FAILURE OF ENRON

The failure of Enron in relation to organizational behavior theories

The failure of Enron and in relation to organizational behavior theories

Petrick et al. (1999) drew attention to the relevance of reputational capital in this regard. According to him, reputational capital plays an important role in the maintenance of the competitive advantage. There is a common approach of labeling the company's executives and blaming them for the complete mess created during and after the scandal. However, such an approach would be a move that takes a denial-driven approach. This is driven by the fact that the company had managed to shore up a large volume of social capital before it decided to engage in corrupt practices. To alternatively point to 'the system' as flawed and in need of more controls, such as the use of more, better. Also, more transparent accounting rules may merely motivate immoral, but innovative executives, accountants, and lawyers to find different ways around the new controls.

It is the role of every CEO to ensure sound ethical practices are enforced from the top down. Ethics are behaviors and guidelines for employee's actions. It is a moral guide for conducting and engaging in day-to-day business. In a sense, it is doing what is right. The leaders must demonstrate to all employees what ethics is all about in the business environment (Gillan & Martin, 2007). This statement has lasting implications and is the foundation upon which many businesses operate. However, in the aftermath of the recent economic boom, many analysts have suspected unethical practices at some of the world's largest companies.

Henri Fayol is a well known industrialist and his perception in this regard encompasses that managers are meant to engage in five essential functions: managers see to organize, lead, enable coordination and exercise control. This comes across as a perspective ...