The Volkswagen emission scandal has hit the global business of the company in the year 2005 as the Environmental Protection Agency (EPA) of USA found that the automobile company was manipulating the anti-corruption and environmental standards by installing a new diesel technology with the model number EA 189 (Clarke 2017). The California Air resource Board (CARB) had been reported in 2014 with the irregularities of those engines by showing the nitrogen Oxide value deviated significantly between bench testing and road operations (Rauwald 2018). It made the International Council on Clean Transportation (ICCT) sceptical about the mechanism that the technical team of the company had installed in the new cars. As the result of this huge scandal came into the surface, it decreased the export of Volkswagen vehicle in an indiscriminate manner. In this regards, the company management responded in such a manner that framed the whole scene as a blunder done by the technical team out of the knowledge of the higher authority. Therefore, the purpose of this discussion is to figure out the role of the Volkswagen higher authority in making the blunder scandalous.
After the scandal, the Volkswagen higher authority realised the need for a change in the company hierarchy to investigate the root cause of the issue. Authority Theory of the Situation is very relevant in this regards. According to the law firm Jones Day that was appointed to investigate the root cause of the scandal, claimed that the practice of tampering the vehicle emission system was certainly a deliberative move by the company higher authority that blamed the technical and R&D team for the emission of nitrogen oxide in an indiscriminate manner (Clarke 2017). However, the former Chief Executive Martin Winterkorn was called to give testify about the scandal (Rauwald 2018). A management board member had expressed that the software changes constituted an erratic device that was prohibited by the US regulation. As a matter of fact, the new CEO of Volkswagen Automobile, Matthias Muller apologised to the stakeholders for the scandal (Hotten 2015). In this context, a critical understanding must be pointed out. The Volkswagen authority did not mention any name of the conspirators or the people responsible for this blunder.
In this regards, a significant change has been placed in the form of the resignation of Muller as the caretaker CEO of the company and Herbert Diess became the new executive head of Volkswagen in 2018 (Rauwald 2018). However, it can be attributed that the new change is not enough for combating with the situation. The entire management is considered to be the part and parcel of this calamity (Ioannou and Serafeim 2017). It can also be proved by another example such as in 2014 when the US regulators got sceptical about the scandal and raised concerns about the emission reducing system used by the company, the company authority vehemently refuted this argument by concluding that it was a technical issue and not to be dangerous as depicted by the Environmental Protection Agency (EPA) (Hotten 2015).
Therefore, it can be concluded that it was a deliberate stance taken by the entire management team of Volkswagen Automobiles and the removal of the CEO in a continuous basis is just an eyewash whereas dishonesty is still prevalent in the company that should be shove off. In this context, I strongly support the claim that it requires to reform the entire supervisory board rather than changing the CEO of the company because the entire board was responsible for the disaster.
The emission scandal of Volkswagen is highly related to the ethical dilemma regarding environmental risk. It can be included in the framework of Corporate Social Responsibility (CSR). The organisation, its employees, customers, suppliers and the government are the key feature of the Corporate Social Responsibility mechanism (Gupta, Briscoe and Hambrick 2017). Moreover, the non government organisations and the international councils are also identified as a part of the CSR concept. In this regards, the purpose of CSR is to deal with the environmental issues and set some planning in order to help the business organisation to generate an environment orientation (Wang et al. 2016). Hence, the CSR idea is referred as a voluntary concept.
As a matter of fact, the emission scandal of Volkswagen is highly related to organisation and society. The Environmental Protection Agency was the whistleblower that found out discrepancies in the vehicle emission system of the Volkswagen cars. The EPA had conducted an investigation on the Volkswagen vehicles and found that around 11million cars worldwide were failed to meet the international carbon emission standard (Hotten 2015). Moreover, the California Air Resource Board (CARB) received irregularities in the Volkswagen cars when two of the Volkswagen vehicles failed to meet the international standard of emission of nitrogen oxide (Clarke 2017). In fact a report was send to the CEO Martin Winterkorn with low standard of product quality report (Rauwald 2018). Besides this, in 2015 the Environment Protection Act issued a public notice for violation of the Clean Air Act against Volkswagen.
As a result of getting immense pressure from the various government and non-government organisations the Volkswagen Company had to issue an internal investigation under such compulsion. However, despite of the efforts carried out by those organisations, a pertinent question always comes in mind about the efficiency of the environment protection institutions. It can be argued that the by which means the leading automobile companies like Volkswagen succeeded to bypass all the rules and regulations set by the environmental organisations (Rauwald 2018). Perhaps there is an array of loop inside the emission test system that was exploited by some renowned carmakers. Car analyst at a financial firm Bernstein advocates that the European standards are not firm enough to monitor the emission standards of the vehicles. Therefore, he puts more emphasis on the method of testing rather than legal actions (Hotten 2015).
Therefore, it can be concluded that the scandal was multifaceted. In one hand it proved the unsustainable attitude of the automobile companies and at the same time exposed the inadequacy of the existing emission testing systems. It should be the prime concern to develop an effective system to prevent this kind of mishaps. Hence, I corroborate the fact that reform in the existing vehicle emission test system is also important.
In the year 2015, Volkswagen was emerged as one of another modern examples of corporate scandals which has been an occurring process since the likes of World-com and Enron (Siano et al. 2017). Having discussed the concepts of ethics, some of the theories that are been applied in the analysis of the ethical conduct of VW are that of the technological and deontological approaches and the Absolutism and Relativism approaches. Using the Teleological and Deontological theories, the analysing process of the moral reasoning becomes easy. The Deontological approach determines and outlines the keys of morality which revolves around the intention and actions, which are absent of the consequences (Vitell and Hunt 2016). As stated by Kant, “one should impose on himself the demand that all his actions must be rational in form” (Wood 2017). In case of VW, the deontological approach has been activated by the action of “cheating” the emission test. It is to state that cheating has been considered to be an unethical action. However, the deontological approach does not take into account that the action was made for maximising the wealth and to establish more competitive edge within the other brands of car. The approach also does not take into consideration the results of the cheating action of VW. On the other hand, the teleological approach considers the consequences of actions and at this point, the very action is judged based on its morality and immorality. While applying the theory to the VW, teleological approach strains out the cheating action and judges the immorality of this event depending on the consequences. As because of the fact that the action of VW had resulted in huge amount of pollution, therefore the consequences are negative. This is because pollution results in health related problems among the human beings and also influence the other stakeholders present in the society that would come to the stakeholder theory. The whole society comprising the animals, natures and human beings are all the some of these stakeholders that are negatively affected due to the VW’s actions. Furthermore, the other ethical approaches related to this scandal are Absolutism and Relativism. The absolutist comprises of the fixed moral actions and the relativists are the ones which are more flexible (Holyoak and Powell 2016). The absolutism acknowledges no boundaries as it covers every country and puts utter moral standards. On the other hand, Relativism considers the different aspects of a person’s personality like that of his culture or nationality which could define morality and this could differ from person to person (Williams 2017). The absolutist argues that the action of cheating is immoral action in case of VW and that stands as an international standard of morality, while the relativist while giving a hint of the ethical egoist could justify the action of VW for benefitting the competitive edge of the company as well as its financial stringency and performance. There is absolutely no “right” or “wrong” as according to the concept of relativism.
Reference
Gupta, A., Briscoe, F. and Hambrick, D.C., 2017. Red, blue, and purple firms: Organizational political ideology and corporate social responsibility. Strategic Management Journal, 38(5), pp.1018-1040.
Holyoak, K.J. and Powell, D., 2016. Deontological coherence: A framework for commonsense moral reasoning. Psychological bulletin, 142(11), p.1179.
Hotten, R., 2015, Volkswagen: The scandal explained, BBC News, 10 December 2015, date accessed 19/4/2018 https://www.bbc.com/news/business-34324772
Ioannou, I. and Serafeim, G., 2017. The consequences of mandatory corporate sustainability reporting.
Rauwald, C., 2018, Herbert Diess becomes new Volkswagen CEO to build brand after dieselgate scandal, Financial Review, April 11 2018, date accessed 19/4/2018https://www.afr.com/business/transport/automobile/herbert-diess-becomes-new-volkswagen-ceo-to-build-brand-after-dieselgate-scandal-20180410-h0yls3
Siano, A., Vollero, A., Conte, F. and Amabile, S., 2017. “More than words”: Expanding the taxonomy of greenwashing after the Volkswagen scandal. Journal of Business Research, 71, pp.27-37.
Vitell, S.J. and Hunt, S.D., 2016. Personal Moral Codes and the Hunt-Vitell Theory of Ethics: Why Do People’s Ethical Judgments Differ?. In Business ethics: New challenges for business schools and corporate leaders (pp. 30-49).
Volkswagen, Case Study 13, Clarke, T, 2017, International Corporate Governance: A Comparative Approach, Routledge
Wang, H., Tong, L., Takeuchi, R. and George, G., 2016. Corporate social responsibility: An overview and new research directions thematic issue on corporate social responsibility. Academy of Management Journal, 59(2), pp.534-544.
Williams, N.W., 2017. Absolutism, Relativism and Anarchy: Alain Locke and William James on Value Pluralism. Transactions of the Charles S. Peirce Society: A Quarterly Journal in American Philosophy, 53(3), pp.400-424.
Wood, A., 2017. The final form of Kant’s practical philosophy. In Immanuel Kant (pp. 27-47).
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