by Cathleene Filmore

Created on: September 01, 2009   Last Updated: September 04, 2009

In 1997, amid deregulation of the telecommunication markets, Gary Winnick founded Global Crossing. Much like Enron, the corporate governance of Global Crossing used creative accounting to inflate the books and engage in insider trading eventually contributing to the rapid rise and fall of stocks and the fourth largest bankruptcy in United States history. Another key similarity between the Enron case and the Global Crossing case was the employ of accounting firm Arthur Andersen as the external auditor.

Although both the Enron case and the Global Crossing case began with deregulation, one cannot cite deregulation as the cause. These companies were characterized by leadership that condoned unethical behavior, encouraged creative accounting and took advantage of their inside knowledge to trade stocks. Gary Winnick was said to have led Global Crossing with 'gorilla management' tactics, firing anyone who dared to get in his way (Hopkins & Krantz, 2002). While some may see corporate mismanagement as common practice, it is in fact a common symptom of an underlying cause; until Americans in business become socially responsible, corporations founded in the United States will be ethically unsound and continue to falter.

According to Ferrell, Fraedrich and Ferrell, companies such as McDonald's and The Home Depot are considered to be socially responsible because of how they use their influence through their marketing and by the large philanthropic contributions they make. Starbucks was sited as voluntarily choosing to give part-time employees full-time benefits (Ferrell, Fraedrich & Ferrell, 2009). While these are certainly indicators of social responsibility within a company, we cannot use these behaviors as a gauge or definition of the term social responsibility. Social responsibility goes much deeper than a monetary gift or an influential ad campaign.

To define social responsibility we must first discuss what it is not. Social responsibility is not the use of creative accounting to such an extent as to over inflate stock prices causing a crash in the stock market to the point that the economy falls into a recession. Social responsibility is not monopolizing natural resources or destroying them for monetary gain. It is certainly not socially responsible behavior for the American government to legislate in a way such as to encourage this kind of behavior. The role of government is to ensure order and safety.

According to Citizen Works, of forty two corporations

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