Accounting and sweatshops: Enabling coordination and control in low-price apparel production chains

  • Neu D
  • Rahaman A
  • Everett J
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1. Introduction The aim of this discussion is not so much to take odds with the paper as to point out how it can be a resource for further reflection. The paper is a very readable and relevant analy-sis of the role of accounting generation and accounting use in an interorganizational space. My comments will underscore some of its points and attempt to use its empirical evidence to discuss roles of accounting for interorganizational relations and the properties of accounting and management practices. This does not take anything away from the paper. Hopefully, it adds a little to its findings and to the role of case study research. In " Accounting and Sweatshops " Dean Neu, Abu S. Rahaman and Jeff Everett (hereaf-ter NRE) analyze the role of accounting generation and accounting use in a production chain where products are produced in low-cost Central American countries and sold in North America. It is a study of how accounting mediates relationships between North American buyers (retailers) and Central American producers in apparel production chains. Accounting here is, on the one hand, enabling for coordinating the production chain across its many tiers and, on the other hand, also coercive when motivating the development of sweatshops among the producers in the production chain. The paper also identifies an accounting inno-vation in the form of the intermediary who is located between the buyer and the producer and who, on the commission of the buyer, develops accounting and conducts quality control at the producer. The paper shows how a reasonable use of accounting can produce effects that are complex and riddled with tensions: it appears that the reasonable use of accounting can generate sweatshop working conditions at the producer's end. Pressures to reduce cost tend to become absorbed in production firms where pressures not only reduce cost and put pressure on wages but also reinforce verbal and physical abuse and pressure. The paper is novel in its analysis of interorganizational relations under conditions where trust and confidence are absent. Most literature has analyzed accounting in interor-ganizational contexts where all parties somehow have a say. This is not the case in NRE's paper: not everybody has access to accounting, and only a few are allowed to debate the knowledge produced by it. The paper notes that economic arguments are prevalent in the production of effects at the producer end. Sweatshops are effects of economic pressure; and, as accounting pro-motes economic versions of the world, economic factors are important in the explanation of the emergence of sweatshop conditions. Yet, drawing on economic sociology, the paper does not stop by noting that accounting promotes economic effects. It adds to this by showing how economic relationships and effects are intertwined with social relations across the production chain. Economic pressures are hardly the only impersonal factors in the development of supplier relations. There are also social relations such as power and social status and taken-for-granted assumptions about roles, positions, and privileges * Accepted by Thomas Ahrens. I am thankful for Dean Neu's and Thomas Ahrens' comments to this discus-sion paper. (habitus). While economic explanations would show that accounting is related to the development of bureaucracies and markets (Williamson 1998), the paper shows that, in addition, social factors such as power make it possible for the buyer (through its interme-diary) to know more about the producer than the producer itself does and to intervene in the producer's affairs. The paper also shows that habitus, the set of norms and taken-for-granted assumptions, distributes roles and positions in the production chain that are strong because they are already internalized in people in the production chain: producers tend to think of themselves as producers and to accept that this is their role. This habitus also mobilizes accounting as a worthwhile endeavor; habitus helps reproduce the social imagination of how accounting is produced and used. In this sense habitus provides symbolic and intellectual resources for the development of the properties of accounting (Oakes, Townley, and Cooper 1998). The paper shows how accounting develops economic capital but under the premise that economic capital cannot work without the help of social resources found in other types of capital. In particular, the imagination of how accounting is to be accomplished is a piece of cultural and symbolic capital. This process is more ambiguous than most eco-nomic explanations of activity would suggest, and the paper raises the problem of what it may then mean to say that accounting is enabling; in what way is it a resource? The paper here suggests that accounting is used reasonably (rather than rationally) because decision makers are able to see some consequences of their use of accounting while other effects may go unnoticed. Therefore whether effects are enabling or coercive is difficult to know because, it seems, enabling the use of accounting may produce sweatshops, which tend to experience accounting use as coercive. 2. The production chain and the size of space The paper develops a different type of interorganizational space than what is common in studies of interorganizational accounting. It concerns a situation where trust is unlikely and knowledge-sharing and learning are almost absent. Type of industry is therefore a noteworthy moderator for its findings about accounting generation and accounting use. This moderation is possible because the apparel industry may focus more on productivity than on knowledge-sharing and innovation. The paper is very detailed and tells a consistent story; yet, its account also makes it possible to open even more debates. Its empirical findings hint at additional questions about the relationships between accounting, organization, and markets that might have been asked. First, it is immediately clear that the production chain may be less bounded than the paper assumes. The interorganizational space is defined in the paper as relations between a buyer, an intermediary, and several producers. This focus makes it important to study how production happens and how control reinforces production relationships. Yet, the paper also notes in passing that the boundaries between the actors are possibly a temporary settlement of the roles of the parties. It is noteworthy that it is possible for workers to think about other spaces, such as alternatives to sweatshops in the agricultural sector, and that the buyer is able to think of alternatives, such as Asian producers, that would be possible competitors to Central American producers. The production chain has both a manifest expression and a latent expression. Since the production chain could have been different, it is possible that the increasing rationalization of the production chain in relation to Central American producers has a limit. This observation could raise some questions about the interests of the American buyer to be in relation to Central American rather than Asian producers. At least, it seems, the buyer might have concerns about time and the control of quality that might be easier at a closer distance than at a farther one. The paper does not empirically analyze the buyer's use of accounting, time, and quality information; and this may be a limitation because here dilemmas between time, quality,

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  • Dean Neu

  • Abu Shiraz Rahaman

  • Jeff Everett

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