This paper will utilize the case study on Enron to determine the appropriate application of business ethics, and it will work to present the Enron case in light of three different articles regarding ethical business practices. Through a clear analysis of the ethics of the situation, it will be possible to see why Enron was so vilified in years past.
The history of business ethics is a long one; starting out slow in the 1920s, it did not gain much headway until the 1970s, picking up steam in the 1980s and continuing to expand its body of knowledge until this day and age (DeGeorge, 1987). As Aristotle discussed, however, such a field often works to attract individuals of a more parasitic nature (Solomon, 1992), and it is these parasites that have worked to create a culture of selfishness within the confines of the upper echelons of business (Mintzberg, Simmons, & Basu, 2002).
Of the many different cases in recent history of such events, perhaps the one that stands out the most is that of Enron, whose collapse in the early 2000s as a result of fraud committed throughout the 1990s, caused one of the largest explosions of corporate scandal in recent memory (Edmonds, 2002); by working to review the case of Enron, it is possible to see where each of the different failings occurred, and it is easy to identify the reason for the much needed changes that took place within the corporate world following such revelations.
The question of ethics in business is a long standing one, well-documented one; it is concerned with the processes and practices of acting in an ethical manner in the field of business, primarily from the perspective of the company itself, the company owners, or the upper levels of management within the company (DeGeorge, 1987). The ethical standpoint of the business may follow any one of the ethical philosophies, or any combination thereof, as long as the practices of the business may be defined as ethical (DeGeorge, 1987). The issue arises from the fact that there are companies that appear, on the surface, to practice the corporation as a community, striving for excellence, integrity, and making all decisions based on sound judgment, in spite of the fact that these are mere smokescreens for the true activities of the business (Solomon, 1992).
Our society faced a shift from concern for the overall welfare of the individual, the employees, the company, and the society in which the company resided, to a picture of all of these different aspects focused on one thing, that of self-interest (Mintzberg, Simmons, & Basu, 2002). The question became one of selfishness, a mentality wherein all parties believed in concerning themselves with the question of what was in it for them (Mintzberg, Simmons, & Basu, 2002). It may be argued that it was this culture of selfishness and self-centeredness that served to create the very culture that allowed Enron to become what it did and to accomplish the unethical practices that it became famous for, following the collapse of the business and the scandal that brought the actions of the company and its upper echelons to light.
Enron started out as a respectable company, one concerned with not only the energy industry in which it started out, but one concerned with innovation, working to bring the company and its associated shareholders into the digital age (Edmonds, 2002). The problem was not with the business, initially; it was the fact that the upper levels of management got greedy (EdmondsS, 2002; Mintzberg, Simmons, & Basu, 2002). The company started out by diversifying, but the upper levels of management soon found it easy to create other companies, setup Enron as a partner with those companies, and then use those partnerships as a means of hiding debts while increasing the overall profits of Enron, boosting their profit margin and their stock prices in the process, not to mention the high figures on the checks received by upper management during this time (Edmonds, 2002).
Alas, this type of falsification of data was not something that could be maintained for long. This was not because the company could not sustain the situation, because the debts became too large to be able to successfully keep up the trading process; the company, in spite of the successful hiding of the massive debts owned by the company, could not keep up with that level of debt (Edmonds, 2002). When the company declared bankruptcy and everything came to light, it was clear that the upper management at Enron had engaged in massive levels of corporate fraud, in direct violation of the ethical business practices that should have been utilized, and were even portrayed by the company as being utilized (Edmonds, 2002; DeGeorge, 1987). As a result of the greed of the parasites, as Aristotle would refer to them, a company considered to be one of the most innovative and one of the top businesses in the nation, was brought to its knees, shattered, due to its inability to play the field straight and its desire above all else for additional profits and additional revenue for the upper levels of management (Edmonds, 2002; DeGeorge, 1987; Mintzberg, Simmons, & Basu, 2002). There are many different possible outcomes that could have emerged as a result of the Enron fiasco, and there are many different course of action that the company could have opted to take, but because of the culture of selfishness that has been created within society today, those executives saw no reason to engage in the morally and ethically correct behaviors that the business world dictated were mandatory; unfortunately, it was the employees and shareholders that paid the price for their greed (Edmonds, 2002; DeGeorge, 1987; Mintzberg, Simmons, & Basu, 2002).
By working to accurately apply the principles of business ethics, ethics in business, greed, and selfishness, it is possible to see how society was able to create an issue like that found at Enron, and it is equally possible to see how, with just a few different decisions, that such an occurrence could have been prevented, allowing the company to remain one of the top in the field, even if they were not able to maintain the levels of dividends that they could through their unethical market manipulations. What the executives failed to recall was that lower profits over a greater period of time are far better than unethically gained profits that cannot be sustained and result not only in a total collapse of the company, but mandate their addressing of the situation in court.