Business Failure: Enron - Research Paper Example

Furthermore, the role of leadership, management and organizational structure has also been discussed in the report. Business Failure at Enron Numerous causes are liable for the business failure of Enron. Serious economic, social as well as political factors had negatively affected the business of Enron. Numerous people believe that politicians as well as market regulators are responsible for the failure of Enron. However, expertise group think that the irresponsible and inefficient management group as well as the incompetent auditors are liable for the failure of Enron.

It has been observed that the management of Enron was unable to take relevant measures regarding the future uncertainty of the business which lead toward collapse of the company (The University of Chicago Booth School of Business, 2002). Organizational Behavior Theories Organizational behavior theories can be used explain the failure of Enron. Organizational behavior theories mainly focus on development of skill of employees for ensuring better performance. Generally, there are three behavioral theories which can explain the appropriate reasons for the failure of Enron which are ‘development and growth’ theory, leadership theory and integrative theory.

The development and growth theory comprises three stages of management such as group development, conflict resolution and cohesion. Group development in an organization can ensure job satisfaction; enhance morale of the employees and can increase employee encouragement. It has been observed that Enron had failed to successfully apply the development and growth theory in the organization. This resulted in lack of efficient policies, inadequate training process and low ethics of employees. According to development and growth theory, the major reason of Enron’s failure is weak organizational culture which resulted in high concern for accomplishing personal profitability rather than achieving organizational goals (Baskerville, 2012).

The leadership theory is another part of the behavioral theory which plays pivotal role for explaining the failure of Enron. According to leadership theory, the leaders of an organization should follow the rules and regulations and perform accordingly. In this context, it can be observed that the leadership techniques of Enron were not effective for solving critical issues which contributed to the failure of the company. Integrative theory of organizational behavior depicts the necessity of proper working climate and culture in an organization.

Proper organizational culture can enhance innovation as well as creativity and helps an organization to be more competitive. On the other hand, unethical cultures and unfair practices can result in corruption in business. In case of Enron, it can be observed that the unethical business practices had ruined the allocation of organizational resources and hence the company had suffered significant losses. The organizational behavior theories explain that the unethical practices and lack of strong leadership are the key reasons of the business failure of Enron (Baskerville, 2012).

Contribution of Leadership, Management and Organizational Structure to the Failure of Enron Leadership is considered as one of the most important aspects for improved organizational performance. Lack of efficient leader in an organization can lead to collapse of entire business. In Enron, lack of leadership has resulted in low control on the