Lights Out. Who had the Power at Enron?

Originally, I had planned on writing about the informal organization that persisted an Enron. Then I read chapter 8 in Scott and Davis’ Organizations and Organizing that dealt with goals, power, and control. I realized that talking about the informal organization as well as examining the power and authority structures that existed in Enron would be at least 1000% more interesting. What really was going on at Enron? Who had the power? Who had the authority? Did it change over time as the organization evolved?

Emerson says “It would appear that the power to control or influence the other resides in control over the things he values, which may range all the way from oil resources to ego-support, depending upon the relation in question. In short, power resides implicitly in the others’ dependence.”  (Scott and Davis, 203)

I think taking the approach to studying Enron will be an interesting exploration. Throughout the book, it has become increasingly clear that at different points in the company’s history, as sources of revenue changed, power shifted from Lay to Skilling to, by some accounts, Pai. I want to look at the organization in the 1980’s, when it was asset based, and look at the change that occurred throughout the 1990’s as their model shifted to focus on trading. I believe what we will find is that power shifted to those who had things that the company needed and that a certain endorsed authority was afforded these individuals.

I also plan on integrating outside material such as Formal and Real Authority in Organizations by P Aghion and J Tirole. The paper discusses the sources and allocation of formal and real authority in organizations. This article, as well as Organizations and Organizing, should serve as a good jumping off point as I explore the complex control structures that existed at Enron.


2 Responses

  1. Pssst. Titles capitalize all words less articles and prepositions less than four words. Don’t ask me why.


  2. This closely mirrors what we discussed yesterday. I think examining how the shifty in power occured in the informal organization and was a question of changing organizational goals is an excellent empirical focus.

    I tend to be very interested in causation. And timing is part of that. Which came first? Power accumulation in the informal organization or the change in goals? You don’t have to focus on that, but it may be a fruitful area to develop some theory.

    I don’t know the paper you found, but Tirole, if he is the same, is a well known strategy writer and academic. Did you find something useful there. What is real authority? It is a provocative title.

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