Volkswagen Emission Scandal: Governance, Ethics, and Decision-Making

This report provides an in-depth analysis of the Volkswagen emission scandal, also known as Emissiongate or Dieselgate. The scandal involved Volkswagen's deliberate programming of its Turbocharged Direct Injection diesel engines to cheat on emissions tests, resulting in significantly higher nitrogen oxide emissions during real-world driving compared to laboratory tests. The report details the history of Volkswagen, the specifics of the scandal, and its impact on the company. It explores the ethical implications of the scandal, applying both utilitarian and deontological ethical frameworks to assess the actions of the company. The utilitarian perspective highlights the negative consequences of the scandal, including environmental pollution, financial losses, and reputational damage, while the deontological perspective focuses on the inherent wrongness of the deceptive actions. The report concludes that Volkswagen's actions were unethical from both perspectives, emphasizing the importance of ethical conduct in corporate governance and the detrimental effects of prioritizing profit over environmental responsibility and adherence to the law. The report also includes a brief discussion of how the world could be improved by preventing such frauds.

GOVERNANCE AND
ETHICS
VOLKSWAGEN EMISSION SCANDAL

Executive Summary
Volkswagen emission scandal will be reported
in this ppt.
It was found that company’s vehicle
produced more Nitrogen oxide in real-world
drive then in the tests
It was found that it was wrong both in terms
of deontology and utilitarianism theories as it
act itself and the consequence that it
produced was wrong.

Introduction
History/ Background
Today’s time governments have become very
much strict over the carbon or nitrogen gas
emission.
This is why every vehicle model is tested
before letting it come in the market.
The car companies are under the pressure to
reduce the pollution that is created by their
vehicle.

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The fraud that
company does for
saving them from the
environment laws
becomes an ethical
issue (Siano, et al
2017).
Software controlled
machinery was often
proved to violating
the laws.

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Issues Prevalent
This issue is prevalent in the European and
United States.
This issue was important as it was related to
the environmental concerns (Mansouri,
2016).
This was violation of the emission laws made
in the United States and Europe.

Brief history of organization
Volkswagen is a
German automaker was
established in the year
1937 by the German
Labour Front.
This company started
its product line
expansion between
1974 and 1990.
It has been the part of
the world war both I
and II.

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This company started
its further expansion
from 2000 where
sixth generation cars
were brought by the
company (Jung and
Sharon, 2019).
This company is the
largest automaker in
terms of global sales
in 2016 and 2017.

Discussion of the case
In September 2015,
Volkswagen emission scandal
took place and it was also
named as Emissiongate or
Dieselgate .
U.S. Environmental Protection
Agency gave a violation
notice related to Clean Air
Act.
Volkswagen had deliberately
programmed Turbocharged
direct injection diesel engines
to start their emissions
controls only at the time of
laboratory emission testing.

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They produced nitrogen oxide output
at the level which is permitted in terms
of US standards at the time of
regulatory testing while in real world
driving there was 40 times more
emission of nitrogen oxide (Rhodes,
2016).
Company deployed this software in
more than 11 million vehicles
throughout the globe which include
500,000 in the U.S. in between 2009
and 2015.
In 2014, California Air Resources
Board has given a study on emissions
laggings between U.S. and European
vehicles models from the International
Council on Clean Transportation. It
was found that extra emission was on
the live road test.

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Volkswagen had to spend
US$18.32 billion on
rectifying this scandal as a
part of recall campaign.
Apart from this Volkswagen
payed a $2.8 billion
criminal fine for "rigging
diesel-powered vehicles to
cheat on government
emissions tests".
Martin Winterkorn, CEO of
Volkswagen Groups had to
resign due to this issue.

Ethical decision making approaches &
theories
This case was a clear violation of the ethical
conduct that a company must follow.
There are different approaches that are used
for finding that any decision is ethical or not.
The two theories that are used are
Utilitarianism and Deontology.

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Utilitarian
It is a theory that promotes actions that maximise happiness
and well-being for the person.
This theory suggests that any action can be judged on the
basis of consequences that are whether it is right or wrong.
The consequence of the Volkswagen emission scandal was
that it was polluting the environment.
The consequence was also wrong because it was done for
the purpose of cheating (Cavico and Mujtaba, 2016).
The case was also wrong in terms of fact that it resulted in
Volkswagen losing large amount of money.
It resulted in the loss of the image of the company and the
consequence that CEO had to resign.

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Deontology
Deontology is an ethical theory that
suggests about the morality of the
action that whether action it itself right
or wrong.
It is a rule based ethics which suggests
that action is more important than the
consequences.
This case was also unethical in terms of
deontology theory because it was done
for the purpose of cheating.
This was unethical as it was
purposefully done.
This was unethical as it was against the
law that was made against environment
pollution (Bachmann, et al 2019).
It was hidden from the authorities
hence it was unethical.

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Using both theories a conclusion
was drawn that:
The case of the Volkswagen was
unethical.
Both in terms of the
consequences that it produced
and the way things were done.
Since it was done for the
cheating the authorities and it
was against the environment
and environment concerns.
Both this theory also illustrated
that it was unethical because it
was against the laws.

Summary
Importance of the issue can be understood by
the fact that it was a cheating done by such a
big firm.
It was unethical because it violated the laws
and it was done deliberately.
Due to this Volkswagen had to face many
things.

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Painting the world
The world is getting polluted every day if the
plans related to such kinds of frauds are not
stopped.
If my plan gets implemented than world will
be cleaner.
It will also reduce the dependency on the
software based technology.

References
Bachmann, R., Ehrlich, G., Fan, Y. and Ruzic, D., 2019. Firms and collective
reputation: a Study of the Volkswagen Emissions Scandal (No. w26117). National
Bureau of Economic Research.
Cavico, D.F.J. and Mujtaba, B.G., 2016. Volkswagen emissions scandal: A global
case study of legal, ethical, and practical consequences and recommendations for
sustainable management. Global Journal of Research in Business & Management
Vol, 4(2).
Jung, J.C. and Sharon, E., 2019. The Volkswagen emissions scandal and its
aftermath. Global Business and Organizational Excellence, 38(4), pp.6-15.
Mansouri, N., 2016. A case study of Volkswagen unethical practice in diesel
emission test. International Journal of Science and Engineering
Applications, 5(4), pp.211-216.
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal
and the disruption of corporate sovereignty. Organization Studies, 37(10),
pp.1501-1518.
Siano, A., Vollero, A., Conte, F. and Amabile, S., 2017. “More than words”:
Expanding the taxonomy of greenwashing after the Volkswagen scandal. Journal
of Business Research, 71, pp.27-37.