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Email this citationCIAO DATE: 09/03
Enron's Missed Opportunity: Enron's Refusal to Build a Collaborative Market Turned Bandwidth Trading Into a Disaster
Andrew Schwartz
Working Paper 152
February 2003
Abstract
Why did Enron fail? The easy answer is that Enron was a fraud, a Ponzi scheme designed to enrich scoundrels. But beneath the off-balance sheet transactions and partnerships that have drawn such intense scrutiny, Enron’s efforts to reduce complex products into tradable commodities represented one of the most promising ideas of the past twenty-five years. Enron’s failure was due in part to a business strategy that regarded competitors as ruthless and uncompromising. That mentality led the company to reject the very real possibility that rivals could, working together, create the new markets that in turn would open up profit opportunities for all. Enron’s brilliant vision of the New Economy didn’t go far enough; it required a New Economy business model that emphasized cooperation among competitors. Business rivals working together to create new markets, or what we may label collaborative markets, represents an important trend in the corporate governance of international business.
