unethical emission cheating scandal of Volkswagen

unethical emission cheating scandal of Volkswagen

Ethics

In the modern-day business environment, the conduct of employees determines the success or failure of an organization. This aspect underscores the importance of an enterprise to have ethical guidelines to direct the behavior of employees. In this context, this paper analyzes the unethical emission cheating scandal of Volkswagen.

Historical Summary of the Organization

Volkswagen AG is a dominant automobile manufacturer in the automotive industry. The primary business segments of the automaker entail passenger vehicles, commercial automobiles, Power Engineering, and Financial Services (MarketLine, 2019). The organization has its headquarters in Wolfsburg, Germany, and operates in North and South America, the Middle East, Europe, and Asia-Pacific (MarketLine, 2019). The entity markets its automotive under different brands encompassing Audi, Skoda, Porsche, Bentley, SEAT, Volkswagen Commercial Vehicles, Scania, MOIA, and MAN (MarketLine, 2019). In addition, the company has a workforce of over 665,260 individuals across the globe (MarketLine, 2019). As such, the car manufacturer is a dominant player in the automotive industry.

Explanation of the Unethical Business Practice

In particular, the unethical business practice, which Volkswagen committed, was cheating diesel emissions. The automaker falsely claimed that its diesel cars were clean and ended up selling millions of vehicles globally (Piper, 2019). Over time, it was discovered that the automotive manufacturer had installed software, which altered the operation of the engine when subjected to an emission test to trigger it to appear like a low-emission automobile (Piper, 2019). Under normal working of the engine, the vehicles emitted dangerous pollutants at degrees that were 150 times higher than that of a conventional car (Piper, 2019). The unethical practice of the company had adverse conditions on the environment, as well as individuals. According to Piper (2019), the degree of environmental pollution was so high to the extent that each UNIT OF cheating vehicle had a significant impact on measures of infant’s health. Children were also affected by increased emissions. Statistical surveys covering five states indicated that for every incremental cheating diesel vehicle per 1000 automobiles, there was an 8% rise in asthma emergency department visits (Piper, 2019). The outcomes of the unethical practice illustrate the magnitude of the actions of the company.

Violation of Ethical Behavior

Ethical standards call for honesty in the conduct of various business practices. The emphasis on ethical conduct is desirable in that it helps in establishing stability and fair dealing. The recent case of the global financial crisis illustrates the grievous nature of breaking ethical standards (Ahmed, Agnihotri, Salam, & Mehmood, 2016). The economic turmoil is attributed to unethical business practices among the major players in the banking sector of the US (Ahmed et al., 2016). The waywardness of the financial giants led to the collapse of Enron, the crash of the housing market, and the fall of the Lehman brothers (Ahmed et al., 2016). As such, it is desirable for business organizations to observe ethical behavior. Under ethical conduct, honesty holds a central position and must be exhibited through the values and beliefs of business leaders.

Moreover, Ahmed et al. (2016) opine that business requires customer trust and bonding, which are the most significant business assets. In this backdrop, the act of Volkswagen to cheat on diesel emissions was an infringement of ethical behavior. The presentation of the company’s diesel cars as clean was deceptive and broke their trust with both customers and environmental regulators. The unethical practice of Volkswagen is in tandem with the culture of greed that has become synonymous with large organizations, resulting in unethical conduct (Ahmed et al., 2016). While the practice enabled the automobile manufacturer to attain emission standards and make more sales, it adversely affected individuals’ health, especially infants and children (Piper, 2019). Therefore, the action of Volkswagen violated the precepts of ethical behavior.

Influence of Leadership on Volkswagen Unethical Behavior

The conduct of leaders has a significant impact on the behavioral practices of an organization. In this line, Volkswagen’s managers influenced unethical practices through their behavior. A considerable number of the company’s managers engaged in the scandal (Mansouri, 2016). Moreover, it is alleged that while some engineers and technicians raised the issue to their supervisors in 2011, the leaders ignored the alerts (Mansouri, 2016). This development indicates that the unethical conduct of the car manufacturer’s leadership facilitated the diesel emission scandal.

Implications of Volkswagen’s Unethical Practice

The diesel cheating scandal had significant environmental and legal implications. Under the environmental aspect, the company’s unethical conduct led to increased environmental pollution. According to Piper (2019), for every increment in a cheating diesel car per 1000 vehicles, which is comparable to a 10% cheating-stimulated rise in automobile exhaust components, there is a 2% elevation in air quality measures for fine particular matter (PM2.5). This increase in environmental pollution has a substantial adverse effect on the ecology.

Furthermore, Volkswagen’s unethical behavior had significant legal implications. The automobile manufacturer pleaded guilty in an American court for cheating diesel emissions tests as well as giving false information to regulators (McGee, 2018). As a result, the firm was fined an estimated $25 billion (McGee, 2018). These implications have a negative influence on the financial wellbeing of the corporation.

Impact of the Behavior on Individuals, the Organization, and Society

Volkswagen’s unethical behavioral conduct has an undesirable effect on society. For instance, the unethical conduct normalizes the culture of dishonesty among individuals. In the same vein, the behavior of the automobile manufacturer fuels the culture of greed and deception among corporations. Organizations will now perceive that they can engage in dishonest practices for financial gain. The company sold millions of car units globally under the false claim that they are clean (Piper, 2019). Similarly, Volkswagen set a bad example to society by engaging in unethical conduct. The entity has an immense influence on society through its customers, employees, and other stakeholders. Therefore, the unethical behavior sends a wrong message to individuals who look up to the organization.

Outcome of the Event and a Comparison of Consequences

While the diesel emission cheating encounter had short term gains for the automotive manufacturer, it led to adverse long-term consequences, which affected its performance and profitability. As earlier reiterated, the short-run outcome of the unethical, deceptive practice was an increase in sales, as illustrated through millions of cars the company sold worldwide (Piper, 2019). However, the long-run consequences of the unethical conduct outweigh the short term gains. For instance, the firm was subjected to a hefty fine of $25 billion (McGee, 2018). Besides, the multinational damaged its image and customer loyalty, prompting existing clients to switch to competing brands. For the first time since 2002, the global sales of the automobile manufacturer reduced significantly (Mansouri, 2016). Similarly, the revelation of the scandal led to a reduction of the company’s share value by a third (Mansouri, 2016). The adverse effect on the firm’s performance illustrates the futility of unethical business conduct.

Fairness of the Punishment

            Notably, the social contract theory stipulates that businesses have a duty to customers, which entails ensuring consumer safety, environmental sustainability, and a desirable quality of life (Davidson & Forsythe, 2016). However, Volkswagen’s actions violated the precepts of this theory and did not observe due diligence towards consumer safety, ecological sustainability, and individuals’ quality of life. The cheating on diesel emissions led to a loss of lives and other health complications, which cannot be justified by the $25 billion fine imposed on the organization (McGee, 2018). It was estimated that by the close of 2016, Volkswagen vehicles with the “cheat” device would have yielded incremental toxic pollution to directly cause premature death of at least 60 people in the US (Mansouri, 2016). As such, the punishment imposed on Volkswagen is not fair since it cannot be equated to people’s lives, and the company violated its social contract with consumers.

Organizational Policies and Procedures to Deter Unethical Practices

While human beings are increasingly susceptible to unethical business conduct, organizations should establish written down ethical policies and procedures to guide the behavior of employees. Moreover, these policies should emphasize a value-based approach since it enhances morality among workers (Mansouri, 2016). In addition, for the case of Volkswagen, the company’s leaders should adhere to the established guidelines to encourage the firm’s workers to embrace ethical behavior. This model will alleviate future cases of unethical business conduct.

In conclusion, ethics in business is significantly essential as it promotes stability and desirable conduct. Companies with no clear ethical standards are prone to unethical practices. The case of Volkswagen’s emission cheating scandal demonstrates that unethical behavior can adversely affect the performance of an organization.

References

MarketLine. (2019). MarketLine company profile: Volkswagen AG.

Ahmed, G., Agnihotri, M., Salam, M. A., & Mehmood, T. (2016). Honesty is the best business policy: The ethics of international business. The Journal of Global Business Management, 12(1), 101-108.

Davidson, D. V., & Forsythe, L. M. (2016). Business in the contemporary legal environment. Alphen aan den Rijn, Netherlands: Wolters Kluwer Law & Business.

Mansouri, N. (2016). A case study of Volkswagen unethical practice in diesel emission test. International Journal of Science and Engineering Applications, 5(4).

McGee, P. (2018, August 6 ). Car emissions scandal: Loopholes in the lab tests. Retrieved from https://www.ft.com/content/2a123e88-9582-11e8-b747-fb1e803ee64e

Piper, K. (2019, July 16 ). Study: Volkswagen cheated on emissions standards — and made thousands of kids sick. Retrieved from https://www.vox.com/future-perfect/2019/7/16/20694781/volkswagen-emissions-cheating-pollution-child-health