Explaining Enron

Abstract

Although a variety of explanations are available for the recent collapse of the nation's seventh largest corporation, this analysis employs principles of communication-based leader responsibilities to explain Enron's demise. These responsibilities include (a) communicating appropriate values to create a moral climate, (b) maintaining adequate communication to be informed of organizational operations, and (c) maintaining openness to signs of problems. A variety of media reports and participant accounts are used to illustrate these failures in responsibility. Several implications for managerial communication are drawn from the analysis. The Enron case highlights specific communication obligations of senior management. It also illustrates the consequences of attending to a very narrow set of values and stakeholder concerns and the dangers inherent to radical innovation when few established rules or standards are available. The authors' analysis also calls for positioning responsibility more centrally in managerial communication.