Paper Entrepreneurialism and Enrons Collapse Essay

Paper Entrepreneurialism and Enrons Collapse - Essay Example A critical analysis of each has been conducted in this assignment to explain how cases like Enron exist and how lay people do not seem to realize the issues in such companies before hand. Reich argues in his article, Paper Entrepreneurialism that accountants and financial experts are particularly trained to manipulate books and numbers. As a result, they have a number of innovative schemes through which an organization can stand to gain through various means. Such paper entrepreneurs manage finances through the usage of paperwork, like establishing holding companies and joint ventures, conducting spinoffs or divestitures, developing mutual funds or conducting exercises that hide realities of the organization under the paperwork and the numbers. Reich suggests that there are other types of entrepreneurs as well which he terms as product entrepreneurs. He believes that these entrepreneurs are developers of products and services that people may want or need. They are innovators of products, and sell such to the consumers. He states that economy has a need for both of them but because paper entrepreneurialism is on the rise, it is expected that organizations will manage to cook up financial gains when competition has become increasingly strong, particularly due to globalization. (Reich) Salter states that Enron is a classic example of deceit and corruption where most of the stakeholders focused on personal gains rather than the organizational gains because of which the shareholders suffered. The problems were deep rooted in ethical and administrative failures, along with lack of corporate governance. As a result, when financial incentives are part of the executives and the board, ethical discipline will definitely be lacking within an organization which was the case in Enron. In such a scenario, Salter explains that corporate governance failure was the key reason why Enron failed and this is the primary way an organization can avoid such a scenario.