Power and corruption attributes to the fall of Enron

Power seems to be present in all types of organization, whether informal or formal. Depending on their internal structure, organizations tend to adapt diverse sources of powers and Enron is no exception. In my paper, I want to focus and finding the link between Organizations and Organizing and The Smartest Guys in the Room in the concept of power.

I believe power is evident in The Smartest Guys in the Room; several people had control over the company and they had a major influence not only to their employees but on Wall Street as well in very deceiving ways. I would like to analyze the different types of power within organizations and find which one applies to Enron. Organizations and Organizing discusses Emerson’s view of power as “the 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 other’s dependence,” (p.203). By doing some research (used index!) I found two very interesting books: Emerson and power: creative antagonism in the nineteenth century and Union power and the public interest which could give me more insights of power and its influence in organizations. Along those lines, I feel that the concept of corruption should be included when analyzing Enron’s power since it pertained to the company. I would like to explore how power and corruption are connected into the fall of Enron.

Organizations and Organizing gives me a wide array of sources for this topic. Among them, I found interesting the book The Modern Corporation and Private Property by Berle and Gardiner in which they argue “that as corporations grew large, ownership grew increasingly dispersed among disconnected (and therefore powerless) shareholders, while managerial control grew increasingly consolidated,” (p.354). I think this is very relevant to what happened in Enron, especially after Skilling took control of the majority company. I would be interesting to read some of Berle and Gardiner’s work and find the connection in The Smartest Guys in the Room. This could be a very interesting subject for the paper because it brings out a major flaw that Enron had.

Enron: Posterchild for the Informal Organization

While it is true that all organizations have both a formal and informal aspect, Enron’s informal organization was the epitome of a situation where the informal aspect of the organization reigned supreme. Unlike how most organizations exist, with a balance between formalities and the social culture/power struggle, Enron’s day-to-day operations were dominated by back-of-the-napkin deals and shady business relations.  Moreover, the level of professionalism which was used during interactions of those at the top (and their interactions with everyone else at times, too) was greatly lacking.  After reading The Smartest Guys in the Room, I gained an incredible understanding for exactly how Enron operated dysfunctionaly on a formal level and that the informal nature of the business is really the only thing that held it together for so long.  It is also interesting to see how each executive interacts with each other based on their own dysfunctional character traits. Continue reading

Best of International Week

After careful deliberation Christian, Mike, and I are pleased to announce this week’s best post….

!!!!CONGRATULATIONS KELLY!!!! and your post 12 zeros gone and Zimbabwe continues to struggle.

We would like to give Brooke and her post Using Soccer to Decrease the Prevalence of HIV/AIDS in South Africa a shout out for being our runner up.

We would also like to recognize Derek for his thoroughly researched and well written post, Peru: A Lesson in Rapid Development and Organizational Corruption.

BlOrg Theory please read on….

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