Social responsibility and ethics are a significant part of a company’s identity. Within the economic sector, firms are responsible for conducting business in a socially responsible and ethical way. The confidence of numerous consumers relies on the operations of the firm . Therefore, it is essential for companies to incorporate social and ethical responsibility in their tactical plan. Every organization ought to find different ways of balancing their moral responsibility and shareholder’s agenda.
The Role of Social and Ethical Responsibility
Firms should consider social and moral responsibility as vital parts of their strategic plan. The strategic process must include social and moral responsibility in before-profit choices and not after-profit resolutions to get the maximum advantage . Nonetheless, businesses have significant responsibilities to their shareholders to make great decisions to benefit the organization. Corporate decisions should be ethical (Wheelmen and Hunger, 2010). Therefore, ethics ensures that an organization accomplishes its objectives, goals, vision, and mission in a way that they offer the business an excellent framework and sense of direction. Simply, ethics is part of logical actions made within an organization. IESE (2006) notes that aside from creating decision-making capabilities, moral actions foster a sense of collaboration and trust amongst individuals involved in future and current business outcomes.
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Enron Corporation overstepping ethical boundaries for stakeholder agendas
The scandal that surrounds the Enron bankruptcy charges involves both unethical and illegal activity. There are various factors, which contributed to the collapse of Enron Corp. including plain greed, accounting procedures, poor business, and mismanagement. Built by Enron’s executive managers, the house of cards came crashing down affecting the financial and business world.
Individuals commit fraud for a broad range of reasons including validation of crime and lack of adequate punishment. The ignorance of administrative integrity capacity is at the ethical root of Enron Corp.’s financial and legal problems (Rosen, 2006). The Enron’s chairperson behaved unethically by trading in the stock , which he had inside information about . By doing this, he neglected his integrity capacity. In addition to trading stock, the managers chose short-term and stakeholder financial gains for themselves, and in return, this destroyed their business and personal reputation, and the social standing of the corporation (Rosen, 2006).
According to Reksulak, (2006), a contributing factor that led to Enron Corp. to file for bankruptcy, was the fact that they invested in various projects, which were too risky. For this reason, the corporation could not keep up with the firm’s debt obligations, hence bankruptcy. However, numerous individuals point out that the primary cause , which led to Enron’s bankruptcy was the corporation’s abuse of disclosure and accounting policies including using the SPE to hide debt and market-to-market accounting. Additionally, the organization used SPE’s for hedges and inadequately capitalized subsidiaries to reduce earnings volatility. These violations were simply symptomatic of a significant problem the corporation was facing, which was identity crisis (Reksulak, 2006). Enron Corp.’s incompatibility of two different ideological systems about how the company is to make its money and its operation as a corporation led to the company’s downfall.
Solution
Having an efficient audit structure is vital for a corporation since it enables the organization to attain and pursue different corporate objectives. Every business procedure needs different kinds of internal management to endorse operational productivity, maintain sufficient business records, monitor ongoing performance, and facilitate supervision.
References
IESE (2006). The Intellectual Evolution of Strategic Management and its Relationship with Ethics and Social Responsibility
Reksulak, M. (2006). After Enron: lessons for public policy, edited by Niskanen, W. A. Lanham, MD: Rowman & Littlefield, 2005, x + 397 pp., USD 34.95 (cloth). Managerial and Decision Economics , 27 (5), 394-396.
Rosen, C. (2006). Ethics after Enron. Business Ethics: The Magazine of Corporate Responsibility , 20 (2), 22-26.
Wheelmen, T. L., and Hunger, J. D. (2010). Concepts in Strategic Management and Business Policy: Achieving Sustainability (12 ed).
