The Business Ethics Blog

I’ve mostly avoided blogging about the trial of former Enron executives Ken Lay and Jeff Skilling, on the (maybe weak) grounds that the trial is about law, not ethics. But every once in a while the testimony in the trials raises interesting ethical issues.

See, for example, this story in yesterday’s NY Times: Folksy Lay Opens Up to the Jury.

I want to focus on just one bit of testimony, given by Ken Lay regarding his own responsiblity (or lack thereof) for the collapse of Enron:

“I’ve said before, I accept full responsibility for everything that happened at Enron,” Mr. Lay testified. “Having said that, there’s no way I could take responsibility for the criminal conduct that I didn’t know about.”

So, Lay “accepts” responsibility (for everything), but can’t “take” responsibility (for criminal conduct). Is this just verbal slight of hand, or is the hair that Lay is trying to split really that finely divisible?

There’s at least some grounds for thinking the two really can be divided.

The belief that a leader should “accept responsibility” is a moral notion, having to do with the idea that when one takes charge of, and is tasked with managing, an organization, one thereby accepts responsibility for whatever goes on there. In part, we hold leaders responsible because they have the power, if not to control everything that goes on in their organizations, at least to set the tone and direction of the organization, and to set an example for appropriate behaviour. But in part, this idea that “the buck stops here” is also a reflection of the idea that someone needs to be accountable — that is, someone needs to be ready to answer for the activities of the organization. So, even if the leader bears no direct causal responsibility, they can still be considered morally responsible. (This set of norms is seen most clearly, perhaps, in parliamentary systems, in which cabinet ministers are traditionally seen as responsible for everything that goes on in the Departments they run, and may be expected to resign in the wake of a wrongdoing, even if they had no direct involvement.)
This might bear some resemblance to the legal notion of strict liability. Under the strict liability doctrine, some activities (like owning a dangerous dog) are so risky that people engaging in such activities must accept responsibility for all untoward outcomes, even ones they didn’t intend and took steps to avoid. Would it be overly cynical to say that the notion of a CEO “accepting responsibillity” for eveything that goes on in a given corporation follows from the generally responsibility-diffusing nature of the corporate form, and the idea that if we’re to allow (and foster) incorporation (because of the productive capacity of corporate structures), we at very least need to be able to hold someone responsible for bad outcomes?