Management controls of liberalised state owned entities: duality of the rational–legal (modern–neoliberal) and the patrimonial–feudal (traditional)

This thesis explores management controls and the consequences of dysfunctions in the operation of management controls in liberalised State Owned Enterprises (SOEs) in Sri Lanka. The thesis argues that there is a duality of traditional (feudal–patrimonial) and modern (rational–neoliberal) control elements, and that this duality can better explain management control issues of developing countries such as Sri Lanka. In the process, it aims to extend management control theory relating to SOEs in developing countries by constructing a multidisciplinary theoretical framework. The main research problem was articulated as: does the apparent duality between traditional and modern elements in Sri Lanka assist in understanding management control dysfunctions in liberalised SOEs? Traditional control elements that were rooted in the ancient hydraulic civilisation of Sri Lanka were examined by using a set of theories and concepts including mode of production, hydraulic civilisation, peasant ideology and Weberian theory of power. The modern control elements were examined by using theories of rational–legal bureaucracy, institutions and neoliberalism. The adaptive theory research methodology of this thesis facilitated theory generation and adaptation by combining structure (overarching social relations) with agency (individual subjectivity) in a single research project. While social theories informed social structure, in-depth interviews helped understand individual subjectivity. Empirical data was collected from three liberalised state owned enterprises operating in three nationally significant industries namely agribusiness, energy and telecommunication. The conclusion reached in this thesis by referring to extant theories and to the three case companies in oil, milk and telecommunications was that the duality of traditional and modern elements can assist in understanding management control issues of developing countries such as Sri Lanka. The rational–legal bureaucracy was transformed into a feudal–patrimonial bureaucracy by the duality. Management controls that included regulatory controls, business planning, budgeting, performance controls, personnel controls, cost controls and task controls did not function as expected since the civil servants, employees, politicians and trade unions used these controls to satisfy organisational practices based on traditional feudal relations. This thesis has potential implications for the theory and methodology of management control of liberalised SOEs in other developing nations, policy planning pertaining to SOEs, donor agencies such as the World Bank, Asian Development Bank (ADB), United States Agency for International Development (USAID) and the International Monetary Fund (IMF), the managers and consultants of SOEs and for further research on management control