Corporate vs. Individual Responsibility: Enron, WorldCom, and Nike

Introduction: The Corporation as a Non-Intentional Body

As Beauchamp and Bowie stress in their work, it is true that individuals who come together in a group have the ability to collectively act in ways different from how they would act alone, but this does not give the collective a consciousness that would constitute an entity culpable for its actions. This paper argues that the role of the individual in ethical action surpasses that of the corporation, because by default the corporation is not an entity that can be held accountable for its actions. The corporation is not an intentional body.

Corporate character and corporate social responsibility have tended to rank high among social and ethical concerns in modern times. Developing systems in which corporations feel and act in a socially responsible manner is essential to the development of a business today, and yet it must also be made clear that corporate responsibility is limited. The corporation itself is the product of the limitations of liability upon the individuals who comprise it. Seeking redress for actions collectively conducted by a corporation is therefore difficult, as each individual's personal knowledge, action, and therefore liability must be investigated.

To discuss the concept of individual responsibility as it applies to corporate culture, this paper examines three high-profile case studies and discusses the ethical and legal issues surrounding them and the actions taken toward accountability. To better understand the reality of holding corporations accountable for collective or individual actions, one can choose from a plethora of corporate scandals and conduct changes that have occurred over the last twenty years. The three that stand out most are Enron, WorldCom, and Nike, as all three companies went through monumental accountability phases and two completely disbanded. Finally, this paper discusses the fact that altering the landscape of corporate responsibility requires essential changes in the individual, as ultimately the individual is the only party truly capable of action.

Punitive Action against the Corporation

The foundation of the argument that individual responsibility surpasses corporate responsibility lies in the fact that there is no meaningful ability to pursue collective punitive action against a corporation, because the corporation cannot truly experience punishment. The corporation can be closed or forced to disband based on financial constraints imposed by a civil court, but it cannot be "punished" per se for the actions of the group. The actions of the individual are the only actions capable of receiving punishment, and in truth they are the only "actions" capable of occurring.

Enron and WorldCom are two names that will likely go down in infamy with regard to fraudulent business practices. They are also responsible for one of the most sweeping alterations in tax and accounting laws ever produced by a single piece of legislation. These changes impact all levels and sizes of business, as well as the accounting firms that serve them, for years to come. Yet these changes are external forces, not an imposition of individual ethics. In a sense, the changes that have occurred as a result of the Enron and WorldCom scandals, in conjunction with broader ethical concerns, are punitive and collective, applying to all corporations in order to protect the public from future fraud. In other words, they are preventative — restrictions on future actions — yet again, those who will be held liable if the rules are broken are the individuals who break them, not the corporations themselves. In business, much more thought must now go into both the real financial situation of a company and the financial situation reported to the public and stakeholders.