Managerial Ethics: Enron Case Study

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Introduction The book The Smartest Guys in the Room describes the Enron fraud case. Enron, the Houston-based energy trading company committed systematic fraud over the course of several years before finally being subject to investigation. Ultimately, the company was shut down and the principals were prosecuted. There is, in essence, no real ethical dilemma in the Enron case. A true ethical dilemma would have a "dilemma" component, whereas Enron was outright criminal behavior from the outset. Nevertheless, we will use this example to discuss some of the issues in managerial ethics. Theoretical Frameworks There are a number of different theoretical frameworks that have been proposed to evaluate ethical decision-making in business. Most of these are loosely based on philosophical tradition, the thinking of Kant (deontological ethics) and Mill (utilitarianism) being the most important of the two. Deontological ethics rests on the idea that there are set rules that must be abided by under all circumstances. These rules are roughly analogous to the mores of our society. It is reasonable to assume that in a democracy, the laws of the land are a reasonable reflection of the mores of our society. A manager therefore need only work within the confines of the law to be ethical. Utilitarian thought is famous for the idea that the most ethical course of action is to that which delivers 'the greatest good for the greatest number.' This is more complex, and requires some evaluation on

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