A research note on control practice and culture at Enron

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 article 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 article draws on Schein's (1993, Legitimating clinical research in the study of organizational culture, Journal of Counselling and Development, 71, 703–708; 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 article 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.