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The Paradox of Corrupt Networks: An Analysis of Organizational Crime at Enron

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  • Brandy L. Aven

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

Despite the prevalence of organizational crime and renewed academic interest in corruption, the coordination of corrupt activities remains undertheorized. This study uses longitudinal data based on the email communication from Enron Corporation prior to its demise and couples qualitative coding techniques with social network analysis to understand the effects of corruption on communication behavior. By contrasting the evolution of corrupt and noncorrupt projects at Enron, I examine how corruption influences the way individuals attempt to remain undetected while sharing information. Although transitive communications were not different at the projects’ onsets, the members of corrupt projects communicate less and have fewer reciprocal relations than the noncorrupt project members. But as the corrupt project members’ tenure on a project increases, their behavior tends to become more similar to the behavior of the noncorrupt project members. Potential mechanisms are explored to explain this finding. This study provides insight into how corruption is coordinated within firms over time and highlights the role of information in understanding the emergent properties of social networks.

Suggested Citation

  • Brandy L. Aven, 2015. "The Paradox of Corrupt Networks: An Analysis of Organizational Crime at Enron," Organization Science, INFORMS, vol. 26(4), pages 980-996, August.
    • Handle: RePEc:inm:ororsc:v:26:y:2015:i:4:p:980-996
    DOI: 10.1287/orsc.2015.0983
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    References listed on IDEAS

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    Cited by:

    1. Judith Van Erp, 2018. "The Organization of Corporate Crime: Introduction to Special Issue of Administrative Sciences," Administrative Sciences, MDPI, vol. 8(3), pages 1-12, July.
    2. Niki A. den Nieuwenboer & João Vieira da Cunha & Linda Klebe Treviño, 2017. "Middle Managers and Corruptive Routine Translation: The Social Production of Deceptive Performance," Organization Science, INFORMS, vol. 28(5), pages 781-803, October.
    3. Qiong Jia & Liyuan Wei & Xiaotong Li, 2019. "Visualizing Sustainability Research in Business and Management (1990–2019) and Emerging Topics: A Large-Scale Bibliometric Analysis," Sustainability, MDPI, vol. 11(20), pages 1-37, October.
    4. Ferrali, Romain, 2020. "Partners in crime? Corruption as a criminal network," Games and Economic Behavior, Elsevier, vol. 124(C), pages 319-353.
    5. Sebastian Forkmann & Jonathan Webb & Stephan C. Henneberg & Lisa K. Scheer, 2022. "Boundary spanner corruption: a potential dark side of multi-level trust in marketing relationships," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 889-914, September.
    6. Stroube, Bryan K., 2021. "Using allegations to understand selection bias in organizations: Misconduct in the Chicago Police Department," Organizational Behavior and Human Decision Processes, Elsevier, vol. 166(C), pages 149-165.
    7. Argote, Linda & Fahrenkopf, Erin, 2016. "Knowledge transfer in organizations: The roles of members, tasks, tools, and networks," Organizational Behavior and Human Decision Processes, Elsevier, vol. 136(C), pages 146-159.
    8. Rafael Alcadipani & Cíntia Rodrigues Oliveira Medeiros, 2020. "When Corporations Cause Harm: A Critical View of Corporate Social Irresponsibility and Corporate Crimes," Journal of Business Ethics, Springer, vol. 167(2), pages 285-297, November.
    9. Walter, Sheryl L. & Gonzalez-Mulé, Erik & Guarana, Cristiano L. & O'Boyle, Ernest H. & Berry, Christopher M. & Baldwin, Timothy T., 2021. "The race discipline gap: A cautionary note on archival measures of behavioral misconduct," Organizational Behavior and Human Decision Processes, Elsevier, vol. 166(C), pages 166-178.
    10. Srivastava, Sameer B & Goldberg, Amir & Manian, V. Govind & Potts, Christopher, 2016. "Enculturation Trajectories and Individual Attainment: An Interactional Language Use Model of Cultural Dynamics in Organizations," Institute for Research on Labor and Employment, Working Paper Series qt8bq4q6d5, Institute of Industrial Relations, UC Berkeley.
    11. Linda Argote & Brandy L. Aven & Jonathan Kush, 2018. "The Effects of Communication Networks and Turnover on Transactive Memory and Group Performance," Organization Science, INFORMS, vol. 29(2), pages 191-206, April.
    12. O'Malley, A. James & Bubolz, Thomas A. & Skinner, Jonathan S., 2023. "The diffusion of health care fraud: A bipartite network analysis," Social Science & Medicine, Elsevier, vol. 327(C).
    13. Sun Hyun Park & Kelly Patterson, 2021. "Being Counted and Remaining Accountable: Maintenance of Quarterly Earnings Guidance by U.S. Public Companies," Organization Science, INFORMS, vol. 32(3), pages 544-567, May.
    14. Aven, Brandy & Morse, Lily & Iorio, Alessandro, 2021. "The valley of trust: The effect of relational strength on monitoring quality," Organizational Behavior and Human Decision Processes, Elsevier, vol. 166(C), pages 179-193.
    15. Sameer B. Srivastava & Amir Goldberg & V. Govind Manian & Christopher Potts, 2018. "Enculturation Trajectories: Language, Cultural Adaptation, and Individual Outcomes in Organizations," Management Science, INFORMS, vol. 64(3), pages 1348-1364, March.
    16. A. James O'Malley & Thomas A. Bubolz & Jonathan S. Skinner, 2021. "The Diffusion of Health Care Fraud: A Network Analysis," NBER Working Papers 28560, National Bureau of Economic Research, Inc.
    17. Jeremy Koster & Brandy Aven, 2018. "The effects of individual status and group performance on network ties among teammates in the National Basketball Association," PLOS ONE, Public Library of Science, vol. 13(4), pages 1-18, April.
    18. James Danowski & Aaron van Klyton & Tai-Quan Winson Peng & Siyuan Ma & Raphaël Nkakleu & Altante Désirée Biboum, 2023. "Information and communications technology development, interorganizational networks, and public sector corruption in Africa," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(4), pages 3285-3304, August.
    19. Seemantini Pathak & Codou Samba & Mengge Li, 2021. "Audit committee diversity and financial restatements," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 899-931, September.

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