Introduction
Ethical frameworks assist leaders in determining the most productive course of action. It was considered unethical for Volkswagen to make the decision that led to the controversy. To conclude the matter, they applied various ethical frameworks, such as ethical egoism and deontology.On the other hand, they should utilize ethical theories such as virtue ethics, corporate social responsibility, and consequentialism. Consequently, it is crucial to adopt models that promote the well-being and flourishing of the community (Mo & Shi, 2018).
Volkswagen
Volkswagen is a vehicle manufacturer and a subsidiary of Porsche Automobile Holding SE. The company produces and sells passenger cars, trucks, buses, motorcycles, light commercial vehicles, original parts, turbomachinery, large-bore diesel engines, propulsion components, special gear units, and testing equipment; it designs and develops vehicles and engines (Welch, 2019). In addition, the company offers leasing, banking and insurance services, dealer and customer finance, fleet management, and mobility services. For example, as shown in the figure above, the organization has production facilities in different parts of the world, including Navarra. Volkswagen is based in Germany and operates globally.
Background of the Problem
The issue started in 2007 when the new CEO launched a strategy to double its vehicle sales yearly. To increase the sales of its diesel vehicles in the US, the company wanted to ensure that its products had high fuel economy and performance (Jacobs & Kalbers, 2019). However, the problem was that the US introduced strict emission standards that all automobile companies must adhere to for their vehicles to be allowed in the market. As a result, it was challenging for the company to adhere to the rules and ensure that its products stood out in the market.
The Ethical Dilemma
An ethical dilemma is a situation that occurs when there is a conflict between two sets of moral values. Volkswagen’s leadership faced a situation where they did not know what to take. As shown in the figure above, the problem with Volkswagen was its high rate of emission into the environment (Caria & Hermans, 2020). For example, the dilemma was whether or not to use the technical knowledge to benefit Volkswagen and defeat the emission tests to sell more vehicles in the US market. However, after deliberation, the leaders decided to use technology to pass the emission test. The other option was to restructure the vehicles to ensure the emission was within the required rate.
Ethical Frameworks Used By Volkswagen
Ethical egoism is one of the theories used in Volkswagen’s scandal to make decisions. According to this theory, people are supposed to pursue their self-interest, and nobody has a duty to enhance anyone’s self-interest (Westacott, 2019). This indicates that everyone should promote their self-interest when making an ethical decision. The primary interest of Volkswagen’s leaders was to increase their sales, and they had no obligation to pursue the interest of the Americans, which was to reduce emissions to the environment and enhance the well-being of the people.
Deontology is among the ethical frameworks used by Volkswagen’s leaders and managers to solve its ethical dilemma. This ethical theory relies on rules to determine if an action is right or wrong (Wood, 2019). An action is right when it follows the rules and wrong when it does not. Unlike utilitarianism, the theory does not weigh the consequences of an action. In the ethical dilemma, the rule was passing the emission test to be allowed to sell the vehicles in the US market.
Ethical Framework That Volkswagen Should Have Used
Consequentialism is an ethical theory that holds that something is morally right or wrong by the consequences it brings. This means that an action is morally good when it leads to many people’s happiness (McCombs School of Business, 2020). It shows that to act ethically, it is important to consider the well-being of everyone. With this view, the leaders of Volkswagen should have considered the consequences of cheating on the emission test before making the decision. The action was morally wrong because it would have increased emissions to the environment, affecting many people’s health.
Corporate Social Responsibility (CSR) is an important ethical model contemporary businesses use to foster a positive relationship with their stakeholders. As shown in the figure above, the framework requires organizations to play a positive role in the community by protecting the environment and contributing to social welfare (Jermsittiparsert et al., 2019). With this model, the leaders of Volkswagen should have considered its primary responsibility and produced eco-friendly vehicles. Their main focus should have been to safeguard the community’s well-being and not to increase the sales of its vehicles.
Virtue ethics is a moral theory that emphasizes the role of an individual’s character andthe virtues they possess in determining the appropriateness of their conduct. An account of right and wrong that is derived from the actions that a virtuous agent would take is provided by virtue ethics (Wood, 2019). Determining a behavior’s appropriateness primarily emphasizes the part that a person’s character plays. From this point of view, the decision that Volkswagen made should have been made by a morally upstanding individual. Volkswagen should not have decided to cheat the emission test using characteristics such as honesty, integrity, and other character components.
Utilitarianism is a moral theory that determines right and wrong decisions considering the results of actions. The theory lends legitimacy to behaviors that aim to improve the quality of life for the greatest number of people possible (Woodard, 2019). When more individuals profit from an action, that action is deemed morally correct. Volkswagen ought to have prioritized making decisions that are beneficial to a large number of individuals. For example, cheating on emission tests would have a detrimental impact on many people. They ought to have been involved in activities that protect the natural environment.
Recommendations For Volkswagen
There are different measures that Volkswagen should adopt to avoid facing this type of problem in the future. Firstly, the organization should strive to create a culture of compliance with rules and standards within and outside the organization. It should invest in employee training explaining corporate policies and prohibited behaviors. Volkswagen should incentivize ethical behavior by adopting it in performance reviews. Secondly, ethical leadership should be incorporated to help develop and implement moral standards. Thirdly, the organization should increase transparency in the design of its products by inviting the public to view the process.
Volkswagen’s Code of Ethics
A Code of ethics is supposed to guide an organization in making ethical decisions and engaging in moral practices. Volkswagen had a code of ethics in its system to influence its decision-making. They outlined core values such as integrity, transparency, and fairness. In addition, the organization demonstrates to its stakeholders its role in protecting the environment. However, when deciding to devise a system that would help overcome the emission test, they failed to recognize the values they outlined as its ethics. They should strive to encourage compliance with its code of ethics.
Takeaway Lessons Learned For Business Leadership
Business leaders should learn several take-away lessons from Volkswagen’s scandal. Firstly, they should learn that unethical behavior can harm an organization and its stakeholders. The behavior resulted in massive layoffs due to the cost of remediation, reduced demand for vehicles, and a bad reputation. Secondly, business leaders should establish rigorous compliance reviews that uncover unethical conduct and negligent activity in an organization (Eva et al., 2019). They should closely monitor the operations of the organization. Thirdly, business leaders should strive to lead by example and demonstrate to employees the need to act morally.
Conclusion
The ethical framework that works best is the one that prioritizes the health and happiness of the most significant number of people. When it comes to decision-making, those in charge of businesses can choose from various conceptual frameworks. Volkswagen decided it needed to reach the conclusion that sparked the controversy using ethical egoism. On the other hand, they should have used frameworks of ethics such as consequentialism, virtue ethics, and others. Therefore, it is crucial to employ models that support the community’s well-being and prosperity.
References
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