Volkswagen Emissions Scandal and Ethical Business Practices

Introduction: The Volkswagen Diesel Scandal

The Volkswagen emissions scandal has been dubbed the "diesel dupe," and the corporation has faced the prospect of manslaughter charges over its rigged diesel emission tests — charges that would be pursued if legal advice determined they could succeed. Thousands of people die each year from air pollution caused by diesel vehicles, with nitrogen oxide (NOx) identified as a primary contributor. Laboratory tests produced dramatically lower NOx readings for Volkswagen vehicles, and management ultimately admitted that it had added "defeat devices" to millions of its vehicles (Saarinen). Subsequent reporting confirmed that vehicles fitted with EA288 engines meeting Euro 5 and Euro 6 standards were not directly implicated in the scandal.

Reports from Germany indicated that older 1.6-litre and 2.0-litre models with EA288 engines — a derivative of the affected EA189 engine — were built with defeat devices designed to cheat emissions tests. These vehicles were found to be cheating Environmental Protection Agency (EPA) emissions tests in the United States, which ignited the broader VW emissions scandal. Although the diesel scandal was initially thought to apply only to cars fitted with EA189 engines produced between 2009 and 2015, U.S. authorities and the EPA subsequently argued otherwise. The EPA uncovered VW's cheating software and, together with U.S. authorities, began evaluating whether the auxiliary device was installed specifically to deceive during emissions testing alone (Saarinen).

The computer software sensed test scenarios by monitoring vehicle speed, engine operation, air pressure, and steering wheel position. Under controlled laboratory conditions — where cars were placed on a stationary test rig — the software switched the vehicle into a safety mode, causing the engine to run below normal performance and power output. Once the vehicles were on the road, however, the engines switched out of test mode, and NOx emissions became fully evident. Pollution from these diesel cars reached up to forty times the levels permitted under EPA regulations (Hotten).

The German automaker faces billions of dollars in litigation and fines, as well as the additional cost of repairing eleven million diesel cars worldwide. Vehicle owners were also affected, particularly those attempting to sell VW diesel cars, whose resale values were expected to fall sharply. To many customers, this represented a profound lack of consideration on VW's part. Online consumer activity declined as the public recalled how the company had built its brand image around environmental responsibility — including planting a forest and constructing what was marketed as a certified green factory.

The social processes contributing to ongoing organizational corruption include compromise, cooptation, and incrementalism (Anand, Ashforth, and Joshi 10). These tactics have fostered dishonesty in individuals who do not value integrity in their actions. Also under scrutiny is how wealthy and powerful actors behave unethically and escape meaningful accountability (Schiffman 1). The actions of the powerful have left many people questioning whether privilege breeds indifference to the harm caused to others. In today's corporate environment, ethical lapses persist in part because they are treated as intractable and pervasive rather than as aberrations to be corrected.

The Nature of VW's Ethical Violation

Most people involved in unethical activities at multinational corporations describe their conduct as an unmistakable mistake. For Volkswagen, however, that characterization does not hold. This was not an error, a lapse in judgment, or a misunderstanding — it was an intentionally designed program. Its execution violated the law in both letter and spirit, placing it at the highest level of ethical violation. Volkswagen deliberately deceived those to whom it owed a duty of honesty. By fraudulently misrepresenting its automobiles as cleaner than competitors' vehicles, the company achieved its goal of increased profits. Critically, these intentions were deliberate, and management went out of its way to achieve success through wrongdoing.

Many observers were shocked by the brazenness of Volkswagen's actions compared to high-profile scandals at companies such as BP or GM. The operation was highly sophisticated: the emissions system was engineered to distinguish between road travel, typical idling, and idling during an emissions test. No public relations effort can mitigate this fact, and management cannot credibly claim confusion, misunderstanding, or communication failures. The scandal has brought into sharp relief the reality of corporate malfeasance for consumers around the world.

The wrongdoings of Volkswagen were further compounded by the response of its leadership. Former CEO Martin Winterkorn acknowledged incompetence and leadership failure while simultaneously claiming he was unaware of his employees' actions — a claim widely regarded as implausible.

Volkswagen's inappropriate goals — chasing sales targets, acquiring new contracts, and expanding market share — likely created the internal pressure that drove individuals toward unethical decisions. Many multinational companies reward results without scrutinizing the means by which objectives were achieved, which fosters a culture in which unethical behavior thrives. The inappropriate testing of diesel vehicles was underscored by research finding that nine out of ten cars on EU roads exceed established pollution limits, suggesting that the current testing regime allows unethical behavior to go unchecked.

Organizational Corruption: Tactics and Rationalization

One common rationalization for corrupt organizational behavior is the denial of injury — the claim that no one is truly harmed by the actions taken, and therefore that no corruption has occurred. This rationalization appears in cases of organizational theft where perpetrators assume that insurance policies will cover any damages, or that the organization can absorb the costs, or that the harm is negligible. Such tactics make corrupt acts appear less offensive by framing them as far less serious than more extreme forms of wrongdoing.

Denial of a victim is a related tactic that reframes exploitation as a form of justified revenge. For instance, employees who steal from their organizations may rationalize this behavior as retaliation for what they perceive as unfair treatment at the hands of their employers, thereby depersonalizing the victim into a faceless abstraction.

Social weighting involves seeking out examples of behavior far worse than one's own to justify participation in corrupt activities. By identifying more egregious offenders, perpetrators minimize their own misconduct and find motivation to continue. An appeal to higher loyalties goes further — not merely neutralizing the negative perception of corruption, but actively framing corrupt acts as necessary or even virtuous in pursuit of a greater goal (Anand, Ashforth, and Joshi 13).

In cooptation, rewards are used to shift an individual's attitude toward accepting unethical behaviors. Organizations engage in cooptation when it serves their self-interest (Anand, Ashforth, and Joshi 14). Power within organizations non-consciously activates personal biases and goals, shapes information processing and behavior, and allows these to be rationalized in socially desirable terms.

Conclusion: Ethical Leadership and Accountability

An organization that practices ethics in its operations attracts a larger market segment and ensures that the needs of both external and internal stakeholders are genuinely considered. It is necessary for individuals in top-level management to serve as role models for subordinates who look to them for direction. The decisions made by top management reflect their values and behavior, and these flow downward through the organization, ultimately shaping the culture that either supports or undermines ethical conduct.

The Volkswagen emissions scandal serves as a sobering reminder that the absence of ethical leadership and accountability creates the conditions for systematic corporate wrongdoing. Rebuilding trust — with regulators, consumers, and the public — requires not only remedial action but a fundamental recommitment to integrity at every level of an organization.

Works Cited

Anand, Vikas, Blake Ashforth, and Mahendra Joshi. "Business as Usual: The Acceptance and Perpetuation of Corruption in Organizations." Academy of Management Executive, vol. 19, no. 4, 2005, pp. 9–23.

Bazerman, Max, and Ann Tenbrunsel. Stumbling Into Bad Behavior. The New York Times, 2011. Print.

Carter, Stephen. The Insufficiency of Honesty.

Hotten, Russell. "Volkswagen: The Scandal Explained." BBC News, 7 Oct. 2015.

Saarinen, Martin. "VW Emissions Scandal: Everything You Need to Know." Auto Express, 27 Oct. 2015.

Schiffman, Richard. "The Rich Really Are Different." The Philadelphia Inquirer, Opinion, 2012. Print.