Business ethics are what guides decisions within a business.
Business ethics are what guides decisions within a business. When a major corporate scandal such as the Volkswagen diesel emission scandal occurs, numerous questions arise for the company and their business ethics. Not only was this Volkswagen scandal unethical, but it was also unlawful. To better understand the significance of this scandal, it is important to have knowledge of what exactly occurred and who was all involved.
Corporate scandals can have lasting effects on the companies involved. In fact, Volkswagen diesel emissions scandal is still facing the repercussions of their scandal that occurred in 2015 to this day (Jung & Sharon, 2019). The question rises, what kind of scandal could happen in an automotive company that could cause this significant of an impact? According to Welch (2019), it all began when a group of students from West Virginia University’s graduate program discovered that the Volkswagen Jetta and Volkswagen Passatt emitted significantly more nitrogen oxides than the US Environmental Protection Agency (EPA) allows. This discovery led to a series of events that resulted in the Volkswagen diesel emission scandal.
Volkswagen utilized a device known as the defeat device. The defeat device allowed Volkswagen to pass the EPA’s emission tests by providing lower emission readings (Welch, 2019). Furthermore, Welch (2019) explains that “when the affected Volkswagen vehicles were tested, the software kicked in and the company was able to record lower emission levels and, as a result, receive substantial green car subsidies and tax exemptions in the USA” (pg. 4). Simply stated, Volkswagen was being dishonest with the amount of nitrogen oxide’s emissions that their vehicles are producing into the environment. Dishonesty is not only an ethical issue but also goes against biblical teachings. There are numerous passages in scripture that speaks on the topic of dishonesty. One example is Proverbs 12:22 (English Standard Version Bible, 2001), which states, “lying lips are an abomination to the Lord, but those who act faithfully are his delight”. It displeases the Lord to be dishonest and a liar in any and all circumstances. While Christianity is not every business professional’s belief, one should see the value of honesty and integrity within their business practices. Furthermore, the Volkswagen diesel emission’s scandal is no different than other scandals when it comes to the legal costs that resulted from it. In 2015 when the scandal was being brought to light, the legal costs reached 15 billion dollars, since then, it has grown to cost Volkswagen 32 billion dollars in legal costs (Jacobs & Kalbers, 2019). One could assume that a scandal this significant would cause a major hit to Volkswagen; however, this was not the case. Despite the fact that Volkswagen just had one of the biggest corporate scandals in the United States, they actually saw an increase in sales in the following year (Jung & Sharon, 2019). While Volkswagen seems to have recovered from the scandal, some companies involved in other corporate scandals were not as fortunate. For example, the Enron scandal resulted in the Enron Corporation to go bankrupt (Schnebel & Bienert, 2004). The specific legal issue that Volkswagen encountered is as follows: “Volkswagen engaged in an elaborate fraud that included the installation of software in diesel vehicles to fool government emissions tests, false certification to government authorities that the vehicles were compliant, deceptive marketing of the vehicles to consumers as \”clean diesel,\” and a brazen cover-up” (Jacobs & Kalbers, 2019, pg. 17). The Volkswagen diesel emission scandal was unethical and illegal.
Another question then arises: who was involved and why did no prevent this from happening? There are still no real answers to these question to this day. According to Jacobs and Kalbers (2019), even the auditors and lawyers claim that they had no idea about this scandal; therefore, could not have helped prevent it from happening. As an employee or a manager in either the legal office or the engineering department I would have prevented this incident in a variety of ways. First, I would have been more observant to what was going on in my company. If I was employee in the engineering department, I personally believe it would be hard to miss the installation of a defeat device into hundreds of thousands of automotive vehicles. Therefore, this suspicious activity would immediately be reported to the managers or CEO of the company. If I was an employee of the legal department at Volkswagen, I would have been more skeptical of the legal activity that was going on considering some of the actions of the company. For example, according to Jacobs and Kalbers (2019), there has been “history of poor ethical corporate culture, weak corporate governance, an aggressive new sales strategy, and bold claims of technological advances” (pg. 20). All these signs should have resulted in a more detailed evaluation of the company from the legal department and also with auditing. Corporate scandals cause a significant impact to the companies involved and can even impact people that were not involved or had no idea of the scandal.
The Volkswagen diesel emission scandal was occurring for a few years before it became public in September of 2015. When the scandal became public, Volkswagens managers quickly denied involvement in the emissions scandal and the CEO even resigned under pressure shortly after the scandal became public (Welch, 2019). However, if I was CEO of the diesel division of Volkswagen during this scandal, I would have followed some of the recommendations from Jung and Sharon (2019) for crisis management. These recommendations include showing a concern to the victims of the scandal and issuing an apology as well as protecting the stakeholders by accepting responsibility and offering relevant information to the stakeholders. Showing concern for the victims of the scandal is a good way of showing empathy for those impacted. In 1 Peter 3:8 (English Standard Version Bible, 2001), Peter states, “finally, all of you, have unity of mind, sympathy, brotherly love, a tender heart, and a humble mind”. I would humble myself and show sympathy to those impacted, just as God calls me to do through the teaching of Peter. Even if I was unaware of the incident as it was occurring in my company, I would still go to the public and accept responsibility for my company’s unethical actions but also provide relevant information on what precautions I would take to prevent this from happening again. This response would prevent future incidents because it would result in more of an awareness of what is going on in the company and acting on any potential red flags.
References
English Standard Version Bible. (2001). Crossway Bibles.Jacobs, D., & Kalbers, L. P. (2019). The Volkswagen diesel emissions scandal and accountability. The CPA Journal (1975), 89(7), 16-21.Jung, J. C., & Sharon, E. (2019). The Volkswagen emissions scandal and its aftermath. Global Business and Organizational Excellence, 38(4), 6-15. https://doi.org/10.1002/joe.21930 (Links to an external site.)
Schnebel, E., & Bienert, M. A. (2004). Implementing ethics in business organizations. Journal of Business Ethics, 53(1/2), 203-211. https://doi.org/10.1023/B:BUSI.0000039409.58757.a8
Welch, J. (2019). The Volkswagen recovery: Leaving scandal in the dust. The Journal of Business Strategy, 40(2), 3-13. https://doi.org/10.1108/JBS-04-2018-0068
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