By now, you should be very familiar with the Enron case. In this Module, we will evaluate the Enron debacle in the context of Corporate Social Responsibility. Specifically, socially responsible organizations behave in certain, ethical ways. Socially responsible organizations tend to go above and beyond the rules, mores, and expectations that have been established (and that are expected to be adhered to) by the general public, company employees, end customers, buyers and suppliers, and the government, for example. We will investigate the ways in which Enron defied the tenets of "socially responsible" behavior.
Read the following excerpt related to CSR. As you read, consider the benefits realized by socially responsible organizations, and how the leadership at Enron operated counter to CSR tenets:
Corporate social responsibility. (2013). International Institute for Sustainable Development. Retrieved from https://www.iisd.org/business/issues/sr.aspx
Discuss how the Enron case informs our understanding of what it means for companies to be "socially responsible."
Keys to the Assignment
1. In the context of CSR, in what ways did Enron demonstrate - not social responsibility - but social irresponsibility? Consider how the company's actions ran counter to the tenets of CSR through its neglect of duty to the company's shareholders, its employees, and even the larger public trust. Be sure to cite specific examples.
2. What have been the long-term consequences of Enron's actions, and how did the company's implosion change our view of what it means for a company to be "socially responsible"?
3. Be sure that you use at least two other references from the library, and that you properly cite your sources.
Tips and Suggestions
Consider cause and effect when you discuss the longer-term consequence of the Enron case. Major corporate scandals - like the Enron scandal - most often result in increases in regulation, and in more oversight and scrutiny of other organizations. Consider, for example, how manipulation of the financial statements brought about vast increases in government regulation (e.g., Sarbanes-Oxley Act of 2002) and oversight of the financial reporting of publicly-held companies. Certainly, the Enron collapse spawned renewed attention to the efficacy of professional accounting standards and related-party transactions (and even Enron's "mark-to-market" accounting practices). Alternatively, you might discuss how the complicity of the company's auditors served to refocus the public's attention on what it means for auditing firms to be truly "independent."
Corporate Social Responsibility (CSR) promotes a form of business principles in which the business participates in activities that benefit the world in which we live. CSR incorporates a wide range of responsibilities, such as legal, civil and environmental, as well as charitable contributions and social consciousness. Businesses are often focused on their bottom lines; however, businesses can use their profits to improve the welfare of society (1).
The leadership at Enron operated counter to CSR tenets. For example, the executives at Enron were not concerned with representing the company's financial situation truthfully. Instead, they were more concerned with hiding the company's debts and losses behind mark-to-market accounting coupled with special purpose entities (2). Note that the SEC did approve of mark-to-market accounting. In addition, Arthur Anderson, the accounting firm which was responsible for auditing Enron's business, had espoused the financial reporting methods. Enron behaved as if the company's actions were detached from their stakeholders. ...
Enron and corporate social responsibility is examined. The solution is answered in 546 words with five references cited.