic regime modelledon practices in richer Western economies. Legal-rational bureaucratic controls regulated by thestate10 based on internal states and internal labourmarkets within enterprises were introduced tocontrol labour through persuasion and consent(Alam, 1990, 1997; Hoque & Hopper, 1994, 1997).

9 Although it is contentious, the paper assumes colonialism

ended in Bangladesh in 1971.

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


Through a combination of idealism, ideology,external advice from development experts, andpragmatic necessity, the post-independence socia-list government in Bangladesh embarked on aprogramme of nationalisation and central stateplanning. Trade unions were recognised and for-mal systems of collective bargaining, recruitment,promotion and job grading were introduced intostate enterprises. Public sector enterprises weremade legally accountable to responsible Ministerswithin a democratic parliament. Accounting wascentral to this. Budgets from enterprises in statecorporations to ministries were central to stateplanning and each state corporation had to pre-sent financial accounts to Parliament (based ongenerally accepted accounting principles andaudited by state officials) for accountability to thepopulace.

In 1975, the government leader, Mujib, wasmurdered and his government overthrown in amilitary coup. Bangladesh politics became moreturbulent and governance increasingly becamebased on patronage and political expediency.Politicians stepped up their interventions into stateenterprises for political rather than commercialends. Trade union leaders assumed positions ofpower through their access to political patronage.The policies of the government resulted in seriousmacroeconomic difficulties. Public enterpriseswere responsible for 25% of gross domestic capitalformation and their inefficiency had a directimpact on the allocation and quality of publicinvestment (World Bank, 1993). Large invest-ments in the public sector failed to make themprofitable and their losses contributed to publicsector budget deficits rising alarmingly leading tostate fiscal crises.11 Nevertheless, PC flourishedduring nationalisation: its products were popularand cheap; it had 70% capacity utilisation, grow-ing sales, and was profitable.

After 1975, Bangladesh governments increas-ingly turned to structural adjustment policies

(Government of Bangladesh, 1976, 1985, 1990),influenced by World Bank and IMF pressures toadopt programs of market liberalisation and pri-vatisation. PC came on to the privatisation lists ofgovernment in the late 1980s and it was partiallyprivatised in 1988: officially to rectify its ineffi-ciencies and to increase private participation in themanufacturing sector. Unofficially, it was arguedthat it was to placate World Bank pressure toreform public enterprises. Paradoxically, PC’sprofitability and relative efficiency made it a can-didate for privatisation, as it was saleable (Uddin& Hopper, 1999). Moreover, being relativelysmall, it was not as politically sensitive as otherlarge loss-making public enterprises.12 PC wasmade a public limited company: 34% of its shareswere offered to the public and 15% to employees.However, the government through its majority(51%) shareholding still controlled PC, giving riseto conflicts amongst directors and delayed deci-sions. The chief executive officer was changed fourtimes in the 5 years and a significant number ofmiddle level managers left the company due tofrustration and the uncertainty over the future ofthe company stemming from these conflicts. PC’sprofitability, sales, and productivity plummetedand it started to make large financial losses. Thiswas exacerbated by workers’ resistance toimpending full privatisation through demonstra-tions, strikes, and a lockout, which dovetailedwith other popular struggles against the govern-ment.

3.3. New despotic regimes and the privatisation ofPC (1993–1999)

Burawoy argues that in LDCs, the convergenceof production and state politics, the ensuing con-flicts, fiscal crises, and pressures from agents of

10 Burawoy’s analysis of control regimes in LDCs after

independence is relatively slight and not as clearly categorised

as here. Whilst our labelling of regimes of control may be

debatable we believe that their features and dynamics corre-

spond to Burawoy’s arguments about controls in post-colonial

LDCs.

11 A World Bank report, Government that Works —

Reforming the Public Sector (1996) indicated that annual losses

of public enterprises represented 2% of gross domestic product

(GDP) and their outstanding debts (much of which is non-per-

forming and would have to be absorbed by government bud-

gets) was equivalent to 90% of annual GDP.12 PC employed circa 1100 workers during its nationalisation

whereas large nationalised enterprises such as the Adamjee Jute

Mills employed over 20,000 (Hoque & Hopper, 1994).


international capital for market reforms, causehegemonic regimes to decline. Instead economic-ally peripheral states often turn to programmes ofeconomic liberalisation based on export proces-sing zones, privatisation, and touting the attrac-tions of cheap, economically weak, unprotectedlabour to foreign capital. Burawoy argues that thisleads to new despotic regimes of control in LDCsbased not merely on the subjection of workers buton the mobility of capital. The need to maintain orattract capital instigates competition amongstenterprises, their labour forces, communities, andgovernments, resulting in policies that undermineprotection and concessions from the previoushegemonic regime. Workers must accede to coer-cive and unilateral management control under thethreat of the relocation of capital. This is espe-cially acute in LDCs given the poverty of theirstates and populace.

This pattern of events was discernable in Ban-gladesh. Given its aid dependence, the Bangladeshstate was vulnerable to World Bank pressures toliberalise its economy — including extensive pri-vatisation (World Bank 1983, 1993, 1995, 1996a,1996b, 1996c). Despite the problems of partialprivatisation, the government accelerated its pri-vatisation programme. PC was fully privatised in1993 through a block tender of governmentshares. Its workers, through their trade unions,attempted to buy the company through theWorkers’ Provident Fund but to no avail. Allega-tions that the main (government party) tradeunion collaborated with the eventual owners tothwart the workers’ bid were rife. The outcomewas that the government’s shares were transferredto one person. PC became family-controlled, asone family now owned 75% of its shares.

Burawoy’s prognosis for privatisation isgloomy: it argues that coercive controls in a newdespotic regime are likely to ensue. This is in sharpcontrast to the claims of the proponents of priva-tisation, whose market-based policies are under-pinned by prescriptions from developmenteconomists, especially neo-classical adherentsdrawing on theories of agency, property rights andallocative efficiency (Adam, Cavendish, & Mistry,1992; Cook & Kirkpatrick, 1995; Uddin & Hop-per, 1999). The assumption is that infusing private

property rights into failing public enterprises willincrease efficiency through better controls (includ-ing accounting ones) and personalised economicincentives, and this will increase capital invest-ment, profits, government revenues, employment,and improve managerial technologies. Marketswill ensure that inefficient enterprises will either failor be taken over. However, neo-classical econo-mists do not study in detail whether the controlswithin enterprises that are integral to their pre-scriptive models actually materialise and operate asthey predict. Internal states, internal labour mar-kets, the nature of control, and accounting prac-tices are ignored in the presumption that efficiencygains following privatisation will trickle down toemployees and society through market forces.

This research sought to establish empiricallywhich version of events rang true. Did privatisa-tion mark a return to coercion in new despoticregimes as claimed by Burawoy or market-basedregimes as some development economists andpolicy advisors claim? Whatever, how is account-ing implicated in such changes? PC was studied toinvestigate these competing claims.

4. Research methods

The research triangulated various types of dataincluding interviews, participation observation,analysis of relevant documents, and examinationof newspaper reports. Participant observation hasbeen a method of social inquiry in cultural anthro-pology (Friedrichs, 1975) and organisation studiesfor some time, e.g. Dalton (1964) and Roethlisbergerand Dickson (1939), though it is less common inaccounting research. The data was gathered over 7months (from February to September 1995).

To obtain an experiential understanding of thebehaviour of managers and workers the leadingauthor worked in the soap division of PC for 1month as a casual worker. Time, access andresources precluded a longer period. Personal andcompany anonymity was a condition of researchaccess. As a participant observer it was neitherpracticable nor desirable to keep notes duringwork or in front of fellow workers as it mightinhibit them from talking freely. Consequently,


observation notes on incidents and conversations,including the researchers’ feelings and reactions,were written up upon returning home.

Fifty-five interviews were conducted with man-agers (past and present), accounting staff, fore-men, and trade union leaders from PC. Inaddition, interviews were held with civil servants(two each from the Ministries of Industries andLabour, two from the Privatisation Board and onefrom the Ministry of Planning), two BangladeshBank and one World Bank officials, and twonational trade union leaders. Questions wereasked in an open-ended fashion to help inter-viewees respond freely and to avoid predefinitionof issues. Normally, interviews lasted between oneand two hours. Notes were taken during eachinterview and the interviewer’s reactions andcross-referencing of similar points were notedimmediately after. Reports, many unpublished,were collected from government offices, the WorldBank, trade unions and PC itself, in addition tolibrary and newspaper searches to validate andsupplement the interview and observational data.

During summer 1999, the researcher conducteda follow up study. Seven interviews were con-ducted with senior managers in PC and some cle-rical staff. Permission was not granted to talk toworkers or trade union leaders due to industrialrelations disturbances. Some trade union leadershad just been sacked and security was tight due todemonstrations and the explosion of severalbombs outside the factory gates.

5. Control under public ownership and partial

privatisation

This section analyses controls in PC when it wasnationalised and partially privatised.13 (Partialprivatisation retained majority public ownership

and did not significantly change controls in PC,therefore events then are discussed alongside thoseduring nationalisation.) It traces how controlsdesigned to produce consent based on internallabour markets, the internal state, and formalaccounting systems actually operated in the con-text of production and state politics in Bangladesh.(Given the limitations of retrospective research therelevance of gaming can only be surmised.) Theintended hegemonic regime was transformed intoone subsequently defined as political despotic, withmarked consequences for accounting controls.

5.1. Accounting systems

The Nationalisation Order and subsequent Pre-sidential Orders made PC accountable to a rangeof public institutions. The Ministry of Industriescontrolled PC via a holding company but financialauthority lay with the Ministry of Finance. Thisdual authority impeded proper financing decisionsand controls. Each public sector enterprise had tosubmit annual accounts to the government fol-lowing the accounting and auditing provisions ofthe Bangladesh Industrial Enterprises Act (Pre-sident’s Order No. 27, 1972, NationalisationOrder). The Comptroller and Auditor-Generalfulfilled an audit role through the Office of theDirector of Commercial Audit. Rigid rules andregulations governed the preparation andapproval of accounts. Accounts were publishedand PC’s accounts came under stricter, formalscrutiny at several levels, especially the SponsoringMinistry, and the Ministries of Finance and Plan-ning. However, though Parliament was theoreti-cally the highest tier of control, performancereports were rarely presented there and when theywere, politicians took no action. In Bangladesh,the political process lay in personal relationshipsand direct patronage: often based on extendedfamilies and associates.14

13 Events within PC during public ownership can only be

constructed retrospectively from the field data, especially the

interviews with obvious problems of selective retention and

retrospective rationalisation. However, the descriptions match

those in other Bangladesh public enterprises in the same period

(Alam, 1990; Hoque & Hopper, 1994, 1997), except that PC

was profitable. Whether this was due to its innate competitive-

ness or protection from imports is difficult to discern.

14 Dyball and Valcarel (1999) note in a study of accounting

in the Philippines that the ‘‘traditionalist/familial culture med-

iates the ‘rationalist/legalist corporate framework of accounting

regulation . . . ‘family’ ties cut across the categories of analysis

implicit in the corporatist model, thereby tending to subvert it’’

(Dyball & Valcarel, p. 304). Similar patterns emerged in this

study.


As in all Bangladesh state enterprises, PCmaintained a detailed budgetary control systemas part of a central state economic planning sys-tem. However, interviews revealed that whilstmanagers prepared the necessary reports, theyrarely used them, as they were perceived as unre-liable and not reflecting normal daily uncertain-ties. Managers’ budgeting behaviour was rule-bound and ritualistic. When preparing budgets,they often merely took the previous years’ figuresand dutifully followed regulations from Head-quarters, with little consideration of actual orlikely circumstances. Sometimes, accountants usedapproximations because of the unavailability ofrelevant data.

Government and Head Office officials con-stantly sought higher production to demonstratetheir achievements to Parliament and the popu-lace. A bonus system for managers and workerspurporting to reward enterprises that exceededproduction budgets replaced an annual lump sumand two festival bonuses. However, the proposalslacked specification and production targetsbecame negotiable between unions (wishing toprotect the custom and practice of non-perfor-mance related lump sums) and ministers (sensitiveto industrial relations disturbances threateningtheir political survival). Production targets forbonuses became detached from the budget targetsof managers. Nevertheless, managers had to pro-tect their reputations by ensuring that their bud-gets were compatible with central instructions,satisfying seniors by achieving budget targets, andsatisfying workers by achieving production tar-gets. To cope, managers followed rules selectivelyand found unofficial means of circumventing theseprocedures. For example, managers frequentlygranted overtime to workers to achieve bonusesdespite the extra production being unnecessary tomeet either the budget or demand.

Internal control was problematic as externalinterventions were rarely related to budget alloca-tions and financial targets, which in turn were de-coupled from the production targets for bonuses.Shop management had a long chain of commandand managers were not prominent on the shopfloor: trade union leaders dominated eventsthere. Officially supervisors should supervise and

monitor production. However, given the unrealityof official plans these duties were light and not ofmajor import. For example, supervisors did notallocate tasks as they were fixed in trade unionnegotiations. As a worker commented, ‘‘Very fewsupervisors and foremen used to be present duringthe shift period.’’ Another commented, ‘‘In thosedays . . . supervisors always tried to allocate over-time to us rather than urging us to work hard.’’Supervisors, often active trade unionists on tradeunion committees, approached supervision indul-gently (Gouldner, 1954): securing votes fromworkers was more important. Trade unions in theplant were based on rival political parties. Theannual elections of collective bargaining agentswere crucial for supervisors seeking advantage forthe political party their union represented andthence reaping the political patronage this affor-ded.

To placate their workforce by achieving bonu-ses, managers had to prioritise physical targets.Moreover, as one manager remarked, ‘‘We wereafraid of taking any actions against workers. If anymanager confronted the workers, his life was indanger.’’ Consequently, financial budgets becameinsignificant to operations or for securingaccountability. Managers coped by balancingdecisions between rival trade unions, grantingunnecessary overtime, reducing or haltingmachine speeds, or by falsifying reports to indicateachievement of physical targets. Trade union lea-ders and managers co-operated in such activitiesas each had a vested interest in doing so.

Few managers condoned this state of affairs,and some resisted granting undue benefits to tradeunions on ethical and/or commercial grounds.However, other managers made illicit deals withtrade union leaders, for example, accepting nomi-nations on who should be official distributors, andthe prices and quantities they should be suppliedat. Whatever, the situation provided a market forexcuses. Managers could legitimise failure toachieve budget targets by blaming unrealisticbureaucratic rules and targets, or ill-judged exter-nal interventions, or by indulging in budgetmanipulation, or — as many did — by disregard-ing formal controls claiming they lacked commer-cial credibility.


Just as Burawoy found in Allied Corporation,managers sought to manufacture the consent ofworkers through games and associated unofficialdeals. However, in PC this was done from a posi-tion of management weakness compared to theircounterparts in Allied Corporation. PC’s workersparticipated in this: it brought benefits, theyenjoyed circumventing managerial prerogatives,and it helped alleviate boredom. However, withinthe limitations of our data, neither games noraccounting data were significant for manu-facturing consent. Essentially, consent lay insecuring concessions through the politicised inter-nal state and workers’ preoccupations werecentred on the quotas and bonuses for materi-alistic reasons.

The failure and irrelevance of formal accountingcontrols in the face of politics and their substitu-tion by unofficial transactions occurred in othercontrol systems including marketing, pricing,financing, and procurement (Uddin, 1997). Theostensibly rational legal bureaucracy establishedupon nationalisation, with a belief in centrallyplanned development, proved inadequate in theface of politics (Sobhan & Ahmad, 1980). Partialprivatisation simply made such controls moreproblematic. For example, trade union militancypersuaded politicians to grant a production bonusfor workers in PC despite production deteriorat-ing. As one accountant remarked with a laugh,‘‘Accounting and budgeting systems were onlychanged in terms of its amount of reporting.Now we had to make several reports to gov-ernments as well as to private directors, whichonly increased our workload.’’ Interviews sup-ported Sobhan and Ahmad’s comments that dur-ing public ownership and partial privatisation ofPC budgets operated like other Bangladeshi publicenterprises:

The budget usually fails to serve the role of acommunication and planning instrument . . .the corporations do not seem to take it ser-iously . . . they [managers] generally take littleinterest in it . . . all they are interested in is theflow of funds to meet the bills, particularlysalary and wage bills (Sobhan & Ahmad, pp.332–333).

5.2. The internal state and internal labourmarkets

Upon nationalisation Bangladesh enterpriseshad to recognise trade unions as collective bar-gaining agents and form consultative committees.Legally, labour relations became governed bylabour contracts negotiated between managementand trade unions. Government rules and regula-tions determined wages and promotions. All per-manent workers were paid on a salaried basis,supplemented by the production bonus.

An internal labour market was created withinPC. Seventy-five percent of the work was classifiedas unskilled. A production manager explained:‘‘The industry has provided easy access for allworkers who are physically strong because it needsvery few technical people. We train general workersto have technical knowledge of operations duringtheir works.’’ Nevertheless, job classification at PCwas considerable. In terms of functional titles,there were operators, general, service, and main-tenance workers.15 In skill terms, there were tech-nical and non-technical workers. Technicalworkers included operators and some service andmaintenance workers. They were the lifeblood ofPC as they possessed a broad range of skillswhereas non-technical workers needed few skills.Foremen (who also had technical knowledge)supervised technical workers whereas supervisorsfrom the ranks of general workers monitored non-technical workers.

Virtually all workers were permanent and werecategorised into six grades based on seniority ofservice and everyone could be promoted to thenext grade. Such promotions only affectedsalary — not authority, power, and responsibility.There were also hierarchical promotional oppor-tunities, for example, operators could be pro-moted to superintendent — a managerial post.However, whilst this elaborate job classificationexisted, its enactment was often not throughbureaucratic rules. From PC’s inception as a

15 Operators ran machines; general workers were mainly

stores personnel and production labourers; service workers

were mainly clerical workers; and maintenance staff were

responsible for the upkeep of machines and buildings.


public enterprise, the direct intervention of gov-ernment parties and the politicisation of appoint-ments became the norm. This gave rise to a quasi-internal labour market and a quasi-internal state.Both veered intermittently between apparentlybureaucratised rule-bound governance and unoffi-cial interventions by politicians. Trade union lea-ders influenced managerial promotions andappointments through their political connectionswith Ministers. Appointees of politicians workedas political workers making it difficult for super-visors to exercise authority for fear of repercus-sions. Changes of government brought newpolitical appointees to work for the governmentparty’s trade union, which gave rise to shop-floorfactionalism and over-manning. Workers had tobe a member of one or other union to secure wageincrements or promotions. Past managers descri-bed how promotions and appointments had to bebalanced between trade unions to prevent majordisputes. As Burawoy (1985) argued, one couldnot satisfactorily understand the role of the inter-nal state without recourse to the broader politicsof production.

Trade union leaders became even more powerfulwhen the already frequent workers’ strikes andlockouts dovetailed with broader political resis-tance against the Ershad government during thepartial privatisation period. The labour federationmobilised workers against the government, raisingbroader political issues including the impendingfull privatisation of PC. PC’s elected trade unionleaders had to join the workers’ resistance andfight for workers’ welfare despite being the labourwing of the government party. It transpired thatthis was just a strategic step to maintain theirinfluence over workers.

5.3. Transformation of regimes of control:idealised hegemony to political hegemony

The evidence from PC is supportive of Bur-awoy’s suggestion that post-colonial LDCscreated hegemonic regimes of control upon inde-pendence. Through public ownership and legisla-tion the state sought to regulate large enterprisesand control workers by consent based on centralstate planning (of which accounting was a crucial

component), internal labour markets, and theinternal state. The independence movement ofBangladesh was led by a coalition of intellectualsand trade unionists. The new hegemonic arrange-ments reflected their idealistic ideologies and theirdesire for rational development within a demo-cratic state that recognised trade unions.

The hegemonic regime soon withered in sig-nificance (though not presence) as politicalrationality, exercised by politicians and tradeunion leaders, superseded commercial rationalityexercised by managers and government officials.Accounting systems became de-coupled: formalfinancial accounting was adhered to but was lar-gely ignored by those in the chain of account-ability. Planners divorced from operations setbudgets centrally to radiate political optimism.Given the unreality of budgets and political inter-ventions into operations, it is unsurprising thatbudgets played neither a planning nor a scorecardrole within management. Nevertheless, 25accounting managers and a large number of clerkswithin the largest administrative department ofPC ceremoniously maintained accounting recordsand procedures, giving the appearance of ration-ality and accountability and thereby helping fosterexternal legitimacy.

The hegemonic regime was transformed due tothe convergence of state and production politics.The entrepreneurial vacuum following indepen-dence made politicians powerful in Bangladeshcompared to many other de-colonialised countrieswhere metropolitan entrepreneurs commanded theeconomy (Sobhan, 1993). The government’s com-mitment to socialism ceased after the militarycoup of 1975. Subsequent coups, changes of mili-tary governments, and the eventual restoration ofdemocracy reflect the turbulence and volatility ofBangladesh politics. Maintaining popularity andpower was a preoccupation of politicians andorganised workers’ support was crucial to thisend. Politicians realised that central planning andthe accountability systems of public enterprisesenabled them to intervene in enterprises to placateworkers and secure party advantage. Thisincreased as politics became more factional. Thefurtherance of political interests rather than com-mercial criteria became the modus operandi of PC.


As a World Bank report indicated, ‘‘Thoughautonomous in theory, public enterprises are stillde facto under government control and govern-ment interference is the rule rather than theexception.’’ (Bangladesh Observer, 24 March 1992)On the other hand, the same politicians faced withpoor public sector performance, state deficits, andthe need for Western support of their unpopulargovernments increasingly adopted market-basedpolicies. Thus there was political schizophrenia —politicians achieved popular support by interven-ing into the public sector, yet they had to purportto destroy this to secure Western approval andhence access to global capital.

The transformation from public ownership topartial privatisation in PC and the destruction ofthe hegemonic regime needs to be understood inthe context of post-independence class strugglesand the role of trade unions. Bangladesh society isrelatively homogenous and can be divided intothree classes: upper bourgeoisie, petty bourgeoisie,and peasant-worker (Sobhan & Ahmad, 1980).After the flight of capital following independencethe upper bourgeoisie were weak. The petty bour-geoisie dominated politics and governmentinstitutions such as the army, governmentbureaucracies, and universities. Over time, how-ever, the upper bourgeoisie benefited from thegradual restoration of the private sector and poli-tical parties had to accommodate them and theirpressures for privatisation. For example, in the1996 election, 25% of members of Parliamentwere industrialists (Daily Star, 15 June 1996).

Peasants remained largely untouched by trans-fers of power, being unable to resist the higherclasses. However, the urban working class in stateorganisations and organised in trade unions couldeffect changes in government. Even military gov-ernments had to be sensitive and responsive totheir demands. However, trade unions were bran-ches of political parties with leaders, normallyparty members from the educated petty bourgeoi-sie. This led to multi-unionism in plants and inter-union rivalries that mirrored and embracedbroader party struggles. Workers looked to edu-cated and legislatively skilled trade union leadersto protect them against management victimisationand to exploit political connections on their

behalf. Not joining a union was impractical as itexcluded workers from political patronage andcould carry sanctions. The allegiance of workerswas based on instrumental necessities and theattractions of political leaders. (Political parties inBangladesh tend to be based on charismatic lea-ders rather than ideologies.) The result was poli-tical control in state enterprises. As Burawoynoted in Eastern European communist enterprises,a set of (normally) elected local trade union lea-ders (usually foremen and supervisors) emerged asvital intermediaries between workers and tradeunion who could access state organs and politi-cians. However, the coercive controls in EasternEurope described by Burawoy during communismdid not appear in Bangladesh, possibly due to theless totalitarian nature of Bangladesh politics andthe political strength of workers.

Given the difference between the idealised formsof control and their manifestation during the pri-vatisation and partial privatisation of PC it isanalytically advantageous to split Burawoy’shegemonic regime into two, namely idealisedhegemony and political hegemony. Idealised hege-mony is identical to the means of consent withinBurawoy’s hegemonic regimes of control descri-bed earlier. This captures how political leaders inBangladesh upon independence legislated for newrational bureaucratic structures of accounting,planning, accountability, and industrial relations.However, hegemonic control did not operate asintended, instead there was political hegemony.Here, domestic party politics permeated not onlystate politics but also the politics of production.Politicians grabbed the levers of power offered bythe apparatus of the hegemonic regime to pursuetheir political agenda within enterprises such asPC. The divisions of domestic politics were repli-cated in party trade unions within enterprises andworker resistance was funnelled into domesticpolitical strife. Shop floor consent became manu-factured primarily through political interventionand negotiation: commercial ends within publicenterprises became secondary to political ones.Bureaucratic structures resonant of hegemoniccontrol remained, but the triumph of politicalhegemony over legal rationality gave rise to de-coupled accounting controls.


Armstrong et al. (1996) claim that when thepower of labour and trade unions is high thenaccounting controls are less significant for con-trolling labour. This was so at PC where the con-sent of its workers ultimately resided in political-trade union accords.16 Viewed from a position ofhindsight after full privatisation, workers regardedthe partial and full public ownership periods ashalcyon days. Workers reminisced about the shopfloor solidarity with remarks such as, ‘‘We workedtogether though we had problems with each other.We worked as SKOP17 workers,’’ and, ‘‘In the olddays they always fought with management for theirdemands.’’ A worker’s leader recalled, ‘‘That wasour ‘golden time’. Nobody controlled us, rather wecontrolled them. Then everything had to be con-sulted about with trade union leaders.’’ Tradeunions were the major organised force within PC.

However, it is wrong to assume that this indi-cated the domination of the working class overother classes. As described previously, the tradeunions served political leaders and parties and itsleaders were not drawn from the ranks of workers(Hoque, 1993; Murshed, 1989; Wickramasinghe,1996). Worker membership of trade unions tendedto be based on expediency rather any identifica-tion with broader class based struggles. Para-doxically, the satisfaction workers derived fromtheir struggles with management produced anillusion of power whilst reinforcing their sub-ordination to Bangladesh ruling elites. PC’sworkers’ instrumental involvement in struggles toultimately benefit socially elite leaders meant thatthey could not fundamentally question basic pro-duction relations. Instead, their efforts were diver-ted towards petty economic benefits and theybecame compelled to accede to political masters.Thus they found themselves in game, albeit a dif-ferent one from Allied Corporation’s workersstudied by Burawoy. In PC, the workers’ use ofpolitical avenues manufactured their consent tothe prevailing form of state capitalism. However,top-down trade unionism is fragile and contingent

upon political parties believing it meets their ends.The virtual elimination of trade unionism at PCwith state support after PC was fully privatised istestament to this.

6. Controls after full privatisation

The intensive case study and interviews tookplace in 1993, 2 years after PC was fully privatised.The researcher chose to work in the Soap Divi-sion, as it was the largest production departmentin PC. Three kinds of soaps (laundry, toilet andglycerine) were made in separate plants. Eachprocessed the raw materials in boiling kettlestransferring it to soap storage tanks as liquidsoaps. The tanks were connected to machines thatconverted liquid soap into a hard form. The SoapDivision had three shifts: morning (6 a.m. to 2p.m.), evening (2 p.m. to 10 p.m.) and night (10p.m. to 6 a.m.).

The following report draws from the participantobservation, the interviews, and documentarystudies. The aim was to identify what effect fullprivatisation had upon accounting systems, inter-nal labour markets, and the internal state, andwhether this ushered in coercive controls and des-potism as predicted by Burawoy or market-basedcontrols as advocates of privatisation predict?

6.1. Accounting information system changes

Pressure for privatisation in Bangladesh camefrom external sources, especially World Bankrecommendations for economic liberalisation pro-grammes opening up the economy to foreigncapital. World Bank reports (1995, 1996b) arguedthat public sector problems were due to a lack ofaccountability and transparency, partly because ofweak accounting controls. Consistent with claimsof some development economists it was argued thediscipline of markets and regulation, coupled tochanges in property rights, would heraldimprovements in productivity, profitability, andefficiency (Hanke, 1986) brought about by privateowners having greater incentives to adopt modernmanagement controls linking production to mar-kets, reinforced by economic incentives linked to

16 This bears similarities to other studies of management

control in LDCs (Ouibrahim & Scapens, 1989; Wickrama-

singhe, 1996).17 SKOP was a combined trade union organisation


business rather than political goals (Uddin &Hopper, 1999). If they fail to do so then financialreports should prompt take-overs and/or share-holder action to remove recalcitrant managers.The research examined whether this was so.

6.1.1. BudgetsAccording to the conventional literature, bud-

gets evolve from rational co-ordinated processesof delegated management within central control,providing forward plans, co-ordination, targets,performance evaluation, and a basis for rewards.Such transparent, delegated accounting was notfound in PC, though accounting changed sub-stantially after full privatisation but not as pre-dicted by policy makers (Uddin & Hopper, 1999).

After privatisation, there were significant man-agerial changes. The majority shareholder becamethe managing director (MD) of PC and hisyounger brothers held the other two directorshipsof executive director (ED) and marketing director.ED took control of the production department,decreasing the chain of command, cutting man-agers from fifteen to six, but retaining technicaland experienced officials to run operations whilstappointing new managers to lower managerialpositions. The technically sound but politicallycorrupted accounting systems were notreformed — rather, they disappeared from view.Cost information was still collected throughaccounting systems and the owner-managers’ per-sonal contacts but the research revealed no pro-fessional cost accountant or associated systemsdedicated to providing cost information to man-agers outside of the family.

Managers had little idea whether the organisa-tion was running profitably, which is unsurprisingas no internal, financial reports were distributedafter 1993. Budgets in the normal sense of routine,regular, downwards financial reporting to man-agers disappeared. However, the private financialbudgets of the owners were translated into physi-cal budgets passed down to production managerswho transmitted their messages (and pressures) tofirst line managers (foremen and supervisors). Linemanagers were not given financial data but theywere subjected to rhetoric on the need to cut coststo increase profitability.

The marketing function was increased from 22to 32 managers. Its field-based sales forecastsformed the basis of the production budget. Amarketing official commented, ‘‘Accounting infor-mation comes through late although it is correct.But we prepare our sales budget on the basis ofsales-force indicators and market trends, which isvery dynamic.’’ The budget committee consisted ofeight members: one from accounting, production,administration, marketing, and purchasing plusthe three directors. The annual budget expressedin physical terms was reviewed monthly or evenoccasionally weekly. Following telephone con-versations with production and marketing man-agers, ED would reshuffle budgets and then meetmarketing officials and production managers to fixrevised targets or change product lines. A seniorproduction manager remarked, ‘‘We revise targetsas new information comes through. In this case EDplays the vital role.’’

Production managers were there to execute thecommands of ED who monitored them through anew reporting system based on logbooks, quickinformal feedback of results, and frequent unan-nounced shop visits. ED explained, ‘‘It is easy tocontrol. I don’t have to oversee the long chain. Allheads of the department keep in touch with me everyday. Therefore, decisions are not delayed at all.’’Decisions were centred on ED. A departmenthead commented, ‘‘We don’t have to give finaldecisions. We merely give advice. ED gives us deci-sions which we must follow.’’ The direct, centralisedcontrols put heavy demands upon mid-level man-agers to meet budget: ‘‘We have no choice but toproduce. We get a very tight schedule for productionsince the production budget is even reshuffled dailydue to the market situation. It is possible nowbecause we don’t have any labour problems’’ (Pro-duction Manager). Despite not receiving cost data,cost reduction became the language of managerswho relayed this message to foremen and super-visors. Redundancy programmes were the mainsource of cost reductions, aided by cuts to benefitsand allowances.

Top management used physical budget figuresto evaluate the performance of production man-agers. Feedback systems were improved in termsof accuracy and speed but they were essentially ad


hoc with arbitrary imposed targets. Productionmanagers had to justify deviations from budget toED. The budgetary controls disciplined produc-tion managers not because of any accepted logicand reasonableness of numbers, or their reinfor-cement by rewards, but because of power rela-tions. The owner/managers were the finalauthority on recruitment, punishments, promo-tions, dismissals, and all other company matters,including budget targets.

Production managers realised targets by pres-surising supervisors who in turn had to wrestlewith the problem of securing worker effort. Afterprivatisation supervisors and foremen had greaterresponsibility for allocating tasks, achieving pro-duction targets, and extracting worker effort.Their previous role within the politics of produc-tion lubricating political interventions withered.Now most supervisors were temporary: permanentsupervisors being transferred to other jobs or laidoff (except for some with strong relationships withthe remaining trade union leaders). Failures toreach production targets brought sanctions, oftendismissal or non-retention. In contrast, foremenwere kept on as permanent workers as they hadtechnical skills. The responsibility for finishingjobs on time fell on the shoulders of supervisorsrather than on foremen or superintendents.

New reporting systems for supervisors andforemen were introduced. Each day they sub-mitted their logbook to DCC containing shiftinformation such as volume of production, work-ing hours of machines, causes of stoppages, thenumber of casual workers used, and wastage.However, as a supervisor commented: ‘‘As long asthe volume of production is right managers havenothing to say.’’ DCC was proud of how logbookshad increased the visibility of operations, com-menting that, ‘‘I personally developed this reportingsystem under the present management. By the virtueof this system, I can understand what went on dur-ing the shift. There is no scope for supervisors andforemen to conceal the facts.’’

He under-rated the powers of human agencyand ingenuity. Participant observations revealedthat foremen and workers participated in ‘chisel-ling’ practices to improve their reported perfor-mance. Since shop managers had more authority

and power they no longer needed harmoniousrelationships with supervisors. Mindful of theirtemporary job tenure, supervisors sought todemonstrate good performance to senior manage-ment by increasing production on their shift butthis was difficult given their section’s inter-dependence with other units, and their lack ofauthority over permanent operators responsible toforemen (also permanent). Supervisors had toindulge in shop floor deals with workers to showattainment of output targets. This not only cov-ered securing their effort to produce but also theirco-operation in ‘chiselling’ practices to inflate theoutput of their section per shift.

Packaging workers started work early before theshift began. All packages were numbered to indi-cate the shift number and date. Supervisors werecareful about this because the number of packages(each containing 72 soaps) indicated their pro-ductivity. To maximise their recorded output,supervisors ‘chiselled’ data by getting anothershift’s output attributed to their shift, and stealingtime by continuing their shift a bit longer. Sinceworkers and operators had less interest in main-taining actual production and ‘chiselling’ produc-tion figures, supervisors had to make deals withthem to secure their co-operation.

6.1.2. Financial reportingWhen PC was partially privatised it became a

public limited company quoted on the DhakaStock Exchange and thence liable to the CompanyAct of 1994 (which replaced the Company Act of1913), Stock Exchange listing requirements, andSecurity Exchange Rules (1987). These requirestandards of disclosure similar to Westernaccounting requirements for listed companies,including annual audited published accounts.Transgressions, according to the rules, can bringheavy sanctions (see section 181–6, Company Act,1994), even imprisonment in extreme cases. How-ever, the legislated financial reporting regimeessential for lubricating markets did not emerge inPC as anticipated by advocates of privatisation.

PC retained the external reporting system of thepre-privatisation periods but its internal financialaccounting changed greatly. New computerisedsystems speeded up information for directors. An


accountant reported, ‘‘We have to send a dailyreport regarding cash and other transactions to theowner-managers of the company. The ExecutiveDirector (ED) and Managing Director (MD)receive these daily reports for their clear under-standing about the financial condition of the com-pany.’’ Financial accounting information was thepreserve of the three directors. An accountantremarked: ‘‘We record the bills or memo’s whichare signed by MD or ED. All departmental expen-ditures and income have to be signed by these twodirectors. Otherwise we refer the bills back.’’ Thefinancial accounting system rather than becominga vehicle for external accountability and transpar-ency degenerated into a private system of book-keeping.

All financial information was processed accord-ing to the directors’ instructions. A senioraccountant observed, ‘‘We have two systems foraccounting information. One is informal which is arestricted area only usable with the permission ofED. The other system is external reporting which isfor other shareholders, the bank, the Tax Authorityand the Stock Exchange.’’ Another accountantadmitted, ‘‘We have to maintain many informalsystems. You know — business is competitive. Youcan’t maintain all of them in a straightforwardway.’’ The perception was that the owner-man-agers manipulated accounting information tolubricate less regular business activities, ratherthan for rational delegated management withtransparent accountability to capital markets. Oneindividual commented, ‘‘Some informal transac-tions are kept in the IOU fund account for irregularpayments to trade union leaders and bribery ofgovernment and tax officials. These transactionswere usually shown under other headings in theannual reports.’’ A senior accountant commented,‘‘I don’t know what the real transactions were in theIOU fund. It was alleged by some individual thatsometimes the headings of transactions were chan-ged to evade tax such as increasing the amount oftax exempted items.’’

PC has not published audited yearly accountingreports since 1995 when the delayed 1993–1994Annual Reports were published. (Accountingmanagers at PC confirmed that no auditedaccounts after 1995 existed). Failure to do so can

result in fines calculated on a daily basis. This hasnot been enforced, though interviews in 1999 withStock Exchange officials revealed that letters toPC requesting publication of overdue reports andpayment of fines for delay. These had had no suc-cess but a case had been filed in the High Courtagainst PC for not holding Annual General Meet-ings. The owner-managers used their majorityshareholding to their advantage and to inhibitaccountability to other stakeholders,18 especiallyminority shareholders and creditors [see companylaw section 181 (1&2)]. This was not merely anissue of technical compliance: in 1999 the bankersof PC filed a case for non-repayment of a loan andcustom officers discovered that PC had evadedvalue-added tax and supplementary duties forseveral years (Daily Star News, 24th March 2000).The Commissioner of Customs, Excise and VATordered PC to pay Tk. 13,01,871 (approx.US$26,000) for unpaid duty and taxes includingfines.

6.1.3. The nature of accounting changesAfter full privatisation, accounting systems

became the personal fiefdom of the family. Thenature of ownership and control, especially familyownership, was significant in this study (Espeland& Hirsch, 1990; Scott, 1985) as in the Ansari andBell (1991) case study of accounting controls in aPakistan firm. In countries with weak capitalmarkets, a small entrepreneurial class, and incli-nations to crony capitalism, privatisation canresult in accounting and accountability differentfrom that envisaged by development advisorsadopting mythical assumptions of efficient capitalmarkets.

Nevertheless, changes in property rights uponprivatisation did herald changes to internal con-trols. Instead of the previously politicised budgets,systems made production more responsive tomarket changes and there was modest computer-isation of information systems but there was noevidence of more sophisticated incentive systems.

18 Shareholders can take the company to the court as per

section 181-2 (Company Law 94) about the lack of general

meetings and accounts. However, being scattered, they do not

do so.


The family monitored cost reduction by measuringmanagers’ performance against physical targetsand regular feedback from logbooks. These playeda vital role in arbitrary family-based controls overmanagers and thence supervisors and workers.Despite accounting numbers being rarely revealed,the directors’ rhetoric on the need for improvedfinancial performance justified their dictates tomanagers who transmitted similar messagesdownwards. Faced with severe consequences ofbudget failure supervisors entered deals withworkers to manipulate information though thesewere of marginal significance to operations as awhole. As is explored below, the implementationof the physical budgets flowed from the destruc-tion of the internal state and internal labour mar-kets, a repressive sub-contracting system, workintensification, lower wages, and coercive controlsresonant of unbridled nineteenth century Westerncapitalism.19

6.2. Changes to the internal state

Workers initially resisted full privatisation.Trade unions occupied the factory, preventing thenew owners entering their offices. Then, after longsecret negotiations, management secured anagreement with a faction of the trade union lea-dership and the one-month lockout ceased. Aworker commented, ‘‘We were stubborn about oursteps. But some trade union leaders came up withproposals such as no redundancies will be made andno financial incentives will be cut off.’’

These promises never materialised. The newowners immediately made 75% of the workforceredundant,20 including the leaders of the tradeunion factions who allegedly did not collude in the

owner’s bid. Financial benefits for workers such asprovident contributions, bonuses and the work-men participation fund were withdrawn. Theremaining trade union leadership was managedthrough a mix of tangible and covert actions —including excusing union leaders from work andgiving them lump sum payments. This was a con-stant cause of complaint by workers and trade unioninfluence evaporated on the shop floor. For example,trade union offices could not open during shifts.When the researcher wanted to interview trade unionleaders they had to find another location.

Trade union activities became limited to formalnegotiations with the executive director (ED) butto little effect. Management reigned supreme. Aproduction manager commented, ‘‘We can useworkers in what ways we want. Before privatisation,this wasn’t possible at all since trade union leadersand workers had a strong influence over target pro-duction and operations.’’ A trade union leaderadmitted, ‘‘We have now limited power because ofthe job insecurity. Workers are not interested intaking part in any demonstrations although we havebeen trying to get the financial benefits back forworkers.’’ The redundancy programmes and theabsence of trade union leaders from the shop floorreinforced budgetary control and discipline overworkers. As a production manager revealed:‘‘Presently we don’t have to face any serious pro-blems from the part of workers. The deviations ofproduction budgets are mainly due to raw materialshortage or machinery breakdown.’’

Workers repeatedly reported that their leadersworked for the owners and not them. Burawoy(1979) found similar complaints in Allied Cor-poration but noted that workers still turned totrade unions to solve shop-floor grievances. In PCtrade unions were not significantly involved withworker affairs after privatisation. Nevertheless,their symbolic presence protected managementfrom legal sanctions as industrial ordinances givepermanent workers rights to trade union recogni-tion.21 The representation and rights of casualworkers were especially parlous, being excludedfrom this legislation. When the researcher pursuedthis with the General Secretary of the trade unionhe was informed, ‘‘We have nothing to do withcasual worker matters.’’

19 The authors are indebted to an anonymous reviewer for

much of the content of this paragraph.20 In 1988, the total workforce was 1261 (1091 manual and

clerical workers and 170 officers). By 1991, it was 1100 (during

the pre-privatisation period the number of employees ranged

from 1100 to 1200). After privatisation, in 1994 the workforce

(including casual workers) declined to 710 employees (615

manual and clerical workers and 95 officers). Approximately

700 workers and officers were made redundant after privatisa-

tion in 1993, and 310 new casual workers were gradually re-

appointed. During the second visit to PC, production managers

revealed that the workforce had remained at 1993–1994 levels.


After the full privatisation of PC the owners,rather than seeking co-operation from an internalstate, destroyed it and introduced coercive con-trols for private accumulation brought about bystate policies of structural adjustment. The resultswere consistent with Burawoy’s argument that de-regulation ushers in coercive regimes of control.Following full privatisation, collective bargainingwas pushed aside for harsh coercive controlsexpressed through budgetary pressure.

In their weakness, trade union leaders allowedto remain by management pursued a managerialistconception of an internal state, adopting theowners’ rhetoric of accounting calculus. The Gen-eral Secretary of the dominant trade union factioncommented that PC was over-manned and redun-dancy programmes were necessary to revive profit-ability.22 The trade unions banned demonstrationsor strikes. Trade union leaders sought to restoretheir influence by arguing that co-operation lead-ing to increased profits would lay the basis forincreased employee benefits. This attempt tooperate an internal state was a charade: tradeunion leaders could neither influence productionon the shop floor where they were denied accessand support, nor could they wrest significant con-cessions from management.

In July 1999, the owners sacked the majorremaining trade union leaders (the president andsecretary) because, according to a senior manager,‘‘The owner managers wanted to get rid of dishonestleadership. They were putting a lot of undue pres-sures on the owner managers.’’ The trade union

leaders then organised demonstrations and calledfor strikes to restore the Provident Fund, andsecure increased wages and benefits. This receivedno shop floor support, though the trade unionleaders’ lobbying of political leaders resulted insome government pressure upon the owners. Theresearchers could not investigate this disputethoroughly but it probably marked a break in theshort honeymoon between the owners and thepuppet trade union rather than any significantlabour resistance. Workers were terrified of losingtheir jobs for participating in trade union activitiesand they placed little trust in trade unions aftertheir previous behaviour.

In summary, privatisation saw the destructionof the internal state. The economic dependence ofemployees upon the new owners, their loss ofaccess to political influence, and the dire con-sequences of nonconformity, ushered in a coercivecontrol regime based, in part, on accountingrhetoric and physical budgets.

6.3. Changes to internal labour markets

After privatisation, the new owner-managerslargely abandoned previous recruitment and wagesystems. Surviving permanent workers were paidon the old salary structure but management with-drew the collective production bonus replacing itwith ad hoc, arbitrary rewards fixed by ED. Theoriginal job classification system remained forsurviving permanent workers but the use of casuallabour eroded its effectiveness. There was little evi-dence of privatisation benefits trickling down tolabour: wages declined and an ill paid group ofcasual workers paid around 1 US$ per 8 hour shift)emerged.23 There was little evidence that privatisa-tion facilitated development goals with respect tobroader criteria of increased employment, narrowerincome distributions, improved conditions of work,or increased state revenues (Uddin & Hopper, 1999).

21 According to the 1969 industrial ordinance, every manu-

facturing or service organisation must have collective bargain-

ing agents (elected from trade unions at the organisation level)

to protect workers’ interests. Management must meet collective

bargaining agents monthly to discuss workers’ grievances. If

this is not done, the state, through the labour court, can impose

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

organisations. The symbolic presence of trade unions in PC

satisfied legal requirements and avoided political sanctions.22 It is difficult to ascertain the profitability of PC after full

privatisation given the lack of accounts and their possible

unreliability. The 1995 accounts showed a loss in 1994 of 38.76

million taka. An accounting officer during the 1999 visit

claimed that PC had not made a profit since full privatisation

and it was currently breaking even.

23 According to the wage commission and labour laws of

1993, which would have prevailed in PC had it still been natio-

nalised, permanent workers would have been entitled to a

minimum of US$2 per 8 hour shift, excluding other benefits. It

is not unreasonable to conjecture that wage levels, especially

for unskilled workers, declined by approximately one half after

privatisation.


Half the labour force became casual workershired and paid by contractors on a daily flatrate — approximately half that of comparablepermanent workers. Labour contractors suppliedcasual workers to PC on commission. The con-tractor paid the casual workers but they liasedclosely with PC’s management to avoid hiring thesame worker for 90 days continuously, therebybecoming permanent under a 1969 IndustrialOrdinance and entitled to minimum wages, wel-fare provisions, and trade union membership.Casual workers, having few legal rights, had lowcosts politically and economically. Shop managershandled this carefully, having informal arrange-ments with contractors about who to hire and fire,and when — as instructed by ED. The contractoralways honoured management preferences. Beforeprivatisation, nearly all employees were perma-nent: after privatisation, a large proportionbecame casual labour and hence a commodity thatPC’s management could contract or expand daily.Before privatisation, appointments were politi-cised: after privatisation, they were at the whim ofthe family owners acting in conjunction with con-tractors.

Arbitrary rewards and the differential treatmentof casual and permanent workers by supervisorsintensified inter-worker rivalry and weakenedshop floor solidarity. Prior to full privatisation, allworkers had fixed tasks settled through unionnegotiations. After privatisation this was only sofor permanent workers. Casual workers were sub-ject to flexible manning: at the beginning of eachshift they assembled in front of the office of asupervisor responsible for scheduling work. How-ever, supervisors were temporary and needed theco-operation of permanent workers to show goodperformance to shop management, so permanentworkers could pick the easiest jobs. Casual work-ers were exposed to harsher regimes. Before pri-vatisation, new workers got the hard and riskyjobs often in unhealthy areas but nearly all werepermanent. After privatisation, casual workers fil-led these jobs.

Despite their culling and loss of rewards, per-manent workers felt superior to casual workers.Status differences on the shop floor and the dif-ferential treatment of permanent and casual

workers produced conflict between the twogroups. For example, when the researcher workedon the packaging section sticking together packa-ges containing soaps emerging from a wrappingmachine, the sticking material used was often thin,which made the job messier. The supervisordelighted in making the researcher responsible forimproper work although it was the fault of a per-manent worker responsible for preparing stickingmaterials. Such discrimination made casual work-ers jealous of permanent workers. Another workerplaced each package behind the researcher so hecould handle them easily. If this worker wasabsent then the researcher had to do this task.Despite knowing that before privatisation thissection had three or four workers instead of thetwo now allocated, the researcher’s response to thework intensification wrought by management was,once again, to turn his anger upon an apparentlyfailing permanent colleague.

Overtime allocations were a further source oflateral conflict. Permanent workers were notallowed overtime since it was costly: shop man-agement tried to appoint casual workers instead.However, permanent workers were given overtimeby supervisors wishing to gain their favour. Thesupervisors would make false allegations ofshortages of casual workers. This embitteredcasual workers. Logically, the casual workers’resentment should be directed at shop managerand supervisors but it was diverted into conflictwith permanent workers.

The promotion system remained officiallyunchanged for permanent workers but was rarelypractised- possibly because of the lack of influenceof trade union leaders. The new managementdangled promotion opportunities for casualworkers: they could become operators or technicalhands with the possibility of becoming permanent.The DCC told the researcher that allocating hardjobs to new casual workers was part of theirtraining — an opportunity to increase their skillsto enhance their prospect of permanent status.Whatever, many casual workers were trained toperform technical jobs such as machine operationbut their grading rarely changed. This presentedcasual workers with a dilemma: their chances ofretention were small and their conditions dire —


yet refusal to co-operate would only deny themopportunities to become permanent or receive adhoc rewards. These chances, however slight, mademany casual workers conform to managerialpressures to meet budget.

The new internal labour market segmentingworkers between casual and permanent statuspromoted worker division and strengthened man-agers’ ability to impose budgets. Internal labourmarkets at PC after privatisation differed fromthose described by Burawoy in Allied Corporationbut their consequences were similar. Both repro-duced external labour markets within organisationsto create uncertainty, individualism, and competi-tion amongst workers. This diverted workers’opposition from owners to inter-worker rivalriesthereby strengthening managers’ power over work-ers. In PC, this was exercised primarily by coercionwhereas in Allied Corporation it was through man-ufacturing consent. As Burawoy emphasised, theoperation of internal labour markets under capital-ism requires strong union protection for labourand non-arbitrary decisions. The privatisation ofPC diminished state protection of the workers,enabling the new management to obliterate tradeunion politics. Workers became so powerless thatmanagement could disregard such considerations.

6.4. Coercion and gaming

After full privatisation, consent was no longer amanagerial or political imperative in PC and thenew owners could exert coercive controls. Never-theless, gaming, chiselling, and making out existedafter full privatisation: even under coerciveregimes, they play a role in control. Burawoy(1979) argues that games are neither independentof, nor in opposition to management, and thatthey diminish conflicts between workers and man-agement. This was so in PC. Work avoidancepractices with the appearance of resistance actu-ally promoted budget achievement. Participantobservations revealed how workers struggled toreach budget quotas to enjoy illicit rest periodstolerated by management. This was functional tobudget attainment as it divided workers, rein-forced effort, and encouraged self-controls andcoaching amongst workers.

Despite the work intensification, possibilities ofits relaxation existed. Workers had informal restarrangements: one worker worked continuouslyfor the first half of the shift then another tookover. The non-active worker would rest. Thisoccurred before privatisation but was less pre-valent because there were more workers. Theresearcher saw that shop management turned ablind eye to this practice: they were content solong as output met budget. Indeed, workers’ desireto attain budget to achieve unsanctioned rests wasfunctional to production managers, as everyonehad to be attentive to work. If anyone lost speed,it affected the whole shift since it was a continuousprocess. Therefore, workers showed new collea-gues tricks and techniques to finish jobs quickly sothey could take unofficial rest. Workers’ desire forbreaks led them to inculcate new workers withefficient practices and operators sanctioned any-body who made mistakes. For example, theresearcher was transferred to the night shift with anew (to him) job. The supervisor took theresearcher there telling him that you have to learnall the corners of this production line. However,on his first night shift, the researcher was execut-ing his job shakily, causing problems further downthe line. The next worker became impatient andrequested the supervisor to move the researcher.According to the researcher’s notes: ‘‘His com-plaint also made me more attentive and efficient indoing my job. Actually, it was a kind of challengefor me to do the job efficiently.’’ The technologyand managers’ selective tolerance of work viola-tions reinforced managerial budget goals throughincreased worker self-policing.

Workers were conscious of their exploitation.Casual labourers in the Soap Processing Depart-ment worked hard in unpleasant conditions: theplant layout was dangerous and the high tem-peratures needed to mix soap materials producedconsiderable dust. Workers understood the healthrisks and their powerlessness. A worker com-plained, ‘‘They should have paid us more than theother easy works but we are exploited.’’ Workersoccasionally made token acts of resistance, forexample, by deliberately increasing wastage for, asa worker angrily exclaimed, ‘‘If they screw us, wewill screw them.’’ However, resistance tended to be


channelled into localised acts directed at linemanagement rather than broader capitalist rela-tionships.

Burawoy described how in Allied Corporationworkers’ experience of being ‘screwed’ by man-agement was expressed in terms of their bosses’failure to facilitate opportunities for making out(1979, p. 66) or making fake allegations againstmanagement. Permanent workers in PC madesimilar complaints about managers who violatedestablished shop-floor norms such as tiffin breaksand granting overtime. Workers silently resentedmanagers’ increased presence on the shop floor.The DCC moved around the shop periodically,checking the speed of machines and urging work-ers to increase effort. This made workers alert ashe could fire them at will. His presence madeworkers angry — a permanent worker angrilycommented, ‘‘He is a mother-f�cker and alwaysscrews us up.’’ Workers had a strong belief thatshop managers were responsible for their suffer-ings. Another permanent worker complained:‘‘Production managers always earn money by usingillegal ways. They did it before and now they aredoing it with the collaboration of owners.’’ Favour-able attitudes to management and voluntaryworker co-operation were not shop floor norms.One day a permanent worker was gossiping andlaughing with a supervisor — it seemed he had agood relationship with management. A casualworker pointed to him saying to the researcher,‘‘He is a number one telbaz [someone who alwayskeeps good relationship with their bosses]. That’swhy that mother-f�cker sometimes gets overtimeopportunities.’’ Paradoxically, though shop man-agers were subject to similar budget pressures toworkers after privatisation, their increased visibi-lity and demonstrations of power, fuelled workers’tendency to blame them for their woes.

Burawoy found discussions amongst workers inAllied Corporation were dominated by whetherindividuals were ‘making out’ and games. In PC,workers showed little interest in making out pos-sibly because there were no piece rates, the pro-duction bonus having been withdrawn. Shop floorconversations in PC focussed on petty economicstruggles such as, ‘‘What benefits had been takenoff? What managers are doing? How they f�ck

them off? What new facility is being taken off?’’Casual workers were less involved in such con-versations, possibly because they aspired to per-manent status or were unaware of lost facilities.There was little to suggest that workers in PC hadinternalised gaming to manufacture consent liketheir counterparts in Allied Corporation.

In PC it was the shop managers who were pre-occupied with achieving budget. Their first ques-tion to workers was invariably, ‘‘How manypackages are finished?’’ or, ‘‘What is the speed?’’Mostly workers answered them disinterestedly orwith the hushed response, ‘‘F�ck you.’’ One day,DCC asked a permanent packaging worker howmany packages were finished? The worker hesi-tated to answer and a casual worker smartlyanswered the question. Later the permanentworker was furious with the casual worker shout-ing, ‘‘Bastard, is it your father’s factory? Why didyou answer this question?’’

Burawoy and Roy observed behaviour incon-sistent with a thesis of monetary incentives beingthe basis of worker co-operation, leading Burawoyto argue that co-operation and consent came fromgames. Shop floor values not solely explicable bymonetary rewards were found at PC: workerscompeted for easy jobs, were sensitive to socialstigmas, and they regarded operators as moreprestigious because they were skilled — thoughthis carried no monetary advantage. However, itwould be wrong to discount the role of materi-alistic concerns underlying behaviour at PC whereworkers were on low wages, strove for overtime ordouble shift opportunities, and alternativeemployment opportunities were sparse. Workers,managers, and supervisors indulged in making outand chiselling because of physical budget pressuresand repercussions of failure rather than any sub-jective commitment to games. Informal practicesin PC after privatisation were about economicsurvival under increased budget pressures ratherthan the manufacture of consent within capitalistrules (Gordon, Edwards, & Reich, 1982). Con-fronted by their weakness, workers’ preoccupa-tions centred on individual concerns rather thancollective action. As a worker commented, ‘‘Weare appointed for doing things — not to make anyproblems. We can’t do anything against the owner


because he is giving me money for my breads andliving’’. Workers recognised their exploitation butwere pragmatic about their powerlessness — con-fining their resistance mainly to unofficially toler-ated informal practices. However, this had similareffects to the making out and gaming observed inAllied Corporation by Roy (1954) and Burawoy(1979). Work avoidance formed the basis ofworkplace behaviour: both instances shared theself-defeating and paradoxical character of allsuch practices in that they reproduce the condi-tions of their existence — the pressure of work andconformity to managerial ends.

Gaming is highly contingent: it is too easy toassume that it is invariably about the manufactureof consent. Recent case study research inaccounting has concentrated on subjective issuesconcerning control; for example, Ezzamel andWillmott (1998) on employees’ notions of self-identity, and Miller and O’Leary (1993, 1994) oneconomic citizenship and corporate governance.Such work illustrates how management uses newtactics to secure employee co-operation within thespace granted by employee resistance. Their siteshad employees with significant collective powerresulting in a degree of management dependenceupon labour. Management had to secure thevoluntary compliance of labour by inculcatingfavourable attitudes and norms of co-operationthrough means such as gaming and teamwork.However, when workers are economically depen-dent upon an employer, have no trade union pro-tection, and are divided by segmented labourmarkets, then coercive controls can prevail. Man-agement need not synchronise positive employeeattitudes with behaviour: subjectivity is irrelevantto effort. In PC, capital could impose its endswithout legitimisation and consent. Managementdirectly and explicitly stripped out labour costsregardless of whether labour had attitudes of co-operation or their self-identity was threatened. Justas the critics of Braverman (1974) rightly sought toaddress the deficiencies of his analysis regardingsubjective factors, there is a danger that an unduepreoccupation with subjectivity can deflect atten-tion from the importance of materialistic andinstitutional factors (Arnold, 1998, 1999; Froud,Williams, Haslam, Johal, & Williams, 1998).

7. Conclusions

The paper concludes by considering the researchaims in the introduction namely, whether inenterprises within LDCs accounting facilitatescontrol over labour by coercion or consent, whyand how do socio-economic factors transformaccounting controls, and can this be modelled?Fig. 2 summarises the findings of this paper withrespect to these questions. The major differencebetween Figs. 1 and 2 is the distinction betweenidealised and enacted regimes of control in Fig. 2.This is introduced because of scepticism on whe-ther hegemonic and market-based regimes everoperated as intended though their importationimpacted Bangladeshi society, and accountabilityand controls of enterprises.

The basic argument underlying Fig. 2 is thattransformations of regimes of control shapeaccounting. After colonialism, imported idealisedregimes of control, firstly hegemonic and thenmarket-based, were transformed by productionand state politics, into quite different regimes ofcontrol in practice, namely political hegemony andpolitical despotism respectively. Accountingunderpinned both idealised regimes and it too wastransformed by politics.

Colonial despotism was not studied empiricallybut it was an important antecedent to the idealisedhegemonic regime. The coalition of intellectualsand trade unionists formed during independencestruggles provided members of the post-indepen-dence government. Also, the aftermath of warmade nationalisation of industry a pragmaticnecessity, as was recognised by external aid agen-cies. The incoming government tried to build ahegemonic regime on the ashes of colonial despot-ism to construct a modern democratic state basedon socialism, central planning, rational-legal gov-ernance, bureaucracy, and recognised trade unions.An apparatus of collective bargaining, systematisedconditions of employment, rational governancebased on centralised budgets, and accountability toParliament through financial reporting was estab-lished for state enterprises such as PC. The aim wasto control labour through consent.

However, the idealised hegemonic regime with-ered in the face of Bangladesh’s turbulent politics.


Paradoxically, the bureaucratic powers vested inpoliticians through the legislation of the hege-monic regime gave politicians the means to sub-vert it. The consent and support of labour wasessential for politicians during the pre-privatisa-tion period of PC. Politicians used their statutorypowers to intervene into public enterprises forparty advantage and to achieve worker consent.Labour resistance was channelled via party-basedtrade unions into the politics of patronage andparty competition rather than class-based strug-gles. This brought concessions to PC’s workersover matters such as production bonuses. Legal-rational accounting systems of budgets for inter-nal control of enterprises within a nexus of stateplanning, and financial reports for accountabilityto ministers in Parliament formally remained butwere ignored by politicians and managers alike.

The idealised hegemonic regime withered as thecombination of production and state politicswrought a regime of political hegemony.

Political hegemony was characterised by poli-tical factionalism and strife, and the dominationof political ends in state enterprises and stateorgans. Prima facie, organised labour exercisedpower through political gaming in the workplacebut through constrained channels of trade unions,led by middle class educated party cadres, actingas industrial arms of political parties. In theirpowerlessness professional managers in stateenterprises such as PC either acted honourably asbest as they could, or served political masters, orpursued the letter of their duties rather than thespirit. Similarly, state officials maintained the ves-tiges of legal rational bureaucracy, or used theiroffice for personal or political advantage, or

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


followed rules and procedures ritualistically andprocedurally. Not surprisingly, accounting prac-tices became de-coupled. External accountingreports and budgetary controls were preparedaccording to official rules and procedures to givethe appearance of rational governance to provideexternal legitimacy though it was widely knownthat their unreality and marginality to decisionsmeant they played little role in accountability,planning or control.

However, politics did not operate in a vacuum:issues of economics and governance bore on pop-ular support, drained state coffers and, frustratedthe external financial agencies that bankrolled thegovernment. Juggling these conflicting pressuresmade politicians adept at political schizophrenia,favouring market policies on one hand and reap-ing the political benefits from controlling stateenterprises on the other. Political hegemony basedon patronage and charisma is inherently unstable.It fuelled popular protest, led to policy failuressuch as loss making public enterprises, and it pro-voked repeated fiscal crises. The latter were espe-cially sensitive for Bangladesh governments’ asthey were increasingly reliant upon external sour-ces of capital that increasingly pressed for market-based reforms. A growing business class withincreasing political representation supported this,not least because they were potential beneficiaries.Politicians were in a quandary: incrementally theyshifted to market-based policies, sometimes withthe tacit support of trade union leaders. Thus PCwas privatised.

The idealised market-based regime derives fromstructural adjustment policies of the World Bankincorporating deregulation, privatisation, exportzones, and an open economy. Proponents presumethat changed property rights and market forceswill diminish political interference, increase enter-prise efficiency, raise profits and tax revenues,promote economic growth, and thus aid develop-ment (Cook & Kirkpatrick, 1995; World Bank,1993, 1995, 1996b, 1997). This will be policed bystock markets acting on accounting information inexternal reports. Private owners failing to rejuve-nate enterprise rejuvenation by improved man-agement controls such as budgets and rewardslinking activities to market performance will either

be removed, or their firms will whither or be takenover (Adam et al., 1992; Furubotn & Pejovich,1972; Hanke, 1986; Rees, 1985). In brief, it isassumed that contemporary Western financial andmanagerial practices will flow from market forcesand state regulation whilst simultaneously beingthe motor of transformation to markets and bettergovernance.

In their haste to privatise, governments andadvisory bodies paid insufficient attention tocreating effective regulatory structures and open,transparent capital markets (Uddin & Hopper,1999; World Bank, 1995). Imposing market-basedpolicies on societies with a small capitalist classinclined to transactions through familial relations,patronage, and irregular means, facilitates cronycapitalism rather than market capitalism. Thus ,inPC, the majority shareholders could operate rela-tively unfettered. Weakly enforced regulationmeant that statutory rules on auditing, annualreports, accountability to shareholders, and taxa-tion could be ignored. Financial informationbecame a prerogative of the family rather thanmarket players. Similarly, little consideration waspaid to protecting workers through internal statesand internal labour markets. This paved the wayfor the new owners of PC after full privatisation toabandon its internal state and internal labourmarkets, and reduce wages and benefits, segmentlabour markets, and introduce redundancies andcoercive controls. Gaming did not disappear uponprivatisation but did not manufacture consent butmerely relieved work pressures. As with gaming inregimes of consent it was functional to managerialaims. Financial accounting became a privateinformation system expressed to managers asphysical targets that transmitted coercive pres-sures down the line. This was done in the knowl-edge that internal labour markets and the internalstate could now be ignored: labour was weak,divided, fearful of losing their job, and unpro-tected by weakened trade unions. There was muchto support Armstrong et al.’s (1996) claim thatbudgets were most potent managerially whenlabour was weakest.

On the evidence of PC, controls consistent withmarket-based regimes predicted by the WorldBank and its advisors did not emerge — thus, our


depiction of market-based regimes as an idealisedfiction in Fig. 2. The regime of control followingprivatisation closely resembled Burawoy’s claimsthat structural adjustment programmes (termedhere idealised market-based policies) producecoercive controls and new forms of despotism inpost-colonial poor countries. The emergence ofaccounting systems that facilitate coercive controlsmust be seen in the context of the transformationof idealised market-based systems by productionand state politics. Political elites dominating statepolitics, faced with growing pressure from a risingbusiness class and agencies of external capital,abandoned production politics to capital. Thisenabled owners to largely abandon the internalstate and internal labour markets, and treat exter-nal accounting regulation with impunity. Factorylabour, unprotected by trade unions or legal ordi-nances, and divided by segmented labour marketsand capricious controls could not prevent politicaland economic elites reaping the benefits of cronycapitalism. Whilst not wishing to discount localcontingencies, trans-national institutions such asthe IMF and the World Bank promote global capit-alism by pushing LDCs into market-based policies,including privatisation, with effects that bear littleresemblance to their rosy predictions. We wish toadd our voice to concerns that the role of trans-national bodies upon management and accountingpractices in LDCs remains unjustifiably neglectedin accounting research (Rahman, 1998).

Acknowledgements

The authors wish to thank the CommonwealthAwards scheme for funding the main body of thisresearch and the CIMA Reasearch Foundationfor assistance in the later stages. The paper hasbenefited considerably from the advice and com-ments of Peter Armstrong, Colwyn Jones, TonyTinker, and the two anonymous referees.

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