Importance of Corporate Social Responsibility: A Case Study of Volkswagen

This report analyzes the importance of corporate social responsibility while using Volkswagen as a case study. It discusses critic and business practices of Volkswagen, ethical theory breached by VW, importance of Corporate social responsibility, recommendations and conclusions.

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Corporate Social Responsibility, Sustainability and Ethics
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Aim of the Report
This report analysis the importance of corporate social responsibility while using Volkswagen as
a case study. The report is divided into introduction, a body; discussing critic and business
practices of Volkswagen, Ethical theory breached by VW, importance of Corporate social
responsibility, recommendations and conclusions. This research will help the reader to
understand the importance of Social responsibility while showing them how it can practically
apply to existing organizations.
Introduction
Corporate responsibility and sustainable development are related, though distinct concepts.
Corporate responsibility refers to the relationship between a company and the community and
what the company does to the community like charity. Sustainable development, on the other
hand, concerns the issues of environmental impact and economic justice. In a company's
development, sustainable development can be a part of the programs (Rasche, Bakker & Moon,
2013, p 651). Volkswagen has been in the middle of scandals over the past years relating to
corporate and environmental responsibility, which has dented the company. This literature is
going to discuss how corporate responsibility can affect the business using Volkswagen as a case
study.
Criticizing Volkswagen’s Business practices

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Volkswagen has been seen in the middle of a corporate scandal due to the violations they
committed through their defeat devices, where they failed to reveal the true nature of the
emissions from their diesel cars. They tried to comply with the U.S emission standards using
defeat devices, which cleans the exhaust. The devices were fitted during testing, and when
driving, the devices were shut off to improve fuel performance and consumption. Consequently,
the shutting down of the device led to emissions of up to 40 times more Nitrogen oxide than the
recommended amount (Evarts, 2018). This level of emissions can cause a lot of environmental
damage. The German-based company faced criticism after using monkeys in its funded tests to
brand their vehicles as healthy and safe. They knowingly mislead customers to believe that diesel
engines are cleaner than other engines. Further testing showed that fourteen different types of
cars had the duping software. As a result, Volkswagen had to recall over 11 Million cars due to
the software and engines which were deemed faulty. In Europe alone 10million cars were
recalled, other cars are scantily spread in Africa and Asia which is not a significant number.
Volkswagen has been taking appropriate steps to correct the faults since the scandal, at the same
time trying to re-create their image (McWilliams et.al, 2016, p.1-18).
Ethical theory breached by Volkswagen
Kantianism is an ethical theory which, when defined loosely means an ethical duty to treat
people with equal respect. People ought to be treated as autonomous and as equally capable.
People should not be treated as a means to an end but as an end. Complexity can set in when it
comes to determining rights because the scope of rights is involved as well as the justification of
rights. It also involves determining the rights while resolving conflicts. Kantian ethics require
that a business has to sustain the business ethics required to sustain the market. Volkswagen
falsified the theory by trying to cheat on the levels of emissions. When they directly lied to their

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customers, employees, shareholders, and consumers, Volkswagen was immoral to Kantian ethics
(Birch et.al, 2017 p. 85). They made people believe in images and facts which were not the truth,
even to the extent of carrying out funded tests. They kept making shareholders buy shares and
stock, while the customers kept buying cars. The employees kept working in the company
building the damaged cars, while on the other hand, the dealers kept selling the cars. The
Volkswagen company kept using all these people to keep their sales and business going; they
disregarded the decisions of all the parties involved.
Importance of addressing Social and Environmental impacts
Multinational corporations such as Volkswagen are continuously addressing their social and
environmental impacts because it leads to socially desirable outcomes. Consequently, this helps
them in increasing sales while promoting their reputation, image of the brand and better
employee and stakeholder engagement. For corporations to thrive, the client preferences matter a
lot. Better risk management, employee satisfaction, and more engaged employees tend to spread
the business name positively. On the other hand, cheating does not go a long way as consumers
will find an alternative eventually (Haski-Leventhal, 2018.p. 53). Therefore, addressing social
and environmental factors is key to improving sales while creating good relations with all the
stakeholders.
Recommendations
Volkswagen can address their social and environmental impacts by going through an extra
expense and take more time in building an engine which is cleaner. Volkswagen needs to be
more transparent and honest to the shareholders, about the future and current cars, while
producing cars which are environmentally safe (Haski-Leventhal, 2018).

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Conclusion
Volkswagen could avoid the scandal if they made their decisions based on ethics rather than the
need to drive sales and maximize profits. They sacrificed the image of their company and their
integrity because of something which would have quickly been dealt with by just making the
right decisions. The decisions they made, have cost them a lot, and ruined their image now and a
few more years to come. They lost trust in investors and government, and also trust from the
consumers (Evarts, 2018). However, Volkswagen can move past the unfortunate scandal. All
they need to do is increase transparency while adhering to environmental requirements to the
later. Volkswagen did a sweep on top employees after the scandal, and this is an excellent place
to start in rebuilding trust.

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Bibliography
Birch, D.K., Peacock, M., Wellen, R., Hossein, C., Scott, S. and Salazar, A., 2017. Business and
Society: A Critical Introduction. Zed Books Ltd.
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Evarts, C.E, (2018, April 18) VW Brought bavck 300000 cars after its diseslgate scandal –and
now they are sitting in 37 parking lots around the US. Business Insyder. Accessed at
https://www.businessinsider.com/vw-bought-back-300000-cars-after-its-dieselgate-scandal-and-
now-theyre-sitting-in-37-parking-lots-around-the-us-2018-4?IR=T
Haski-Leventhal, D., 2018. Strategic Corporate Social Responsibility: Tools and Theories for
Responsible Management. SAGE.
McWilliams, A., Siegel, D.S. and Wright, P.M., 2016. Corporate social responsibility: Strategic
implications. Journal of management studies, 43(1), pp.1-18.
Rasche, A., De Bakker, F.G. and Moon, J., 2013. Complete and partial organizing for corporate
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