Ethical Issues in Volkswagen Emission Scandal

Volkswagen Emission Scandal

Volkswagen is a company headquartered in Wolfsburg, Lower Saxony, Germany and is the original marquee within the Volkswagen Group. The Volkswagen Group includes different car marquees like Bentley Motors, Audi, Automobile Lamborghini, Bugatti Automobiles, and Scania, which manufactures heavy goods vehicles. Since its inception, Volkswagen has developed to become the third largest manufacturer of automobiles after Toyota and General Motors respectively. However, the company was recently involved in an emission scandal that has generated significant concerns in this industry and among the public. The emission scandal is attributed to the company's corporate misbehavior, which is largely unacceptable from any perspective. The unacceptability of this misbehavior is attributable to its impact on the world and violation of business ethics.

Emission Issue at Volkswagen

Volkswagen is renowned across the globe as one of the leading and successful car manufacturers that have experienced tremendous growth and profitability since inception. Despite its success, Volkswagen has experienced several issues from time to time relating to its business practices. One of the recent issues that are facing this company is an emission scandal that was fueled by its corporate misbehavior that is unacceptable from any perspective. Volkswagen rigged its diesel engines to falsify emission tests, which has attracted considerable media attention and impacted the public. According to Hotten (2015), the company installed defeat software or device in its diesel engines that could detect when the vehicle was being tested and change performance accordingly in order to generate better or improved results in emission tests. The company admitted to cheating emissions tests in the United States through the installation of this device or software in its diesel engines.

The device works through putting the cars into a certain kind of safety mode where the engines run below normal performance and power. This occurred when the vehicles were functioning under controlled laboratory circumstances that essentially involved putting them on a motionless test rig. Once these vehicles were on the rod, the engines switched out from normal power and performance witnessed in the test mode. This resulted in emissions of nitrogen oxide pollutants that were approximately 40 times more the acceptable range of emissions in the United States (Hotten, 2015).

Volkswagen decision to install the defeat device or software in its diesel engines was based on belief and assumptions that its investors care about financial performance, especially stock price, instead of impact of its operations on the society. The company's decision was fueled by the myth that maximizing shareholder value is the main financial objective of a business or company. This was an erroneous decision that was evident in shareholders' reaction, which was characterized by decline in share price by one-third resulting in significant losses in Volkswagen's value. This implies that unethical behavior or corporate misbehavior destroys a company's reputation and share value.

Impact of these Actions on the World

The decision by Volkswagen to cheat in emission tests had considerable impacts on the company's operation with regards to its share value and profitability. However, the actions by these humans also had considerable effects on the world. Actually, regulators, politicians, and environmental groups worldwide have raised questions and concerns about the legitimacy of the company's emissions testing. One of the impacts of the actions of these humans on the world is increased emissions of gases that damage the environment, especially at a time when global climate change or global warming is a major international issue. Through the cheating, Volkswagen emissions were more than the standard range of emissions of these gasses into the atmosphere by nearly 40 times. Therefore, these actions had considerable impacts on the environment because of the increased emissions of environmentally damaging gasses. Secondly, these actions highlighted the need for strict testing standards since the current ones are seemingly outdated. Car analysts have argued that the existing standards and mechanisms for testing diesel cars are outdated and do not effectively help in preventing increased emissions of greenhouse gasses into the Earth's atmosphere. Third, through increased emissions of these gasses, Volkswagen negatively affected the world's ecosystems. The emissions of these gasses usually harm the world's ecosystems through contributing to extremely cold or warm weather conditions that affect humans, plants, and animals.

Ethical Issues in the Scandal

In the corporate world, sustainability and corporate social responsibility are not easy though they are essential elements in business operations. The difficulty with these processes is attributable to the fact that managers face tradeoffs between short-term and long-term, between quarterly profits and the long-term environmental effects and between annual compensation and business survival. The company's Vice President of engineering and the emissions technicians acted dishonesty by approving the installation of the defeat device or software in the diesel engines, which violated existing laws. Through intentional installation of the devices, the emissions technicians, VP of engineering, and employees in the company deceived those it owed a duty of honesty (Queen, 2015). This was primarily because they acted intentionally given that the installation was not an error, poor judgment, a mistake or an ethical lapse but an intentionally developed and implemented breach of the law and blatant violation of business ethics.

The President of Volkswagen was at fault through failure of leadership, which demonstrated his incompetence since he was unaware of actions taken by his subordinates, especially his employees in installing the device. Through his incompetence and failure of leadership, the President of Volkswagen promoted the creation of culture of dishonesty within the organization as evident in dishonest employees (Argenti, 2015). This is further evident in claims that the installation of the defeat devices was not a corporate decision but a decision and initiative of a few software engineers in collaboration with the engineering department.