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

www.elsevier.com/locate/aos

A Bangladesh soap opera: privatisation, accounting, and

regimes of control in a less developed country
Shahzad Uddina, Trevor Hopperb,*
a
School of Management and Economics, Queen’s University Belfast, Belfast BT7 1NN, UK
b
Manchester 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 nationalised
upon Bangladesh’s independence in 1971 and privatised in 1993. Theoretically it is informed by Burawoy’s contribu-
tions to labour process theory, especially how the consent of labour is manufactured through internal states, internal
labour markets and games, and how regimes of control in less developed ex-colonial countries are transformed by state
and production politics. How the role of accounting systems may shape and be shaped by these processes is traced.
Nationalisation brought state attempts to manufacture consent by the methods described in Burawoy’s depiction of
hegemonic regimes. However, idealistic attempts to secure accountability, rational planning and control, and consent
through bureaucratic means were subverted and transformed into a regime of political hegemony. Here control was
secured by political interventions, often at the behest of trade unions, for party political rather than commercial ends.
Detailed systems of accounting for control and accountability were maintained but became marginal, ritualistic, and
de-coupled from operations. Privatisation brought changes consistent with Burawoy’s prediction of coercive controls
within a new despotic regime. New owners destroyed the internal state and internal labour markets and, following
widespread redundancies, most workers were hired through internal subcontracting. The changes heightened worker
divisions and rendered workers powerless to resist. Gaming was observed but this relieved the pressures of work
intensification and proved functional to management. Significant changes to accounting controls were made. External
reporting ceased in violation of legal requirements — financial accounting became the preserve of the owning family
and was beset with irregularities. Budgets became more market oriented and were transmitted downwards in a physical
form to reinforce coercive pressures upon managers and thence the shop floor. The paper concludes by relating the
findings to a revised model of transformation of control regimes in Bangladesh # 2001 Elsevier Science Ltd. All rights
reserved.

1. Introduction exists on management accounting in less devel-

This research stems from an interest in account-
ing and development policy in poor countries,
especially Bangladesh. The little research that
* Corresponding author. Tel.: +44-161-275-4014.
E-mail addresses: s.uddin@qub.ac.uk (S. Uddin), trevor.
hopper@man.ac.uk (T. Hopper).
0361-3682/01/$ - see front matter # 2001 Elsevier Science Ltd. All rights reserved.
PII: S0361-3682(01)00019-8
oped countries (LDCs) rests on brief interviews
with senior managers and surveys (for example,
Abdeen, 1980; Anderson & Lanen, 1999; Frucot &
Shearon, 1991; Rahman & Scapens, 1986). There
are few intensive case studies and an almost total
neglect of participatory observation (an exception
is Ansari & Bell, 1991). Thus the aim is to give a
grounded account of controls in a Bangladeshi
soap factory (anonymised as PC).
644 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
The paper has theoretical ambitions. Burawoy’s
(1979, 1985) theorisation of management controls
of labour processes is used to develop a political
economy of accounting in LDCs to addresses:
1. How, if at all, did accounting help achieve
control at the point of production, whether
based on consent or coercion?
2. How did state politics involving political
parties, classes, trade unions, and external
financial institutions interact with labour
resistance at the point of production to
transform controls, including accounting?
3. Can the historical transformation of
accounting in enterprises in LDCs, especially
ex-British colonies, be modelled?
The paper is structured as follows. First, the
theoretical constructs underpinning the research
are outlined. These draw from Burawoy’s (1979,
1984, 1985) work on the control of labour pro-
cesses, especially the manufacture of consent and
the historical transformation of controls inter-
nationally. Contextual information about Bangla-
desh, the firm researched (PC), and its changing
ownership is woven into the section. The research
methods are then described followed by the case
study. The first part examines control in PC after
nationalisation and then partial privatisation. The
second part examines how controls changed upon
privatisation. The paper concludes by returning to
the original research questions and offers a model
of accounting transformation in LDCs.
2. Burawoy, control, consent and coercion
Previous research demonstrates how industrial
relations and trade unions are central to under-
standing accounting within the Bangladeshi public
sector (Alam, 1990, 1997; Hoque & Hopper, 1994,
1997; Uddin, 1987). Interventions by politicians
and trade union leaders rendered technically
sound accounting systems ineffective, leading to
public sector deficits and state financial crises.
Public enterprises became an impediment to eco-
nomic development. Bangladeshi governments,
spurred on external funding agencies such as the
World Bank and the IMF, subsequently adopted
programmes of privatisation with varying degrees
of enthusiasm. This fuelled intense political debate
and industrial conflict within Bangladesh.
Given the importance of political institutions
and workers’ resistance in accounting in Bangla-
desh, a political economy approach to research
was 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 especially
apt, despite its neglect in accounting research.1 It
traces how shop floor conflicts, industrial rela-
tions, domestic politics, external finance, and
management controls shape regimes of controls in
enterprises. These factors are all important in
Bangladesh. 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 case
study based, utilising Burawoy offered possibilities
of comparative analysis.
In contrast to most labour process theorists who
focus upon conflicts within capitalist enterprises,
Burawoy sought to explain why workers normally
co-operate. He recognises that coercive controls
form the basis of labour process analysis but he
argues that the increased power of labour meant
firms had to supplement coercion by the organi-
sation of consent. Thus Burawoy addresses a
major criticism of labour process theory, namely
its neglect of subjectivity and how consent is pro-
duced. This is relevant to accounting, given claims
that 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).
 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 significant
in securing shop-floor control. Accounting and
sociological research appear to conflict regarding
the significance of accounting for securing the
control of labour. The research adopted Bur-
awoy’s key constructs — coercion, consent, the
internal state, internal labour markets, and gam-
ing, plus the apparently problematical construct of
accounting 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 firing
in violation of collective bargaining. Coercion
occurs when ‘‘For their economic survival, work-
ers are presumed to be totally at the mercy of the
capitalist or his agent, the overseer, who can arbi-
trarily intensify the work, provided that his
demands are compatible with the reappearance of
the worker the next day (and sometimes not even
then) and that they remain within certain broad
and often unenforced legal limits’’ (Burawoy,
1979, p. 27). Coercion is likely to occur during
periods of uncertainty, profitability crises, and
diminished state protection to workers and trade
unions, or when workers’ resistance is weak. This
is relevant in poor ex-colonial countries vulnerable
to currency fluctuations and fiscal crises of the
state. Unemployment, weak trade unionism, weak
regulation, the state’s dependence upon external
capital, and the nature of political elites can render
workers powerless and unprotected.
Burawoy’s concern is to explain, without resort
to economic determinism, how capitalism con-
tinuously secures increasing volumes of surplus
value in potentially antagonistic labour–capital
relationships. Burawoy’s basic premise is that
whilst capital may coerce workers it must also
secure their co-operation by obscuring the exploi-
tative character of its control.3 He argues that
645
Marx’s analysis of the labour process emphasised
coercion and ignored the organisation of consent,
possibly because this was not significant for nine-
teenth century capitalism. Burawoy argues that
the increased power of labour in rich economies
has led to wages being increasingly independent of
individual effort. Thus coercion must be supple-
mented by consent. Consent is defined as ‘‘the
necessity to elicit a willingness to co-operate in the
translation of labor power into labor’’ (Burawoy,
1979, p. 27). Consent flows from the organisation
of activities rather than workers’ beliefs. Beliefs,
Burawoy claims, are determined primarily by
experiences outside the factory. Thus consent
results from tangible management actions that
present 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 socialisation
but, paradoxically, through workplace participa-
tion (Sturdy, 1992, p. 117). Burawoy identifies
three sets of activities crucial to the manufacture
of consent: internal labour markets, the internal
state, and games.
2.2. Internal labour markets
Burawoy noted how shop-floor consent since
World War Two was facilitated by internal labour
markets, partly as a consequence of larger, more
concentrated firms. Internal labour markets have
six aspects:‘‘a differentiated job structure, an
institutionalised means of disseminating informa-
tion about submitting applications for vacancies,
non-arbitrary criteria for selecting employees for
vacancies, a system of training on the job, ways of
generating a commitment to the firm that makes
jobs in other firms unattractive, and, finally,
maintaining the allegiance of employees after they
have 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.
646 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Neo-classical economists examine internal
labour markets in terms of organisational effi-
ciency and whether they are more efficient than
external labour markets (Doeringer & Piore,
1971). To Burawoy internal and external labour
markets are similar: each reproduces competitive
individualism. However, internal labour markets
also bring systematic, objective job mobility that
cements workers’ commitment to enterprises.
Thus internal labour markets expand workers’
choices with the prospect of greater reward but
constrain behaviour within narrower managerial
limits. The ensuing individualism and competition
between workers redistributes conflict, thereby
obscuring and helping secure surplus value
(Braverman, 1974; Doeringer & Piore; Edwards,
1975, 1979; Polanyi, 1944). Thus the collective
mobilisation of workers as a class is frustrated and
worker/management tensions are reduced.
2.3. The internal state
Prior to the cessation of World War Two, the
activities of organised labour were curtailed and
often resisted by firms such as Allied
Corporation — the site of Burawoy’s research.
After the war this changed rapidly: companies
recognised trade unions and instituted formal col-
lective bargaining and grievance procedures. They
created internal states4 (normally incorporating
trade unions through collective bargaining and
grievance procedures). Such states are relatively
autonomous, so long as they protect management
from itself — especially making arbitrary inter-
ventions that undermine consent. Companies
maintain the relative autonomy of union leader-
ship and legitimise the union as a bargaining
instrument providing it co-ordinates union and
management interests within the rules and regula-
tions of labour contracts. This must expand the
profits that provide the source of concessions to
labour (Burawoy, 1979, p. 119). Thus the union
acts as an umpire: protecting the rights of indus-
trial citizens and overseeing the punishment of
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).
offenders against contractual obligations (Bur-
awoy, 1979, p. 113; Flanders, 1970). The internal
state has similar functions to internal labour mar-
kets. It constrains managerial prerogatives and
endows workers with rights as well as obligations.
Collective bargaining reconstitutes shop-floor
conflict into a framework of negotiation (Reuther,
1958) that generates a common interest between
the union and company based on the survival and
growth of the enterprise (Przeworski, 1978).
However, by negotiating on marginal changes, it
deflects workers’ attention from more funda-
mental capitalist relations of ownership and con-
trol. Burawoy (1979) saw collective bargaining as
another game — ‘‘this time a game about rules
and outcomes of other games, such as making
out’’ (p. 115).
2.4. Gaming behaviour
Taylor argued that piece rate systems co-ordi-
nate the interests of management and worker
through a mutual interest in financial gain (Tay-
lor, 1947). Scientific Management brought control
systems separating the conception and execution
of work, and shop floor rewards based on piece
rates, subsequently reinforced by production tech-
nologies that limit autonomy.5 Burawoy argues
that the increased power of labour rendered such
control problematical and firms had to use con-
sent. Thus, collective bargaining governed grie-
vances and rewards, for example piece rates
became set in nationally negotiated labour con-
tracts rather than by time and motion study and
local negotiation. Yet these factors give only a
partial explanation of how consent is produced.
Burawoy observed that managers did not con-
tinuously intensify work, rigidly apply contract
rates and duties, or seek further separation of
conception and execution of work in the machine
shop of Allied Corporation. Instead they relaxed
the enforcement of some controls to permit
greater worker autonomy. He argued that this was
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.
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
functional to management as it promoted indivi-
dualism and ‘gaming’ amongst workers that
diverted labour conflict from management into
petty local disputes with fellow workers. Bur-
awoy’s identification of gaming behaviour was not
new to the labour process literature (see for
example, Baldamus, 1961; Crozier, 1964; Hanri
De Man, 1927; Roethlisberger & Dickson, 1939).
His contribution was linking it to the manufacture
of 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 resistance
to mitigate managerial pressures and to gain easier
rates and greater autonomy. In contrast, Burawoy
observes 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 enhance
worker autonomy (Buroway, 1979, pp. 71–72) as
practices permitting worker manipulations pro-
mote individual performance and effort, and co-
operation between foremen and workers, and
ultimately mask potential sources of conflict.
Individualistic rather than collective reward sys-
tems reinforce this, as they generate competition
and conflict amongst workers. Labour’s partici-
pation in capitalist choices within games generates
consent to capitalist rules.
2.5. Accounting information systems
There is little evidence directly associating
accounting with coercive control of shop floor
labour. Managers that can operate arbitrary
regimes due to unequal power relations need not
financially justify their actions to workers or tie
shop floor targets and rewards to financial
expressions of production such as budgets —
physical (non-financial) targets, rules, penalties,
and direct supervision will produce effort. How-
ever, tight budgets imposed on managers can
transmit pressure downwards to intensify pressure
and coercion on the shop floor.
Most research on accounting and labour control
is on accounting’s contribution to manufacturing
647
consent. It acknowledges the importance of
games, for example, Hofstede’s (1968) research on
budgeting as a game bears empirical similarities to
Burawoy’s observations. However, how each
author traces its significance differ markedly.
Hofstede, in a Human Relations tradition, argues:
. . . planning and control, essential factors for
any organisation, can be seen as a game by
managers. The trick, then, is to get managers
to 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 in
Burawoy’s writings accounting plays no direct role
in shop floor gaming or the control of labour. This
may be because financial budgets stop at first line
supervisors or earlier, and shop floor targets are
based on physical extrapolations of budgets. If so,
managerial gaming associated with budgets may
be associated with shop floor gaming based on
physical targets. The issue is how and when (if at
all) are management budget games and shop floor
games connected, and does this help secure con-
trol through consent?
Burawoy did not explicitly study accounting
though others have subsequently done so from a
labour process perspective (Armstrong 1985, 1991;
Hopper et al., 1986, 1987; Hopper & Armstrong,
1991). Such studies claim that accounting techni-
ques manufacture worker consent by reproducing
sectional interests and a mystificatory ideology of
efficiency. Accounting provides ideological rein-
forcement of the priorities of capital, reproduces
hierarchical relations within enterprises, and
institutionalises labour subordination through
purportedly objective analyses and reports
(Roslender, 1996, pp. 471–472). However, explicit
demonstrations 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 claims
accounting reports reproduce notions of economic
648 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
imperatives and individual accountability that
tally with worker attitudes of masculinity and
their discourses conducive to managerial practices.
Knights (1990) subsequently claimed that
accounting is an invisible hand that subjectively
justifies controls such as bonus systems to work-
ers, whose voluntarily engagement in practices
reproducing existing social orders prevents them
advancing a revolutionary political praxis.
The implications of the small number of studies
on accounting and shop floor control that exist is
that accounting helps constitute subjectivity and
workplace consent. However, few studies trace
how accounting directly and tangibly does this. If
so, is it through gaming or just an inculcation of
attitudes 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 accounting
reports to inculcate favourable attitudes amongst
factory workers may be marginal. Also, the evi-
dence is slight that accounting manufactures con-
sent through shop floor gaming, either directly or
via budget games of managers. Armstrong, Mar-
ginson, Edwards, and Purcell (1996), imply that
this is more likely under conditions of managerial
weakness. If so how management uses accounting
to control labour may be contingent, for example,
gaming associated with accounting may disappear
when management is strong and/or uses coercive
controls.
The relationship of accounting to internal
labour markets, the internal state, and hence
labour control is similarly poorly understood.
Hopper et al. (1987, p. 446) argue that accounting
provides an ideological reinforcement of labour
relations through the way it portrays organisa-
tions, their goals, employment contracts, and the
necessity of hierarchy. Prima facie, accounting and
internal labour markets appear inter-related.
Accounting can reveal the scope for material con-
cessions in labour contracts, and assumptions
underlying its calculations can legitimate manage-
rial practices and obscure capitalist relations of
production. Nevertheless, research on accounting
and the internal state indicates that accounting has
played a minor role in industrial relations, though
it 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 hegemonic
control characterised by internal labour markets
and an internal state. As will be argued below,
capitalist relations may be different in more global
economies where managers have greater powers.
Armstrong et al. (1996) claim that budgeting in
large UK companies is connected to the control of
labour: budgets being most used when manage-
ment has the freedom to act on the information.
This normally occurs when the power of labour is
weakest. If so, then accounting should be more
prominent within weakened internal states. In
deregulated market situations external labour
markets may become more prominent and
accounting may become less concerned with fac-
tors producing consent. Instead it may reproduce
external labour markets by converting direct
labour to a variable cost through subcontracting
and tying economic rewards to production
volumes. Studies of organisations undergoing cri-
sis and transformation in the past two decades
suggest that this may be so (Berry et al., 1985;
Miller & O’Leary, 1987, 1994).
To summarise, the relationship of accounting
controls to shop floor control is poorly under-
stood under either coercive or consensual regimes
of control. Moreover, academic accountants and
sociologists differ over accounting’s import in this
respect. 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 the
Allied Corporation study but substitutes the
internal state with the ‘‘politics of production’’
because the former is too focussed on the factory.
The politics of production links the factory to the
state and ultimately global politics8 and it is used,
inter alia, to analyse when and why controls are
based on coercion or consent.
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Burawoy’s work analyses the historical trans-
formation of controls in LDCs sharing a legacy of
British colonialism with Bangladesh: hence its
attraction and pertinence here. Burawoy criticises
economists and sociologists for neglecting
LDCs — ‘‘the hidden abode of production’’ —
and, when they do, their over-emphasis on market
relations and neglect of labour processes, class
struggles, and state politics. Burawoy’s delineation
of regimes of control in LDCs is adopted in figure
one to build an analytical model of transforma-
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.
649
tions of controls in LDCs to study PC — the sub-
ject of this paper. Three ‘ideal-type’ production
regimes 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 accounting
under each regime. Conflicts and contradictions of
domestic and state politics within each regime lead
to its demise and its replacement by another. Fig. 1
identifies how and when each regime relates to
changed forms of ownership of PC. The dynamics
of this model and its relationship to accounting
are explored in the following section.
3.1. Colonial despotism and the private ownership
of PC (1959–1971)
Colonial despotism occurs where foreign capital
has complete control over labour with little state
intervention. Control tends to be coercive, arbitrary,
physical, sometimes violent, racist, and often extends
to workers’ family lives. Colonial governments exer-
ted little control over companies, giving rise to com-
pany states where companies governed their
employees and possessions. Accounting was unne-
cessary for controlling employees but financial
reports were important for controlling overall per-
formance, securing remittances to company head-
quarters overseas, and satisfying external reporting
requirements of the parent company (Borkowski,
1997; Rahman & Scapens, 1986). However, over
time nascent trade unionism and labour resistance
in factories and mines, manifest in riots and
strikes, often led colonial powers to grant limited
collective bargaining and labour rights. This
occurred in Bangladesh when it was part of British
India (Bhattacharjee, 1986; Murshed, 1989).
After World War Two, many colonies were
granted independence following domestic libera-
tion struggles led by coalitions of middle class
intellectuals and labour leaders (Murshed, 1989).
In Bangladesh this occurred in two phases. Fol-
lowing Indian independence, Pakistan was created
in 1947 consisting of East (Bangladesh) and West
Pakistan. This provoked a Bangladesh indepen-
dence movement seeking separation from West
Pakistan. Independence came in 1971 following a
brief war.
650 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Fig. 1. Possible regimes of control in Bangladesh enterprises.
PC was established in 1959, during this transi-
tory period of colonialism,9 at its present premises
as a private company to produce a cold cream. PC
was profitable immediately: it faced little domestic
competition and was protected from multi-
nationals by government import restrictions. PC
rapidly expanded and by 1971 it had increased its
product range, production, and profits. Given the
difficulties of obtaining data about PC during
colonialism, events then could not be researched
but their legacy was an important backcloth to
subsequent events.
Significant industrial restructuring was essential
after the independence of Bangladesh as fleeing
West Pakistanis, including PC’s owners, aban-
doned their enterprises leaving a managerial
9
Although it is contentious, the paper assumes colonialism
ended in Bangladesh in 1971.
vacuum. The government responded by nationa-
lising abandoned property and hundreds of
industrial and commercial enterprises. PC was
nationalised in March 1972, becoming part of a
centralised formal planning and control structure
running from the Ministry of Industries, through
corporation boards, to enterprises such as PC.
3.2. Hegemonic regimes and the public ownership
of PC (1971–1993)
Burawoy argues that colonial despotism was
often replaced with a hegemonic regime modelled
on practices in richer Western economies. Legal-
rational bureaucratic controls regulated by the
state10 based on internal states and internal labour
markets within enterprises were introduced to
control labour through persuasion and consent
(Alam, 1990, 1997; Hoque & Hopper, 1994, 1997).
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Through a combination of idealism, ideology,
external advice from development experts, and
pragmatic necessity, the post-independence socia-
list government in Bangladesh embarked on a
programme of nationalisation and central state
planning. Trade unions were recognised and for-
mal systems of collective bargaining, recruitment,
promotion and job grading were introduced into
state enterprises. Public sector enterprises were
made legally accountable to responsible Ministers
within a democratic parliament. Accounting was
central to this. Budgets from enterprises in state
corporations to ministries were central to state
planning and each state corporation had to pre-
sent financial accounts to Parliament (based on
generally accepted accounting principles and
audited by state officials) for accountability to the
populace.
In 1975, the government leader, Mujib, was
murdered and his government overthrown in a
military coup. Bangladesh politics became more
turbulent and governance increasingly became
based on patronage and political expediency.
Politicians stepped up their interventions into state
enterprises for political rather than commercial
ends. Trade union leaders assumed positions of
power through their access to political patronage.
The policies of the government resulted in serious
macroeconomic difficulties. Public enterprises
were responsible for 25% of gross domestic capital
formation and their inefficiency had a direct
impact on the allocation and quality of public
investment (World Bank, 1993). Large invest-
ments in the public sector failed to make them
profitable and their losses contributed to public
sector budget deficits rising alarmingly leading to
state fiscal crises.11 Nevertheless, PC flourished
during nationalisation: its products were popular
and cheap; it had 70% capacity utilisation, grow-
ing sales, and was profitable.
After 1975, Bangladesh governments increas-
ingly turned to structural adjustment policies
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.
651
(Government of Bangladesh, 1976, 1985, 1990),
influenced by World Bank and IMF pressures to
adopt programs of market liberalisation and pri-
vatisation. PC came on to the privatisation lists of
government in the late 1980s and it was partially
privatised in 1988: officially to rectify its ineffi-
ciencies and to increase private participation in the
manufacturing sector. Unofficially, it was argued
that it was to placate World Bank pressure to
reform public enterprises. Paradoxically, PC’s
profitability and relative efficiency made it a can-
didate for privatisation, as it was saleable (Uddin
& Hopper, 1999). Moreover, being relatively
small, it was not as politically sensitive as other
large loss-making public enterprises.12 PC was
made a public limited company: 34% of its shares
were offered to the public and 15% to employees.
However, the government through its majority
(51%) shareholding still controlled PC, giving rise
to conflicts amongst directors and delayed deci-
sions. The chief executive officer was changed four
times in the 5 years and a significant number of
middle level managers left the company due to
frustration and the uncertainty over the future of
the company stemming from these conflicts. PC’s
profitability, sales, and productivity plummeted
and it started to make large financial losses. This
was exacerbated by workers’ resistance to
impending full privatisation through demonstra-
tions, strikes, and a lockout, which dovetailed
with other popular struggles against the govern-
ment.
3.3. New despotic regimes and the privatisation of
PC (1993–1999)
Burawoy argues that in LDCs, the convergence
of production and state politics, the ensuing con-
flicts, fiscal crises, and pressures from agents of
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).
652 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
international capital for market reforms, cause
hegemonic regimes to decline. Instead economic-
ally peripheral states often turn to programmes of
economic liberalisation based on export proces-
sing zones, privatisation, and touting the attrac-
tions of cheap, economically weak, unprotected
labour to foreign capital. Burawoy argues that this
leads to new despotic regimes of control in LDCs
based not merely on the subjection of workers but
on the mobility of capital. The need to maintain or
attract capital instigates competition amongst
enterprises, their labour forces, communities, and
governments, resulting in policies that undermine
protection and concessions from the previous
hegemonic regime. Workers must accede to coer-
cive and unilateral management control under the
threat of the relocation of capital. This is espe-
cially acute in LDCs given the poverty of their
states and populace.
This pattern of events was discernable in Ban-
gladesh. Given its aid dependence, the Bangladesh
state was vulnerable to World Bank pressures to
liberalise its economy — including extensive pri-
vatisation (World Bank 1983, 1993, 1995, 1996a,
1996b, 1996c). Despite the problems of partial
privatisation, the government accelerated its pri-
vatisation programme. PC was fully privatised in
1993 through a block tender of government
shares. Its workers, through their trade unions,
attempted to buy the company through the
Workers’ Provident Fund but to no avail. Allega-
tions that the main (government party) trade
union collaborated with the eventual owners to
thwart the workers’ bid were rife. The outcome
was that the government’s shares were transferred
to one person. PC became family-controlled, as
one family now owned 75% of its shares.
Burawoy’s prognosis for privatisation is
gloomy: it argues that coercive controls in a new
despotic regime are likely to ensue. This is in sharp
contrast to the claims of the proponents of priva-
tisation, whose market-based policies are under-
pinned by prescriptions from development
economists, especially neo-classical adherents
drawing on theories of agency, property rights and
allocative efficiency (Adam, Cavendish, & Mistry,
1992; Cook & Kirkpatrick, 1995; Uddin & Hop-
per, 1999). The assumption is that infusing private
property rights into failing public enterprises will
increase efficiency through better controls (includ-
ing accounting ones) and personalised economic
incentives, and this will increase capital invest-
ment, profits, government revenues, employment,
and improve managerial technologies. Markets
will ensure that inefficient enterprises will either fail
or be taken over. However, neo-classical econo-
mists do not study in detail whether the controls
within enterprises that are integral to their pre-
scriptive models actually materialise and operate as
they predict. Internal states, internal labour mar-
kets, the nature of control, and accounting prac-
tices are ignored in the presumption that efficiency
gains following privatisation will trickle down to
employees and society through market forces.
This research sought to establish empirically
which version of events rang true. Did privatisa-
tion mark a return to coercion in new despotic
regimes as claimed by Burawoy or market-based
regimes as some development economists and
policy advisors claim? Whatever, how is account-
ing implicated in such changes? PC was studied to
investigate these competing claims.
4. Research methods
The research triangulated various types of data
including interviews, participation observation,
analysis of relevant documents, and examination
of newspaper reports. Participant observation has
been a method of social inquiry in cultural anthro-
pology (Friedrichs, 1975) and organisation studies
for some time, e.g. Dalton (1964) and Roethlisberger
and Dickson (1939), though it is less common in
accounting research. The data was gathered over 7
months (from February to September 1995).
To obtain an experiential understanding of the
behaviour of managers and workers the leading
author worked in the soap division of PC for 1
month as a casual worker. Time, access and
resources precluded a longer period. Personal and
company anonymity was a condition of research
access. As a participant observer it was neither
practicable nor desirable to keep notes during
work or in front of fellow workers as it might
inhibit them from talking freely. Consequently,
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
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. In
addition, interviews were held with civil servants
(two each from the Ministries of Industries and
Labour, two from the Privatisation Board and one
from the Ministry of Planning), two Bangladesh
Bank and one World Bank officials, and two
national trade union leaders. Questions were
asked in an open-ended fashion to help inter-
viewees respond freely and to avoid predefinition
of issues. Normally, interviews lasted between one
and two hours. Notes were taken during each
interview and the interviewer’s reactions and
cross-referencing of similar points were noted
immediately after. Reports, many unpublished,
were collected from government offices, the World
Bank, trade unions and PC itself, in addition to
library and newspaper searches to validate and
supplement the interview and observational data.
During summer 1999, the researcher conducted
a follow up study. Seven interviews were con-
ducted with senior managers in PC and some cle-
rical staff. Permission was not granted to talk to
workers or trade union leaders due to industrial
relations disturbances. Some trade union leaders
had just been sacked and security was tight due to
demonstrations and the explosion of several
bombs outside the factory gates.
5. Control under public ownership and partial
privatisation
This section analyses controls in PC when it was
nationalised and partially privatised.13 (Partial
privatisation retained majority public ownership
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.
653
and did not significantly change controls in PC,
therefore events then are discussed alongside those
during nationalisation.) It traces how controls
designed to produce consent based on internal
labour markets, the internal state, and formal
accounting systems actually operated in the con-
text of production and state politics in Bangladesh.
(Given the limitations of retrospective research the
relevance of gaming can only be surmised.) The
intended hegemonic regime was transformed into
one subsequently defined as political despotic, with
marked consequences for accounting controls.
5.1. Accounting systems
The Nationalisation Order and subsequent Pre-
sidential Orders made PC accountable to a range
of public institutions. The Ministry of Industries
controlled PC via a holding company but financial
authority lay with the Ministry of Finance. This
dual authority impeded proper financing decisions
and controls. Each public sector enterprise had to
submit annual accounts to the government fol-
lowing the accounting and auditing provisions of
the Bangladesh Industrial Enterprises Act (Pre-
sident’s Order No. 27, 1972, Nationalisation
Order). The Comptroller and Auditor-General
fulfilled an audit role through the Office of the
Director of Commercial Audit. Rigid rules and
regulations governed the preparation and
approval of accounts. Accounts were published
and PC’s accounts came under stricter, formal
scrutiny at several levels, especially the Sponsoring
Ministry, and the Ministries of Finance and Plan-
ning. However, though Parliament was theoreti-
cally the highest tier of control, performance
reports were rarely presented there and when they
were, politicians took no action. In Bangladesh,
the political process lay in personal relationships
and direct patronage: often based on extended
families and associates.14
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.
654 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
As in all Bangladesh state enterprises, PC
maintained a detailed budgetary control system
as part of a central state economic planning sys-
tem. However, interviews revealed that whilst
managers prepared the necessary reports, they
rarely 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’ figures
and dutifully followed regulations from Head-
quarters, with little consideration of actual or
likely circumstances. Sometimes, accountants used
approximations because of the unavailability of
relevant data.
Government and Head Office officials con-
stantly sought higher production to demonstrate
their achievements to Parliament and the popu-
lace. A bonus system for managers and workers
purporting to reward enterprises that exceeded
production budgets replaced an annual lump sum
and two festival bonuses. However, the proposals
lacked specification and production targets
became negotiable between unions (wishing to
protect the custom and practice of non-perfor-
mance related lump sums) and ministers (sensitive
to industrial relations disturbances threatening
their political survival). Production targets for
bonuses became detached from the budget targets
of 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, and
satisfying workers by achieving production tar-
gets. To cope, managers followed rules selectively
and found unofficial means of circumventing these
procedures. For example, managers frequently
granted overtime to workers to achieve bonuses
despite the extra production being unnecessary to
meet either the budget or demand.
Internal control was problematic as external
interventions 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 command
and managers were not prominent on the shop
floor: trade union leaders dominated events
there. Officially supervisors should supervise and
monitor production. However, given the unreality
of official plans these duties were light and not of
major import. For example, supervisors did not
allocate tasks as they were fixed in trade union
negotiations. As a worker commented, ‘‘Very few
supervisors and foremen used to be present during
the shift period.’’ Another commented, ‘‘In those
days . . . supervisors always tried to allocate over-
time to us rather than urging us to work hard.’’
Supervisors, often active trade unionists on trade
union committees, approached supervision indul-
gently (Gouldner, 1954): securing votes from
workers was more important. Trade unions in the
plant were based on rival political parties. The
annual elections of collective bargaining agents
were crucial for supervisors seeking advantage for
the political party their union represented and
thence 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 were
afraid of taking any actions against workers. If any
manager confronted the workers, his life was in
danger.’’ Consequently, financial budgets became
insignificant to operations or for securing
accountability. Managers coped by balancing
decisions between rival trade unions, granting
unnecessary overtime, reducing or halting
machine speeds, or by falsifying reports to indicate
achievement of physical targets. Trade union lea-
ders and managers co-operated in such activities
as each had a vested interest in doing so.
Few managers condoned this state of affairs,
and some resisted granting undue benefits to trade
unions on ethical and/or commercial grounds.
However, other managers made illicit deals with
trade union leaders, for example, accepting nomi-
nations on who should be official distributors, and
the prices and quantities they should be supplied
at. Whatever, the situation provided a market for
excuses. Managers could legitimise failure to
achieve budget targets by blaming unrealistic
bureaucratic rules and targets, or ill-judged exter-
nal interventions, or by indulging in budget
manipulation, or — as many did — by disregard-
ing formal controls claiming they lacked commer-
cial credibility.
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Just as Burawoy found in Allied Corporation,
managers sought to manufacture the consent of
workers through games and associated unofficial
deals. However, in PC this was done from a posi-
tion of management weakness compared to their
counterparts in Allied Corporation. PC’s workers
participated in this: it brought benefits, they
enjoyed circumventing managerial prerogatives,
and it helped alleviate boredom. However, within
the limitations of our data, neither games nor
accounting data were significant for manu-
facturing consent. Essentially, consent lay in
securing concessions through the politicised inter-
nal state and workers’ preoccupations were
centred on the quotas and bonuses for materi-
alistic reasons.
The failure and irrelevance of formal accounting
controls in the face of politics and their substitu-
tion by unofficial transactions occurred in other
control systems including marketing, pricing,
financing, and procurement (Uddin, 1997). The
ostensibly rational legal bureaucracy established
upon nationalisation, with a belief in centrally
planned development, proved inadequate in the
face of politics (Sobhan & Ahmad, 1980). Partial
privatisation simply made such controls more
problematic. For example, trade union militancy
persuaded politicians to grant a production bonus
for workers in PC despite production deteriorat-
ing. As one accountant remarked with a laugh,
‘‘Accounting and budgeting systems were only
changed in terms of its amount of reporting.
Now we had to make several reports to gov-
ernments as well as to private directors, which
only increased our workload.’’ Interviews sup-
ported Sobhan and Ahmad’s comments that dur-
ing public ownership and partial privatisation of
PC budgets operated like other Bangladeshi public
enterprises:
The budget usually fails to serve the role of a
communication and planning instrument . . .
the corporations do not seem to take it ser-
iously . . . they [managers] generally take little
interest in it . . . all they are interested in is the
flow of funds to meet the bills, particularly
salary and wage bills (Sobhan & Ahmad, pp.
332–333).
655
5.2. The internal state and internal labour
markets
Upon nationalisation Bangladesh enterprises
had to recognise trade unions as collective bar-
gaining agents and form consultative committees.
Legally, labour relations became governed by
labour contracts negotiated between management
and 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 within
PC. Seventy-five percent of the work was classified
as unskilled. A production manager explained:
‘‘The industry has provided easy access for all
workers who are physically strong because it needs
very few technical people. We train general workers
to have technical knowledge of operations during
their works.’’ Nevertheless, job classification at PC
was 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. Technical
workers included operators and some service and
maintenance workers. They were the lifeblood of
PC as they possessed a broad range of skills
whereas non-technical workers needed few skills.
Foremen (who also had technical knowledge)
supervised technical workers whereas supervisors
from the ranks of general workers monitored non-
technical workers.
Virtually all workers were permanent and were
categorised into six grades based on seniority of
service and everyone could be promoted to the
next grade. Such promotions only affected
salary — 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 classification
existed, its enactment was often not through
bureaucratic 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.
656 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
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 apparently
bureaucratised rule-bound governance and unoffi-
cial interventions by politicians. Trade union lea-
ders influenced managerial promotions and
appointments through their political connections
with Ministers. Appointees of politicians worked
as political workers making it difficult for super-
visors to exercise authority for fear of repercus-
sions. Changes of government brought new
political appointees to work for the government
party’s trade union, which gave rise to shop-floor
factionalism and over-manning. Workers had to
be a member of one or other union to secure wage
increments or promotions. Past managers descri-
bed how promotions and appointments had to be
balanced between trade unions to prevent major
disputes. As Burawoy (1985) argued, one could
not satisfactorily understand the role of the inter-
nal state without recourse to the broader politics
of production.
Trade union leaders became even more powerful
when the already frequent workers’ strikes and
lockouts dovetailed with broader political resis-
tance against the Ershad government during the
partial privatisation period. The labour federation
mobilised workers against the government, raising
broader political issues including the impending
full privatisation of PC. PC’s elected trade union
leaders had to join the workers’ resistance and
fight for workers’ welfare despite being the labour
wing of the government party. It transpired that
this was just a strategic step to maintain their
influence 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 LDCs
created hegemonic regimes of control upon inde-
pendence. Through public ownership and legisla-
tion the state sought to regulate large enterprises
and control workers by consent based on central
state planning (of which accounting was a crucial
component), internal labour markets, and the
internal state. The independence movement of
Bangladesh was led by a coalition of intellectuals
and trade unionists. The new hegemonic arrange-
ments reflected their idealistic ideologies and their
desire for rational development within a demo-
cratic state that recognised trade unions.
The hegemonic regime soon withered in sig-
nificance (though not presence) as political
rationality, exercised by politicians and trade
union leaders, superseded commercial rationality
exercised by managers and government officials.
Accounting systems became de-coupled: formal
financial accounting was adhered to but was lar-
gely ignored by those in the chain of account-
ability. Planners divorced from operations set
budgets centrally to radiate political optimism.
Given the unreality of budgets and political inter-
ventions into operations, it is unsurprising that
budgets played neither a planning nor a scorecard
role within management. Nevertheless, 25
accounting managers and a large number of clerks
within the largest administrative department of
PC ceremoniously maintained accounting records
and procedures, giving the appearance of ration-
ality and accountability and thereby helping foster
external legitimacy.
The hegemonic regime was transformed due to
the convergence of state and production politics.
The entrepreneurial vacuum following indepen-
dence made politicians powerful in Bangladesh
compared to many other de-colonialised countries
where metropolitan entrepreneurs commanded the
economy (Sobhan, 1993). The government’s com-
mitment to socialism ceased after the military
coup of 1975. Subsequent coups, changes of mili-
tary governments, and the eventual restoration of
democracy reflect the turbulence and volatility of
Bangladesh politics. Maintaining popularity and
power was a preoccupation of politicians and
organised workers’ support was crucial to this
end. Politicians realised that central planning and
the accountability systems of public enterprises
enabled them to intervene in enterprises to placate
workers and secure party advantage. This
increased as politics became more factional. The
furtherance of political interests rather than com-
mercial criteria became the modus operandi of PC.
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
As a World Bank report indicated, ‘‘Though
autonomous in theory, public enterprises are still
de facto under government control and govern-
ment interference is the rule rather than the
exception.’’ (Bangladesh Observer, 24 March 1992)
On the other hand, the same politicians faced with
poor public sector performance, state deficits, and
the need for Western support of their unpopular
governments increasingly adopted market-based
policies. Thus there was political schizophrenia —
politicians achieved popular support by interven-
ing into the public sector, yet they had to purport
to destroy this to secure Western approval and
hence access to global capital.
The transformation from public ownership to
partial privatisation in PC and the destruction of
the hegemonic regime needs to be understood in
the context of post-independence class struggles
and the role of trade unions. Bangladesh society is
relatively homogenous and can be divided into
three classes: upper bourgeoisie, petty bourgeoisie,
and peasant-worker (Sobhan & Ahmad, 1980).
After the flight of capital following independence
the upper bourgeoisie were weak. The petty bour-
geoisie dominated politics and government
institutions such as the army, government
bureaucracies, and universities. Over time, how-
ever, the upper bourgeoisie benefited from the
gradual restoration of the private sector and poli-
tical parties had to accommodate them and their
pressures for privatisation. For example, in the
1996 election, 25% of members of Parliament
were industrialists (Daily Star, 15 June 1996).
Peasants remained largely untouched by trans-
fers of power, being unable to resist the higher
classes. However, the urban working class in state
organisations and organised in trade unions could
effect changes in government. Even military gov-
ernments had to be sensitive and responsive to
their demands. However, trade unions were bran-
ches of political parties with leaders, normally
party members from the educated petty bourgeoi-
sie. This led to multi-unionism in plants and inter-
union rivalries that mirrored and embraced
broader party struggles. Workers looked to edu-
cated and legislatively skilled trade union leaders
to protect them against management victimisation
and to exploit political connections on their
657
behalf. Not joining a union was impractical as it
excluded workers from political patronage and
could carry sanctions. The allegiance of workers
was based on instrumental necessities and the
attractions of political leaders. (Political parties in
Bangladesh tend to be based on charismatic lea-
ders rather than ideologies.) The result was poli-
tical control in state enterprises. As Burawoy
noted in Eastern European communist enterprises,
a set of (normally) elected local trade union lea-
ders (usually foremen and supervisors) emerged as
vital intermediaries between workers and trade
union who could access state organs and politi-
cians. However, the coercive controls in Eastern
Europe described by Burawoy during communism
did not appear in Bangladesh, possibly due to the
less totalitarian nature of Bangladesh politics and
the political strength of workers.
Given the difference between the idealised forms
of control and their manifestation during the pri-
vatisation and partial privatisation of PC it is
analytically advantageous to split Burawoy’s
hegemonic regime into two, namely idealised
hegemony and political hegemony. Idealised hege-
mony is identical to the means of consent within
Burawoy’s hegemonic regimes of control descri-
bed earlier. This captures how political leaders in
Bangladesh upon independence legislated for new
rational bureaucratic structures of accounting,
planning, accountability, and industrial relations.
However, hegemonic control did not operate as
intended, instead there was political hegemony.
Here, domestic party politics permeated not only
state politics but also the politics of production.
Politicians grabbed the levers of power offered by
the apparatus of the hegemonic regime to pursue
their political agenda within enterprises such as
PC. The divisions of domestic politics were repli-
cated in party trade unions within enterprises and
worker resistance was funnelled into domestic
political strife. Shop floor consent became manu-
factured primarily through political intervention
and negotiation: commercial ends within public
enterprises became secondary to political ones.
Bureaucratic structures resonant of hegemonic
control remained, but the triumph of political
hegemony over legal rationality gave rise to de-
coupled accounting controls.
658 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Armstrong et al. (1996) claim that when the
power of labour and trade unions is high then
accounting 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 of
hindsight after full privatisation, workers regarded
the partial and full public ownership periods as
halcyon days. Workers reminisced about the shop
floor solidarity with remarks such as, ‘‘We worked
together though we had problems with each other.
We worked as SKOP17 workers,’’ and, ‘‘In the old
days they always fought with management for their
demands.’’ A worker’s leader recalled, ‘‘That was
our ‘golden time’. Nobody controlled us, rather we
controlled them. Then everything had to be con-
sulted about with trade union leaders.’’ Trade
unions were the major organised force within PC.
However, it is wrong to assume that this indi-
cated the domination of the working class over
other classes. As described previously, the trade
unions served political leaders and parties and its
leaders were not drawn from the ranks of workers
(Hoque, 1993; Murshed, 1989; Wickramasinghe,
1996). Worker membership of trade unions tended
to be based on expediency rather any identifica-
tion with broader class based struggles. Para-
doxically, the satisfaction workers derived from
their struggles with management produced an
illusion of power whilst reinforcing their sub-
ordination to Bangladesh ruling elites. PC’s
workers’ instrumental involvement in struggles to
ultimately benefit socially elite leaders meant that
they could not fundamentally question basic pro-
duction relations. Instead, their efforts were diver-
ted towards petty economic benefits and they
became compelled to accede to political masters.
Thus they found themselves in game, albeit a dif-
ferent one from Allied Corporation’s workers
studied by Burawoy. In PC, the workers’ use of
political avenues manufactured their consent to
the prevailing form of state capitalism. However,
top-down trade unionism is fragile and contingent
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
upon political parties believing it meets their ends.
The virtual elimination of trade unionism at PC
with state support after PC was fully privatised is
testament to this.
6. Controls after full privatisation
The intensive case study and interviews took
place 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 department
in PC. Three kinds of soaps (laundry, toilet and
glycerine) were made in separate plants. Each
processed the raw materials in boiling kettles
transferring it to soap storage tanks as liquid
soaps. The tanks were connected to machines that
converted liquid soap into a hard form. The Soap
Division had three shifts: morning (6 a.m. to 2
p.m.), evening (2 p.m. to 10 p.m.) and night (10
p.m. to 6 a.m.).
The following report draws from the participant
observation, the interviews, and documentary
studies. The aim was to identify what effect full
privatisation had upon accounting systems, inter-
nal labour markets, and the internal state, and
whether this ushered in coercive controls and des-
potism as predicted by Burawoy or market-based
controls as advocates of privatisation predict?
6.1. Accounting information system changes
Pressure for privatisation in Bangladesh came
from external sources, especially World Bank
recommendations for economic liberalisation pro-
grammes opening up the economy to foreign
capital. World Bank reports (1995, 1996b) argued
that public sector problems were due to a lack of
accountability and transparency, partly because of
weak accounting controls. Consistent with claims
of some development economists it was argued the
discipline of markets and regulation, coupled to
changes in property rights, would herald
improvements in productivity, profitability, and
efficiency (Hanke, 1986) brought about by private
owners having greater incentives to adopt modern
management controls linking production to mar-
kets, reinforced by economic incentives linked to
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
business rather than political goals (Uddin &
Hopper, 1999). If they fail to do so then financial
reports should prompt take-overs and/or share-
holder action to remove recalcitrant managers.
The research examined whether this was so.
6.1.1. Budgets
According to the conventional literature, bud-
gets evolve from rational co-ordinated processes
of delegated management within central control,
providing forward plans, co-ordination, targets,
performance evaluation, and a basis for rewards.
Such transparent, delegated accounting was not
found 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 became
the managing director (MD) of PC and his
younger brothers held the other two directorships
of 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 technical
and experienced officials to run operations whilst
appointing new managers to lower managerial
positions. The technically sound but politically
corrupted accounting systems were not
reformed — rather, they disappeared from view.
Cost information was still collected through
accounting systems and the owner-managers’ per-
sonal contacts but the research revealed no pro-
fessional cost accountant or associated systems
dedicated to providing cost information to man-
agers outside of the family.
Managers had little idea whether the organisa-
tion was running profitably, which is unsurprising
as no internal, financial reports were distributed
after 1993. Budgets in the normal sense of routine,
regular, downwards financial reporting to man-
agers disappeared. However, the private financial
budgets of the owners were translated into physi-
cal budgets passed down to production managers
who transmitted their messages (and pressures) to
first line managers (foremen and supervisors). Line
managers were not given financial data but they
were subjected to rhetoric on the need to cut costs
to increase profitability.
659
The marketing function was increased from 22
to 32 managers. Its field-based sales forecasts
formed the basis of the production budget. A
marketing official commented, ‘‘Accounting infor-
mation comes through late although it is correct.
But we prepare our sales budget on the basis of
sales-force indicators and market trends, which is
very dynamic.’’ The budget committee consisted of
eight members: one from accounting, production,
administration, marketing, and purchasing plus
the three directors. The annual budget expressed
in physical terms was reviewed monthly or even
occasionally weekly. Following telephone con-
versations with production and marketing man-
agers, ED would reshuffle budgets and then meet
marketing officials and production managers to fix
revised targets or change product lines. A senior
production manager remarked, ‘‘We revise targets
as new information comes through. In this case ED
plays the vital role.’’
Production managers were there to execute the
commands of ED who monitored them through a
new reporting system based on logbooks, quick
informal feedback of results, and frequent unan-
nounced shop visits. ED explained, ‘‘It is easy to
control. I don’t have to oversee the long chain. All
heads of the department keep in touch with me every
day. Therefore, decisions are not delayed at all.’’
Decisions were centred on ED. A department
head commented, ‘‘We don’t have to give final
decisions. We merely give advice. ED gives us deci-
sions which we must follow.’’ The direct, centralised
controls put heavy demands upon mid-level man-
agers to meet budget: ‘‘We have no choice but to
produce. We get a very tight schedule for production
since the production budget is even reshuffled daily
due to the market situation. It is possible now
because we don’t have any labour problems’’ (Pro-
duction Manager). Despite not receiving cost data,
cost reduction became the language of managers
who relayed this message to foremen and super-
visors. Redundancy programmes were the main
source of cost reductions, aided by cuts to benefits
and allowances.
Top management used physical budget figures
to evaluate the performance of production man-
agers. Feedback systems were improved in terms
of accuracy and speed but they were essentially ad
660 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
hoc with arbitrary imposed targets. Production
managers had to justify deviations from budget to
ED. The budgetary controls disciplined produc-
tion managers not because of any accepted logic
and reasonableness of numbers, or their reinfor-
cement by rewards, but because of power rela-
tions. The owner/managers were the final
authority 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 wrestle
with the problem of securing worker effort. After
privatisation supervisors and foremen had greater
responsibility 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: permanent
supervisors being transferred to other jobs or laid
off (except for some with strong relationships with
the remaining trade union leaders). Failures to
reach production targets brought sanctions, often
dismissal or non-retention. In contrast, foremen
were kept on as permanent workers as they had
technical skills. The responsibility for finishing
jobs on time fell on the shoulders of supervisors
rather than on foremen or superintendents.
New reporting systems for supervisors and
foremen were introduced. Each day they sub-
mitted their logbook to DCC containing shift
information such as volume of production, work-
ing hours of machines, causes of stoppages, the
number of casual workers used, and wastage.
However, as a supervisor commented: ‘‘As long as
the volume of production is right managers have
nothing to say.’’ DCC was proud of how logbooks
had increased the visibility of operations, com-
menting that, ‘‘I personally developed this reporting
system under the present management. By the virtue
of this system, I can understand what went on dur-
ing the shift. There is no scope for supervisors and
foremen to conceal the facts.’’
He under-rated the powers of human agency
and ingenuity. Participant observations revealed
that 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 harmonious
relationships with supervisors. Mindful of their
temporary job tenure, supervisors sought to
demonstrate good performance to senior manage-
ment by increasing production on their shift but
this was difficult given their section’s inter-
dependence with other units, and their lack of
authority over permanent operators responsible to
foremen (also permanent). Supervisors had to
indulge in shop floor deals with workers to show
attainment of output targets. This not only cov-
ered securing their effort to produce but also their
co-operation in ‘chiselling’ practices to inflate the
output of their section per shift.
Packaging workers started work early before the
shift began. All packages were numbered to indi-
cate the shift number and date. Supervisors were
careful 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 another
shift’s output attributed to their shift, and stealing
time by continuing their shift a bit longer. Since
workers and operators had less interest in main-
taining actual production and ‘chiselling’ produc-
tion figures, supervisors had to make deals with
them to secure their co-operation.
6.1.2. Financial reporting
When PC was partially privatised it became a
public limited company quoted on the Dhaka
Stock Exchange and thence liable to the Company
Act of 1994 (which replaced the Company Act of
1913), Stock Exchange listing requirements, and
Security Exchange Rules (1987). These require
standards of disclosure similar to Western
accounting requirements for listed companies,
including annual audited published accounts.
Transgressions, according to the rules, can bring
heavy sanctions (see section 181–6, Company Act,
1994), even imprisonment in extreme cases. How-
ever, the legislated financial reporting regime
essential for lubricating markets did not emerge in
PC as anticipated by advocates of privatisation.
PC retained the external reporting system of the
pre-privatisation periods but its internal financial
accounting changed greatly. New computerised
systems speeded up information for directors. An
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
accountant reported, ‘‘We have to send a daily
report regarding cash and other transactions to the
owner-managers of the company. The Executive
Director (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 the
preserve of the three directors. An accountant
remarked: ‘‘We record the bills or memo’s which
are signed by MD or ED. All departmental expen-
ditures and income have to be signed by these two
directors. Otherwise we refer the bills back.’’ The
financial accounting system rather than becoming
a 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 senior
accountant observed, ‘‘We have two systems for
accounting information. One is informal which is a
restricted area only usable with the permission of
ED. The other system is external reporting which is
for other shareholders, the bank, the Tax Authority
and the Stock Exchange.’’ Another accountant
admitted, ‘‘We have to maintain many informal
systems. You know — business is competitive. You
can’t maintain all of them in a straightforward
way.’’ The perception was that the owner-man-
agers manipulated accounting information to
lubricate less regular business activities, rather
than for rational delegated management with
transparent accountability to capital markets. One
individual commented, ‘‘Some informal transac-
tions are kept in the IOU fund account for irregular
payments to trade union leaders and bribery of
government and tax officials. These transactions
were usually shown under other headings in the
annual reports.’’ A senior accountant commented,
‘‘I don’t know what the real transactions were in the
IOU fund. It was alleged by some individual that
sometimes the headings of transactions were chan-
ged to evade tax such as increasing the amount of
tax exempted items.’’
PC has not published audited yearly accounting
reports since 1995 when the delayed 1993–1994
Annual Reports were published. (Accounting
managers at PC confirmed that no audited
accounts after 1995 existed). Failure to do so can
661
result in fines calculated on a daily basis. This has
not been enforced, though interviews in 1999 with
Stock Exchange officials revealed that letters to
PC requesting publication of overdue reports and
payment of fines for delay. These had had no suc-
cess but a case had been filed in the High Court
against PC for not holding Annual General Meet-
ings. The owner-managers used their majority
shareholding to their advantage and to inhibit
accountability to other stakeholders,18 especially
minority shareholders and creditors [see company
law section 181 (1&2)]. This was not merely an
issue of technical compliance: in 1999 the bankers
of PC filed a case for non-repayment of a loan and
custom officers discovered that PC had evaded
value-added tax and supplementary duties for
several years (Daily Star News, 24th March 2000).
The Commissioner of Customs, Excise and VAT
ordered PC to pay Tk. 13,01,871 (approx.
US$26,000) for unpaid duty and taxes including
fines.
6.1.3. The nature of accounting changes
After full privatisation, accounting systems
became the personal fiefdom of the family. The
nature of ownership and control, especially family
ownership, was significant in this study (Espeland
& Hirsch, 1990; Scott, 1985) as in the Ansari and
Bell (1991) case study of accounting controls in a
Pakistan firm. In countries with weak capital
markets, a small entrepreneurial class, and incli-
nations to crony capitalism, privatisation can
result in accounting and accountability different
from that envisaged by development advisors
adopting mythical assumptions of efficient capital
markets.
Nevertheless, changes in property rights upon
privatisation did herald changes to internal con-
trols. Instead of the previously politicised budgets,
systems made production more responsive to
market changes and there was modest computer-
isation of information systems but there was no
evidence 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.
662 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
The family monitored cost reduction by measuring
managers’ performance against physical targets
and regular feedback from logbooks. These played
a vital role in arbitrary family-based controls over
managers and thence supervisors and workers.
Despite accounting numbers being rarely revealed,
the directors’ rhetoric on the need for improved
financial performance justified their dictates to
managers who transmitted similar messages
downwards. Faced with severe consequences of
budget failure supervisors entered deals with
workers to manipulate information though these
were of marginal significance to operations as a
whole. As is explored below, the implementation
of the physical budgets flowed from the destruc-
tion of the internal state and internal labour mar-
kets, a repressive sub-contracting system, work
intensification, lower wages, and coercive controls
resonant of unbridled nineteenth century Western
capitalism.19
6.2. Changes to the internal state
Workers initially resisted full privatisation.
Trade unions occupied the factory, preventing the
new owners entering their offices. Then, after long
secret negotiations, management secured an
agreement with a faction of the trade union lea-
dership and the one-month lockout ceased. A
worker commented, ‘‘We were stubborn about our
steps. But some trade union leaders came up with
proposals such as no redundancies will be made and
no financial incentives will be cut off.’’
These promises never materialised. The new
owners immediately made 75% of the workforce
redundant,20 including the leaders of the trade
union factions who allegedly did not collude in the
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.
owner’s bid. Financial benefits for workers such as
provident contributions, bonuses and the work-
men participation fund were withdrawn. The
remaining trade union leadership was managed
through a mix of tangible and covert actions —
including excusing union leaders from work and
giving them lump sum payments. This was a con-
stant cause of complaint by workers and trade union
influence evaporated on the shop floor. For example,
trade union offices could not open during shifts.
When the researcher wanted to interview trade union
leaders they had to find another location.
Trade union activities became limited to formal
negotiations with the executive director (ED) but
to little effect. Management reigned supreme. A
production manager commented, ‘‘We can use
workers in what ways we want. Before privatisation,
this wasn’t possible at all since trade union leaders
and workers had a strong influence over target pro-
duction and operations.’’ A trade union leader
admitted, ‘‘We have now limited power because of
the job insecurity. Workers are not interested in
taking part in any demonstrations although we have
been trying to get the financial benefits back for
workers.’’ The redundancy programmes and the
absence of trade union leaders from the shop floor
reinforced budgetary control and discipline over
workers. As a production manager revealed:
‘‘Presently we don’t have to face any serious pro-
blems from the part of workers. The deviations of
production budgets are mainly due to raw material
shortage or machinery breakdown.’’
Workers repeatedly reported that their leaders
worked for the owners and not them. Burawoy
(1979) found similar complaints in Allied Cor-
poration but noted that workers still turned to
trade unions to solve shop-floor grievances. In PC
trade unions were not significantly involved with
worker affairs after privatisation. Nevertheless,
their symbolic presence protected management
from legal sanctions as industrial ordinances give
permanent workers rights to trade union recogni-
tion.21 The representation and rights of casual
workers were especially parlous, being excluded
from this legislation. When the researcher pursued
this with the General Secretary of the trade union
he was informed, ‘‘We have nothing to do with
casual worker matters.’’
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
After the full privatisation of PC the owners,
rather than seeking co-operation from an internal
state, destroyed it and introduced coercive con-
trols for private accumulation brought about by
state policies of structural adjustment. The results
were consistent with Burawoy’s argument that de-
regulation ushers in coercive regimes of control.
Following full privatisation, collective bargaining
was pushed aside for harsh coercive controls
expressed through budgetary pressure.
In their weakness, trade union leaders allowed
to remain by management pursued a managerialist
conception of an internal state, adopting the
owners’ rhetoric of accounting calculus. The Gen-
eral Secretary of the dominant trade union faction
commented that PC was over-manned and redun-
dancy programmes were necessary to revive profit-
ability.22 The trade unions banned demonstrations
or strikes. Trade union leaders sought to restore
their influence by arguing that co-operation lead-
ing to increased profits would lay the basis for
increased employee benefits. This attempt to
operate an internal state was a charade: trade
union leaders could neither influence production
on the shop floor where they were denied access
and support, nor could they wrest significant con-
cessions from management.
In July 1999, the owners sacked the major
remaining trade union leaders (the president and
secretary) because, according to a senior manager,
‘‘The owner managers wanted to get rid of dishonest
leadership. They were putting a lot of undue pres-
sures on the owner managers.’’ The trade union
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.
663
leaders then organised demonstrations and called
for strikes to restore the Provident Fund, and
secure increased wages and benefits. This received
no shop floor support, though the trade union
leaders’ lobbying of political leaders resulted in
some government pressure upon the owners. The
researchers could not investigate this dispute
thoroughly but it probably marked a break in the
short honeymoon between the owners and the
puppet trade union rather than any significant
labour resistance. Workers were terrified of losing
their jobs for participating in trade union activities
and they placed little trust in trade unions after
their previous behaviour.
In summary, privatisation saw the destruction
of the internal state. The economic dependence of
employees upon the new owners, their loss of
access to political influence, and the dire con-
sequences of nonconformity, ushered in a coercive
control regime based, in part, on accounting
rhetoric and physical budgets.
6.3. Changes to internal labour markets
After privatisation, the new owner-managers
largely abandoned previous recruitment and wage
systems. Surviving permanent workers were paid
on the old salary structure but management with-
drew the collective production bonus replacing it
with ad hoc, arbitrary rewards fixed by ED. The
original job classification system remained for
surviving permanent workers but the use of casual
labour eroded its effectiveness. There was little evi-
dence of privatisation benefits trickling down to
labour: wages declined and an ill paid group of
casual workers paid around 1 US$ per 8 hour shift)
emerged.23 There was little evidence that privatisa-
tion facilitated development goals with respect to
broader criteria of increased employment, narrower
income distributions, improved conditions of work,
or increased state revenues (Uddin & Hopper, 1999).
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.
664 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Half the labour force became casual workers
hired and paid by contractors on a daily flat
rate — approximately half that of comparable
permanent workers. Labour contractors supplied
casual workers to PC on commission. The con-
tractor paid the casual workers but they liased
closely with PC’s management to avoid hiring the
same worker for 90 days continuously, thereby
becoming permanent under a 1969 Industrial
Ordinance and entitled to minimum wages, wel-
fare provisions, and trade union membership.
Casual workers, having few legal rights, had low
costs politically and economically. Shop managers
handled this carefully, having informal arrange-
ments with contractors about who to hire and fire,
and when — as instructed by ED. The contractor
always honoured management preferences. Before
privatisation, nearly all employees were perma-
nent: after privatisation, a large proportion
became casual labour and hence a commodity that
PC’s management could contract or expand daily.
Before privatisation, appointments were politi-
cised: after privatisation, they were at the whim of
the family owners acting in conjunction with con-
tractors.
Arbitrary rewards and the differential treatment
of casual and permanent workers by supervisors
intensified inter-worker rivalry and weakened
shop floor solidarity. Prior to full privatisation, all
workers had fixed tasks settled through union
negotiations. After privatisation this was only so
for permanent workers. Casual workers were sub-
ject to flexible manning: at the beginning of each
shift they assembled in front of the office of a
supervisor responsible for scheduling work. How-
ever, supervisors were temporary and needed the
co-operation of permanent workers to show good
performance to shop management, so permanent
workers could pick the easiest jobs. Casual work-
ers were exposed to harsher regimes. Before pri-
vatisation, new workers got the hard and risky
jobs often in unhealthy areas but nearly all were
permanent. 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 two
groups. For example, when the researcher worked
on the packaging section sticking together packa-
ges containing soaps emerging from a wrapping
machine, the sticking material used was often thin,
which made the job messier. The supervisor
delighted in making the researcher responsible for
improper work although it was the fault of a per-
manent worker responsible for preparing sticking
materials. Such discrimination made casual work-
ers jealous of permanent workers. Another worker
placed each package behind the researcher so he
could handle them easily. If this worker was
absent then the researcher had to do this task.
Despite knowing that before privatisation this
section had three or four workers instead of the
two now allocated, the researcher’s response to the
work intensification wrought by management was,
once again, to turn his anger upon an apparently
failing permanent colleague.
Overtime allocations were a further source of
lateral conflict. Permanent workers were not
allowed overtime since it was costly: shop man-
agement tried to appoint casual workers instead.
However, permanent workers were given overtime
by supervisors wishing to gain their favour. The
supervisors would make false allegations of
shortages of casual workers. This embittered
casual workers. Logically, the casual workers’
resentment should be directed at shop manager
and supervisors but it was diverted into conflict
with permanent workers.
The promotion system remained officially
unchanged for permanent workers but was rarely
practised- possibly because of the lack of influence
of trade union leaders. The new management
dangled promotion opportunities for casual
workers: they could become operators or technical
hands with the possibility of becoming permanent.
The DCC told the researcher that allocating hard
jobs to new casual workers was part of their
training — an opportunity to increase their skills
to enhance their prospect of permanent status.
Whatever, many casual workers were trained to
perform technical jobs such as machine operation
but their grading rarely changed. This presented
casual workers with a dilemma: their chances of
retention were small and their conditions dire —
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
yet refusal to co-operate would only deny them
opportunities to become permanent or receive ad
hoc rewards. These chances, however slight, made
many casual workers conform to managerial
pressures to meet budget.
The new internal labour market segmenting
workers between casual and permanent status
promoted worker division and strengthened man-
agers’ ability to impose budgets. Internal labour
markets at PC after privatisation differed from
those described by Burawoy in Allied Corporation
but their consequences were similar. Both repro-
duced external labour markets within organisations
to create uncertainty, individualism, and competi-
tion amongst workers. This diverted workers’
opposition from owners to inter-worker rivalries
thereby strengthening managers’ power over work-
ers. In PC, this was exercised primarily by coercion
whereas in Allied Corporation it was through man-
ufacturing consent. As Burawoy emphasised, the
operation of internal labour markets under capital-
ism requires strong union protection for labour
and non-arbitrary decisions. The privatisation of
PC diminished state protection of the workers,
enabling the new management to obliterate trade
union politics. Workers became so powerless that
management could disregard such considerations.
6.4. Coercion and gaming
After full privatisation, consent was no longer a
managerial or political imperative in PC and the
new owners could exert coercive controls. Never-
theless, gaming, chiselling, and making out existed
after full privatisation: even under coercive
regimes, they play a role in control. Burawoy
(1979) argues that games are neither independent
of, nor in opposition to management, and that
they diminish conflicts between workers and man-
agement. This was so in PC. Work avoidance
practices with the appearance of resistance actu-
ally promoted budget achievement. Participant
observations revealed how workers struggled to
reach budget quotas to enjoy illicit rest periods
tolerated by management. This was functional to
budget attainment as it divided workers, rein-
forced effort, and encouraged self-controls and
coaching amongst workers.
665
Despite the work intensification, possibilities of
its relaxation existed. Workers had informal rest
arrangements: one worker worked continuously
for the first half of the shift then another took
over. The non-active worker would rest. This
occurred before privatisation but was less pre-
valent because there were more workers. The
researcher saw that shop management turned a
blind eye to this practice: they were content so
long as output met budget. Indeed, workers’ desire
to attain budget to achieve unsanctioned rests was
functional to production managers, as everyone
had to be attentive to work. If anyone lost speed,
it affected the whole shift since it was a continuous
process. Therefore, workers showed new collea-
gues tricks and techniques to finish jobs quickly so
they could take unofficial rest. Workers’ desire for
breaks led them to inculcate new workers with
efficient practices and operators sanctioned any-
body who made mistakes. For example, the
researcher was transferred to the night shift with a
new (to him) job. The supervisor took the
researcher there telling him that you have to learn
all the corners of this production line. However,
on his first night shift, the researcher was execut-
ing his job shakily, causing problems further down
the line. The next worker became impatient and
requested the supervisor to move the researcher.
According to the researcher’s notes: ‘‘His com-
plaint also made me more attentive and efficient in
doing my job. Actually, it was a kind of challenge
for me to do the job efficiently.’’ The technology
and managers’ selective tolerance of work viola-
tions reinforced managerial budget goals through
increased worker self-policing.
Workers were conscious of their exploitation.
Casual labourers in the Soap Processing Depart-
ment worked hard in unpleasant conditions: the
plant layout was dangerous and the high tem-
peratures needed to mix soap materials produced
considerable dust. Workers understood the health
risks and their powerlessness. A worker com-
plained, ‘‘They should have paid us more than the
other easy works but we are exploited.’’ Workers
occasionally made token acts of resistance, for
example, by deliberately increasing wastage for, as
a worker angrily exclaimed, ‘‘If they screw us, we
will screw them.’’ However, resistance tended to be
666 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
channelled into localised acts directed at line
management rather than broader capitalist rela-
tionships.
Burawoy described how in Allied Corporation
workers’ 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 against
management. Permanent workers in PC made
similar complaints about managers who violated
established shop-floor norms such as tiffin breaks
and granting overtime. Workers silently resented
managers’ 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 as
he could fire them at will. His presence made
workers angry — a permanent worker angrily
commented, ‘‘He is a mother-fcker and always
screws us up.’’ Workers had a strong belief that
shop managers were responsible for their suffer-
ings. Another permanent worker complained:
‘‘Production managers always earn money by using
illegal ways. They did it before and now they are
doing it with the collaboration of owners.’’ Favour-
able attitudes to management and voluntary
worker co-operation were not shop floor norms.
One day a permanent worker was gossiping and
laughing with a supervisor — it seemed he had a
good relationship with management. A casual
worker pointed to him saying to the researcher,
‘‘He is a number one telbaz [someone who always
keeps good relationship with their bosses]. That’s
why that mother-fcker sometimes gets overtime
opportunities.’’ Paradoxically, though shop man-
agers were subject to similar budget pressures to
workers after privatisation, their increased visibi-
lity and demonstrations of power, fuelled workers’
tendency to blame them for their woes.
Burawoy found discussions amongst workers in
Allied Corporation were dominated by whether
individuals 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 floor
conversations in PC focussed on petty economic
struggles such as, ‘‘What benefits had been taken
off? What managers are doing? How they fck
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 had
internalised gaming to manufacture consent like
their 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 many
packages are finished?’’ or, ‘‘What is the speed?’’
Mostly workers answered them disinterestedly or
with the hushed response, ‘‘Fck you.’’ One day,
DCC asked a permanent packaging worker how
many packages were finished? The worker hesi-
tated to answer and a casual worker smartly
answered the question. Later the permanent
worker was furious with the casual worker shout-
ing, ‘‘Bastard, is it your father’s factory? Why did
you answer this question?’’
Burawoy and Roy observed behaviour incon-
sistent with a thesis of monetary incentives being
the basis of worker co-operation, leading Burawoy
to argue that co-operation and consent came from
games. Shop floor values not solely explicable by
monetary rewards were found at PC: workers
competed for easy jobs, were sensitive to social
stigmas, and they regarded operators as more
prestigious because they were skilled — though
this carried no monetary advantage. However, it
would be wrong to discount the role of materi-
alistic concerns underlying behaviour at PC where
workers were on low wages, strove for overtime or
double shift opportunities, and alternative
employment opportunities were sparse. Workers,
managers, and supervisors indulged in making out
and chiselling because of physical budget pressures
and repercussions of failure rather than any sub-
jective commitment to games. Informal practices
in PC after privatisation were about economic
survival under increased budget pressures rather
than the manufacture of consent within capitalist
rules (Gordon, Edwards, & Reich, 1982). Con-
fronted by their weakness, workers’ preoccupa-
tions centred on individual concerns rather than
collective action. As a worker commented, ‘‘We
are appointed for doing things — not to make any
problems. We can’t do anything against the owner
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
because he is giving me money for my breads and
living’’. Workers recognised their exploitation but
were pragmatic about their powerlessness — con-
fining their resistance mainly to unofficially toler-
ated informal practices. However, this had similar
effects to the making out and gaming observed in
Allied Corporation by Roy (1954) and Burawoy
(1979). Work avoidance formed the basis of
workplace behaviour: both instances shared the
self-defeating and paradoxical character of all
such practices in that they reproduce the condi-
tions of their existence — the pressure of work and
conformity to managerial ends.
Gaming is highly contingent: it is too easy to
assume that it is invariably about the manufacture
of consent. Recent case study research in
accounting has concentrated on subjective issues
concerning control; for example, Ezzamel and
Willmott (1998) on employees’ notions of self-
identity, and Miller and O’Leary (1993, 1994) on
economic citizenship and corporate governance.
Such work illustrates how management uses new
tactics to secure employee co-operation within the
space granted by employee resistance. Their sites
had employees with significant collective power
resulting in a degree of management dependence
upon labour. Management had to secure the
voluntary compliance of labour by inculcating
favourable attitudes and norms of co-operation
through 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 labour
markets, then coercive controls can prevail. Man-
agement need not synchronise positive employee
attitudes with behaviour: subjectivity is irrelevant
to effort. In PC, capital could impose its ends
without legitimisation and consent. Management
directly and explicitly stripped out labour costs
regardless of whether labour had attitudes of co-
operation or their self-identity was threatened. Just
as the critics of Braverman (1974) rightly sought to
address the deficiencies of his analysis regarding
subjective factors, there is a danger that an undue
preoccupation with subjectivity can deflect atten-
tion from the importance of materialistic and
institutional factors (Arnold, 1998, 1999; Froud,
Williams, Haslam, Johal, & Williams, 1998).
667
7. Conclusions
The paper concludes by considering the research
aims in the introduction namely, whether in
enterprises within LDCs accounting facilitates
control over labour by coercion or consent, why
and how do socio-economic factors transform
accounting controls, and can this be modelled?
Fig. 2 summarises the findings of this paper with
respect to these questions. The major difference
between Figs. 1 and 2 is the distinction between
idealised and enacted regimes of control in Fig. 2.
This is introduced because of scepticism on whe-
ther hegemonic and market-based regimes ever
operated as intended though their importation
impacted Bangladeshi society, and accountability
and controls of enterprises.
The basic argument underlying Fig. 2 is that
transformations of regimes of control shape
accounting. After colonialism, imported idealised
regimes of control, firstly hegemonic and then
market-based, were transformed by production
and state politics, into quite different regimes of
control in practice, namely political hegemony and
political despotism respectively. Accounting
underpinned both idealised regimes and it too was
transformed by politics.
Colonial despotism was not studied empirically
but it was an important antecedent to the idealised
hegemonic regime. The coalition of intellectuals
and trade unionists formed during independence
struggles provided members of the post-indepen-
dence government. Also, the aftermath of war
made nationalisation of industry a pragmatic
necessity, as was recognised by external aid agen-
cies. The incoming government tried to build a
hegemonic regime on the ashes of colonial despot-
ism to construct a modern democratic state based
on socialism, central planning, rational-legal gov-
ernance, bureaucracy, and recognised trade unions.
An apparatus of collective bargaining, systematised
conditions of employment, rational governance
based on centralised budgets, and accountability to
Parliament through financial reporting was estab-
lished for state enterprises such as PC. The aim was
to control labour through consent.
However, the idealised hegemonic regime with-
ered in the face of Bangladesh’s turbulent politics.
668 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
Paradoxically, the bureaucratic powers vested in
politicians through the legislation of the hege-
monic regime gave politicians the means to sub-
vert it. The consent and support of labour was
essential for politicians during the pre-privatisa-
tion period of PC. Politicians used their statutory
powers to intervene into public enterprises for
party advantage and to achieve worker consent.
Labour resistance was channelled via party-based
trade unions into the politics of patronage and
party competition rather than class-based strug-
gles. This brought concessions to PC’s workers
over matters such as production bonuses. Legal-
rational accounting systems of budgets for inter-
nal control of enterprises within a nexus of state
planning, and financial reports for accountability
to ministers in Parliament formally remained but
were ignored by politicians and managers alike.
Fig. 2. Regimes of control in a less developed ex-colonial country.
The idealised hegemonic regime withered as the
combination of production and state politics
wrought a regime of political hegemony.
Political hegemony was characterised by poli-
tical factionalism and strife, and the domination
of political ends in state enterprises and state
organs. Prima facie, organised labour exercised
power through political gaming in the workplace
but through constrained channels of trade unions,
led by middle class educated party cadres, acting
as industrial arms of political parties. In their
powerlessness professional managers in state
enterprises such as PC either acted honourably as
best as they could, or served political masters, or
pursued the letter of their duties rather than the
spirit. Similarly, state officials maintained the ves-
tiges of legal rational bureaucracy, or used their
office for personal or political advantage, or
 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
followed rules and procedures ritualistically and
procedurally. Not surprisingly, accounting prac-
tices became de-coupled. External accounting
reports and budgetary controls were prepared
according to official rules and procedures to give
the appearance of rational governance to provide
external legitimacy though it was widely known
that their unreality and marginality to decisions
meant 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, frustrated
the external financial agencies that bankrolled the
government. Juggling these conflicting pressures
made politicians adept at political schizophrenia,
favouring market policies on one hand and reap-
ing the political benefits from controlling state
enterprises on the other. Political hegemony based
on patronage and charisma is inherently unstable.
It fuelled popular protest, led to policy failures
such as loss making public enterprises, and it pro-
voked repeated fiscal crises. The latter were espe-
cially sensitive for Bangladesh governments’ as
they were increasingly reliant upon external sour-
ces of capital that increasingly pressed for market-
based reforms. A growing business class with
increasing political representation supported this,
not least because they were potential beneficiaries.
Politicians were in a quandary: incrementally they
shifted to market-based policies, sometimes with
the tacit support of trade union leaders. Thus PC
was privatised.
The idealised market-based regime derives from
structural adjustment policies of the World Bank
incorporating deregulation, privatisation, export
zones, and an open economy. Proponents presume
that changed property rights and market forces
will 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 by
stock markets acting on accounting information in
external reports. Private owners failing to rejuve-
nate enterprise rejuvenation by improved man-
agement controls such as budgets and rewards
linking activities to market performance will either
669
be removed, or their firms will whither or be taken
over (Adam et al., 1992; Furubotn & Pejovich,
1972; Hanke, 1986; Rees, 1985). In brief, it is
assumed that contemporary Western financial and
managerial practices will flow from market forces
and state regulation whilst simultaneously being
the motor of transformation to markets and better
governance.
In their haste to privatise, governments and
advisory bodies paid insufficient attention to
creating effective regulatory structures and open,
transparent capital markets (Uddin & Hopper,
1999; World Bank, 1995). Imposing market-based
policies on societies with a small capitalist class
inclined to transactions through familial relations,
patronage, and irregular means, facilitates crony
capitalism rather than market capitalism. Thus ,in
PC, the majority shareholders could operate rela-
tively unfettered. Weakly enforced regulation
meant that statutory rules on auditing, annual
reports, accountability to shareholders, and taxa-
tion could be ignored. Financial information
became a prerogative of the family rather than
market players. Similarly, little consideration was
paid to protecting workers through internal states
and internal labour markets. This paved the way
for the new owners of PC after full privatisation to
abandon its internal state and internal labour
markets, and reduce wages and benefits, segment
labour markets, and introduce redundancies and
coercive controls. Gaming did not disappear upon
privatisation but did not manufacture consent but
merely relieved work pressures. As with gaming in
regimes of consent it was functional to managerial
aims. Financial accounting became a private
information system expressed to managers as
physical targets that transmitted coercive pres-
sures down the line. This was done in the knowl-
edge that internal labour markets and the internal
state could now be ignored: labour was weak,
divided, fearful of losing their job, and unpro-
tected by weakened trade unions. There was much
to support Armstrong et al.’s (1996) claim that
budgets were most potent managerially when
labour was weakest.
On the evidence of PC, controls consistent with
market-based regimes predicted by the World
Bank and its advisors did not emerge — thus, our
670 S. Uddin, T. Hopper / Accounting, Organizations and Society 26 (2001) 643–672
depiction of market-based regimes as an idealised
fiction in Fig. 2. The regime of control following
privatisation closely resembled Burawoy’s claims
that structural adjustment programmes (termed
here idealised market-based policies) produce
coercive controls and new forms of despotism in
post-colonial poor countries. The emergence of
accounting systems that facilitate coercive controls
must be seen in the context of the transformation
of idealised market-based systems by production
and state politics. Political elites dominating state
politics, faced with growing pressure from a rising
business class and agencies of external capital,
abandoned production politics to capital. This
enabled owners to largely abandon the internal
state and internal labour markets, and treat exter-
nal accounting regulation with impunity. Factory
labour, unprotected by trade unions or legal ordi-
nances, and divided by segmented labour markets
and capricious controls could not prevent political
and economic elites reaping the benefits of crony
capitalism. Whilst not wishing to discount local
contingencies, trans-national institutions such as
the IMF and the World Bank promote global capit-
alism by pushing LDCs into market-based policies,
including privatisation, with effects that bear little
resemblance to their rosy predictions. We wish to
add our voice to concerns that the role of trans-
national bodies upon management and accounting
practices in LDCs remains unjustifiably neglected
in accounting research (Rahman, 1998).
Acknowledgements
The authors wish to thank the Commonwealth
Awards scheme for funding the main body of this
research and the CIMA Reasearch Foundation
for assistance in the later stages. The paper has
benefited considerably from the advice and com-
ments of Peter Armstrong, Colwyn Jones, Tony
Tinker, and the two anonymous referees.
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