What was in the water at Enron?

While reading The Smartest Guys in the Room, I became increasingly angry about the Enron scandal and it disgusted me in terms of the level of corruption within the company.  In my oversimplified 7th grade memory of the Enron scandal, I thought that Ken Lay was a terrible person who was the cause of the downfall of Enron.  While reading Smartest Guys in the Room, I realized that there was no one person who was the downfall of Enron, but that so many people within Enron were just as responsible as Ken Lay.  I didn’t understand how so many people could act unethically and at times illegally, to increase profits.  What could possibly make a group of smart people with such high degrees from Ivy League schools act the way Enron did?  Why couldn’t they see any of the possible ramifications of their actions, or if they did why did they decide to ignore the signs?  What was in the water they were drinking that made some of the smartest guys in the room act so stupidly?

As I was reading Organizations and Organizing, I began to make connections between what happened at Enron and the concept of organizational culture.  Davis and Scott state that organizational culture creates belief systems that cause participants to “not only know what they are expected to do for the good of the organization, but they also want to do it” (214).  In the case of Enron, employees knew that they were expected to do whatever it took to increase profits; Lay had made that message apparent from the beginning.  Culture can explain why people like Skilling, Mark, Baxter, Fastow, Glisan and others were so willing to act unethically and at times illegally for Enron.

I looked in Organizations and Organizing to see what sources they cited while discussing organizational culture.  I found that they cited a paper by Linda Smircich, Concepts of Culture and Organizational Analysis, and I found the paper on JStor.  It was cited by 74 other sources.  When I looked at some of the other papers that cited Smircich, one was The Ethical Context in Organizations: Influences on Employee Attitudes and Behaviors by Treviño, Butterfield and McCabe.  When I looked that paper up on Google scholar it showed that it had been cited 182, mostly in other works regarding ethics.  I found another paper, Deviant workplace behavior and the organization’s ethical climate, by DK Peterson.  After finding these new sources on corporate culture I think I want to further explore the ways in which the culture affected the actions of the Enron employees, and the ways in which ethics, or the lack thereof, affected the culture.

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3 Responses

  1. I am impressed you remember anything from Enron when you were in 7th grade! Clearly, destined to be a management major.

  2. Great post!

    How will you handle the ambiguity around culture that emerges on its own versus culture that is the direct outcome of managerial intentions and actions? In other words, sometimes we say culture is a process of managers instilling certain values and perspectives in employees. Other times we say culture is the sum of the informal interactions and the values and perspectives they create that emerge on their own as all the people in a complex organization carry out their various roles.

  3. […] What was in the water at Enron? […]

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