"Ethical Conflicts at Enron: Moral Responsibility in Corporate Capitalism" case study presents the factors which resulted in the scandal. It looks into the culture of Enron and how it has contributed to the issues. It also discusses the role of key managers and the executive officers in avoiding the same event.
Sherron S. Watkins
Harvard Business Review (CMR259-PDF-ENG)
July 01, 2003
Case questions answered:
- Summarize in one paragraph how you would explain the ethical conflicts at Enron.
- How would you characterize Enron’s culture? What role and in what way do you think culture played in the ethical conflicts at Enron?
- How would you describe and characterize the leadership of the two key players at Enron, Skilling and Lay, and what role did that leadership play in the events at Enron?
- What role did motivational elements of performance review policy play in the meltdown?
- Please give three to five specific things that Enron’s CEO could have done to create a healthy and ethical culture.
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Ethical Conflicts at Enron: Moral Responsibility in Corporate Capitalism Case Answers
Enron: Ethics, Leadership, and Motivation
Summarize in one paragraph how you would explain the ethical conflicts at Enron.
The culture of the organization was to be blamed for the ethical conflicts at Enron. It is noted that as accounting deceptions were being used to indicate a favorable range, the ethical practices were eroding gradually.
Later, the culture of Enron changed, and it became more destructive, characterized by deceiving business practices. The company was reporting profits from partnerships that were not yet achieved in order to keep their stock values high.
The nature of the Enron business was primarily to make money as an intermediate between the customers and suppliers without the need to consider other factors. They maintained an unusual accounting procedure, which indicated that they did not have an asset of their own (Kobrak, 2009). Even though they had a financial statement, it was manipulated and difficult to understand and made their financial performance look more than it was in reality.
As the subordinates of the organization viewed the ethical conflicts at Enron and the ethical standards of the leadership deteriorating, they soon followed suit. It was worrying to see an organization that had once been admired for its ethical culture emerge with less regard for ethical standards.
The leaders of the organization did not want to hurt its image. Hence, they decided to manipulate the financial statement to save it from financial ruin.
Despite the existence of conflicts of interest, partnerships were formed. By vending off the assets of the partnered company, they managed to cheat on the bottom line and argue that it was a profit. This was merely a short-term solution to the image of the company and kept it bankrupt, but it could hurt the company beyond expectations.
How would you characterize Enron’s culture? What role, and in what way, do you think culture played in the ethical conflicts at Enron?
Enron embraced a very irresponsible and unethical culture across the organization, particularly in the…
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