Critical Management Research in Eastern Europe: Managing the Transition

By Mihaela Kelemen; Monika Kostera | Go to book overview
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7
Powerful Accounts: Identities,
Principals and Agents
Karin Svedberg Nilsson

The analysis of a cross-border acquisition in the former German Democratic Republic supports the notion that accounting practices have constitutive as well as regulatory powers. In this case, project accounting was instrumental in promoting company reform. It helped increase the powers of the acquirer over the acquiree. It also affected internal power relationships, and furthered a transformation of individual and organizational identities.

This chapter looks into the powers of accounting in organizational settings. It describes some of the ways in which new accounting practices affected the power relationships between two organizations, thereby furthering organizational reconstruction. The empirical basis of the chapter is a study of a cross-border acquisition in the former German Democratic Republic. In this case, a Swedish construction ‘combine’ introduced decentralized and project-based accounting in an acquired German firm as part of an overall reform programme aiming to increase competitiveness and identification with the acquirer.

One conclusion is that the new accounting practices affected organizational boundaries in the German firm. It facilitated change in internal power-relationships and lead to the transformation of individual and organizational identities. Another conclusion is that that project accounting helped establish a principal-agent relationship between the acquirer and the acquiree, that is, a relationship where organizational members considered it natural for the German firm to be governed by the Swedish one.

As the cross-border acquisition theme implies, the chapter can also be read as tale of an encounter between the ‘East’ and the ‘West’. Here, the East/West divide is used mainly as a signifier denoting differences

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Critical Management Research in Eastern Europe: Managing the Transition
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