Management Control Practice and Culture at Enron: The Untold Story

35 Pages Posted: 6 Jan 2006

See all articles by Clinton Free

Clinton Free

University of Sydney Business School

Norman B. Macintosh

Queen's University

Date Written: August 8, 2006

Abstract

At the time of its demise in 2001, the Enron Corporation could boast of its comprehensive, state-of-the-art management control and governance systems. Yet these controls were rendered ineffective in the company's last few years. This paper identifies the radical change in Enron's corporate culture that took place from the Lay-Kinder era (1986-1996) to the Lay-Skilling era (1997-2001). It argues that this was a major cause of neutralizing these controls, which in turn proved to be a major factor in Enron's fall into bankruptcy. The paper draws on Schein's (1993; 1996; 2004) framework of cultural practice to develop our analysis. Thus, it supports Simon's (1990; 1995) urging to more meaningfully include corporate culture in management control research studies. The paper contributes to the literature by drawing attention to the rich but untold story of Enron's governance and control and also extends the research linking corporate culture and control systems.

Keywords: Enron, Management control systems, Organizational culture, Enculturation, Jeff Skilling

JEL Classification: M40, M41, M46, G34, Z10

Suggested Citation

Free, Clinton Wallace and Macintosh, Norman B., Management Control Practice and Culture at Enron: The Untold Story (August 8, 2006). CAAA 2006 Annual Conference Paper, Available at SSRN: https://ssrn.com/abstract=873636 or http://dx.doi.org/10.2139/ssrn.873636

Clinton Wallace Free (Contact Author)

University of Sydney Business School ( email )

H69 Economics and Business Building
Sydney, NSW 2006
Australia
2006 (Fax)

HOME PAGE: http://https://www.sydney.edu.au/business/about/our-people/academic-staff/clinton-free.html

Norman B. Macintosh

Queen's University ( email )

Kingston, Ontario
613-545-2334 (Phone)
613-545-6847 (Fax)

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