After reading about Enron, I wondered a lot about the social phenomenon known as Diffusion of Responsibility. This phenomenon takes places when any one individual feels he does not bare the burden of responsibility because there are many others present that can instead. When an event occurs that requires a response, the individual assumes that someone else will or already has taken care of it, and therefore he does not need to do anything. Had the individual been alone, he would never have allowed the event to occur.
The most well known example of Diffusion of Responsibility is in the case with Kitty Genovese. A man stabbed and murdered Kitty a block from her New York City apartment while 38 witnesses watched from their windows and did nothing about it. The witnesses heard Kitty yell “Oh my god. He stabbed me. Help me!” but assumed that someone else was already phoning the police for her. The witnesses then either closed the shades or continued to watch until she was dead. However, nobody ever called the police or tried to help her.
It seems like corporations would be prime places to look for Diffusion of Responsibility. In the case of Enron, we can see how many traders used Fastow’s crafted financial solutions while knowing he created them to deceive stockholders. While any one trader may have known the schemes were immoral to use, no one assumed responsibility to stop the others from using them. Fastow also felt his responsibility was diffused based on the fact that, while he created the solutions, others were using them very often. Bankers outside the company who knew of the deceiving financial statements also felt it was not their sole responsibility to speak up. Outside of Enron,
There were lots of whispers in the banking world that Enron consumed incredible amounts of capital, that the company was way overleveraged. But despite the whispers-few bankers were willing to stop doing business with the company” (McLean and Elkind 165).
To stop the diffusion of responsibility that occurred at Enron, the government created federal laws like the Sarbanes Oxley Act. This act requireD top management to sign off that they were responsible for the accuracy in the financial reporting. There could no longer be Diffusion of Responsibility.
It seems to me like the education system should also develop rules or incentives for students that aim to decrease Diffusion of Responsibility in the earlier years. Helping students to learn the importance of assuming responsibility may serve to bring generations of people that are more assertive into the business world. Do you believe schools should do this? For instance, when you pass a computer broken in the library, do you believe there should be a created incentive to report the computer is broken? Do you believe this will decrease Diffusion of Responsibility when students go out into the real world?