Political Dynamics in Micro Organisational Accounting Change

Political Dynamics in Micro Organisational Accounting Change

To date, research studies into public sector cost management practices have taken different theoretical perspectives and employed various methodological paradigms. The majority of such work has been framed by the methodological inclinations of positivism and the theoretical propositions of contingency theory; it has mainly viewed cost management change as being contingent upon a set of variables and factors. Most scholars have relied on surveys and other quantitative approaches, while some have carried out consultancy-oriented model-building exercises. These studies, by and large, provide predictive models but have failed to appreciate changes in cost management practices as being examples of ‘situated practice’, that is, the precedent work has not tended to address such practices in their politico-historical, economic and social contexts. Thus, there is an academic requirement to better understand public sector cost management practices and the changes that have taken place in various political, cultural, economic and organisational settings, especially when we consider the organisational changes that have taken place, and continue to take place, in less developed countries, where there is greater political sensitivity surrounding such economic enterprises.

This book responses to this requirement and contributes to the management accounting literature by providing an empirical case study of how the macro political dynamics of the state can underpin micro-level changes in an organisation’s cost management practices. Taking an Egyptian state-owned enterprise as its case study, it explores the political evolution of cost management practices and how cost management became a political and, hence, strategic imperative. In doing so, the present work explores the roles played by neoliberal political reform, re-privatisation, modernisation and state budget reform in relation to micro-level changes in cost management practices.

Throughout, this work draws on Dillard et al.’s (2004) version of institutional theory to explore the macro dynamics of cost management, while Burns and Scapens’s (2000) model of institutional theory is drawn upon to explain the micro dynamics. In terms of macro dynamics, the historical evolution of the organisation’s cost management practices are explained with reference to the evolution of the political and field-level criteria of public sector performance; this work also looks at the ways in which wider macro political changes at the state level have had implications for the historical evolution of both field-level and organisational changes in cost management practices. Finally here, Burns and Scapens’s (2000) version of institutional theory is deployed to explain how cost management technologies, procedures and practices are institutionalised within the particular neoliberal cost management regime in existence today.

The empirical data for this study comes from an extended case study of a state-owned enterprise in the Egyptian Electricity and Energy (E&E) sector, in which semi-structured interviews, field observations and documentary analysis have been deployed as the data collection methods. This particular methodological approach, introduced by early proponents of the Manchester School, and further developed by Michael Burawoy, extends the otherwise micro-oriented case study method to macro settings, so that the connection between the macro and the micro can be theorised. Thus, the extended case study method deployed here includes a triangulation of ethnographic fieldwork data on changes in micro-level organisational practices with macro-level data on changes in the historical, institutional and structural context. In particular, the selected case study has a specific political history that is closely associated with Egypt’s postcolonial history, which was included in this analysis in order to explore whether, and how, micro-level changes might be affected by such historical dynamics.

The book concludes that it is necessary to see cost management change, especially in politically sensitive public utilities in less developed countries, as a form of institutional change that is closely linked to the structural changes taking place in the wider arena of state politics. The new cost management practices deployed in such utility companies operate as technological and micro-level managerial tools that bring together the wider political objectives of the state and the narrower economic objectives of the firms. Hence, cost management is political and operates as an instrument of neoliberal reform. In an empirical sense, this means that E&E production and distribution in Egypt has been, historically, managed at three distinct but interrelated levels: the political level, the field level and the organisational level. Neoliberal political reforms, re-privatisation, modernisation and state budget reform have penetrated all these levels to transform cost management practices, in effect institutionalising a neoliberal regime in which the cost management has become not only a strategic imperative in a managerial sense but also a political imperative in terms of state politics. While re-privatisation instigated the changes required in political ideologies and ownership structures in order to establish the political and institutional infrastructure for neoliberal transformation, modernisation brought about the accounting technologies that enabled such ideological and structural transformation at the micro level. The state budget reforms then linked these changes to the crisis in public finance and, thus, the micro-level changes in cost management practices became a political as well as a managerial imperative. In this way, a set of apparently non-political management accounting technologies, especially ERP and performance-based budgeting, became a set of political tools.


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