Issues management, systems, and rhetoric: exploring the distinction between ethical and legal guidelines at Enron

Abstract

Many corporations use legal rather than ethical standards for decision making in issues management. The Enron collapse provides a case example of why legal standards should never be used as a substitute for ethical principles. As we illustrate in this discussion of Enron, seeking loopholes in the law can lead to ethical violations that are ultimately more severe than legal infractions. We use systems theory and rhetorical rationales to discuss the issues management function as the proper location in an organization for ethical decision making and corporate responsibility. Both systems theory and rhetoric support the argument that an organization must be good internally and make decisions from an outside-in perspective; management at Enron heeded neither idea. This research recommends a deontological approach, based on Kantian norms of moral autonomy and good intention as a basis for ethical issues management, and uses the Enron case for illustration of these principles. We conclude this discussion by offering a matrix simplifying the principles of both ethical and legal decision making based on systems theory and rhetorical approaches to public policy. Copyright © 2005 John Wiley & Sons, Ltd.