Does shareholder ethics benefit those in the short-term, while stakeholder ethics benefit companies in the long-run?
Was Enron destined to be a short-term success story due to the company’s focus on short-term gains? Would a structure that involved stakeholder ethics kept them from their demise? Enron’s structure was one that was focused on keeping their stock’s high. This was not only to benefit employees and executives with large stock options, but the company also relied on high stocks prices for their off-balance sheet partnerships. Incentives and performance management programs also promoted immediate success, and thus a large focus on maximizing profits in the short-run. Their accounting practices and manipulation of the books were all aimed at showing high revenues. This shareholder approach may have been the root of their early success, but was it also the cause of their massive collapse? Had the company focused on all of its stakeholders, would it have succeeded in the long-run?