Enron Case Study

Globalization and Corporate Social Responsibility – Corporate Culture and Individual Responsibility

1. Based on Alex Gibney’s film version of the rise and fall of Enron, do you accept Joel Bakan’s argument that the corporation shows “psychopathic” traits?

I agree with Joel Bakan, however, just partially about the corporation Enron showing ‘psychopathic’ traits. Yes there are traits that they were doing unethical actions that completely ruin many people life-long works and their lives; nonetheless, in my opinion, those actions were intentional. The executives at Enron were gambling intelligently, according to the movie, and take a risk so big that it was over their heads at the end, making it an absolute failure. The psychopathic traits here were that once they managed to aggressively make the profits they made, and pocketed millions of dollars, they started to care less about employees. They knew the consequence but they still proceeded with their plans and did not care that the results will affect the lives of many. They also lied on financial reports, covering their debts one way or another, which was unlawful. Therefore, it is psychopathic in some sorts, but above all, their actions are just so unethical and unmoral.

2. How do you account for what happened at Enron? How would you assess the relative importance of culture, environment, and personal values in the company’s history?

What happened to Enron was just its founder at the time Ken Lay was greedy and unethical right from the beginning, and that was how he steered the boat to that direction. Instead of firing traders who were pocketing profits for themselves, manipulating reports which showed steady financial trends, he managed to keep them, because they were making a lot of money for the company. So he was giving opportunities for this staffs to do underhand works and he only cared if it made profits for the company. Later, when Jeff Skilling joined Enron, he developed what Lay had tolerated before which the use of financial loopholes, manipulated reports to hide debts. They bribed their auditor firm to erase proofs of their action. At some point, Enron executives use the deregulation of Californian energy market to raise the price of electricity, getting other company to join in action and make skyhigh profits. At the end, all these illegal, unethical actions they had done snowballed and they could not stop because once they could not hide their debts, and government institutes started to suspect, they are left with nothing to protect themselves. They took a high risk road to profit, followed a strategy of ‘win at all cost’ so it will later come back at them. Throughout company’s history, its culture had been an unethical one, with staffs from executives to accountants to associated firms having joined in their strategies and performed underhand actions.

The environment was set for them to success in their scams because they brought in people and company having the same mind set. As for personal values, they executives only cared about themselves and whoever on their side. The financial executive, like Fastow even stole money from the company for himself and it was 40 million dollars. They pocketed millions of dollars so they did not pay much attention to what would happen to their employees once this scam was taken out of the dark. After Enron bankrupted, their employees had nothing in return, not even pension money and shareholders, with the stock price of the company being lower than a sing dollar, lost everything. In conclusion, what happened at Enron was just that they started to do for a risky, psychopathic and illegal business right from the start, and there were consequences at the end. They knew it was coming but they did it anyways.

3. Based on the Enron narrative, and Bakan’s use of a psychological analogy for corporate behaviour, how would you define the role of personal values/ responsibility in the daily operations of a large corporation?

Honesty should be the code for any corporation, especially with large corporations, to follow. The larger the company is, the more if at stake. Everyone from the board to every employee should be honest and clean in what they do. It is very important on management levels because if executives crossed the boundary of truth and lies, their actions affect many lives. They put themselves and their employees in danger. Many people rely on salary from the company to live their lives and they could end up with empty hands based on just one decision from above. The corporation’s leaders have to have absolute responsibility of what they do. The employees have to hold true to regulations and do everything legally. There should be rewards for doing things ethically and punishment for not, within the regulation of the company, to make sure everyone are on the same ‘honesty’ page. A strong ethics culture encourages ethical conduct. “Profits with honor”, that is the road every corporation should take.

4. What could/should Enron employees have done about the slowly unfolding scandal in their company?

The staffs should be more aware of the actions from their executive. Employees like accountants and managers should not join in dishonest plans with their executives. They need to record and document everything about the leaders’ interactions with others. Because Enron destroyed tons of evidences using their auditor’s firm, if the accountants did save records for themselves, the scandal would be brought into light sooner, and might just give other employees enough time to save themselves. Moreover, the employees should come forward, questioning the actions of their leaders whether or not it was ethical. They should also get out there while they can. They should have left the company right when they see the first unethical or dishonest actions from senior management.