Volkswagen (VW) is a giant vehicle manufacturer that was accused of rigging its diesel engine to misrepresent its emission levels. The defeat device was meant to deliver counterfeit results of emission tests with the hope that VW vehicles would not appear to be emitting many pollutants. As VW was to find out, part of the corporate responsibility involves being cautious about the potential adverse effects that arise from the actions of a corporation (Matten & Crane 2005). As the paper reveals, in installing the defeat device in its cars, not only did VW act unethically but also broke laws, even though the outcome of the company’s action could have been positive.
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The objectives of this paper include determining whether VW’s move to use the defeat device was wrong and to establish the unprincipled standards of behavior within the company with the view of analyzing areas where it went wrong.
To achieve the above objectives, the paper will incorporate normative ethical presumptions and frameworks in the field of business principles. Such theories and models will be critically assessed in the context of the Volkswagen emissions scandal. The paper will also address the restrictions and applications of the theories and methods deployed. Specifically, the paper will adopt the normative ethical theory in examining VW’s emission scandal.
VW’s Unethical Actions
VW acted unethically when it installed the defeat device, which purported to give false emissions test results. Corporate dishonesty is a major challenge today given that companies are expected to be the custodians of ethics in society. The defeat device or the ‘diesel dupe’ turned out to be software installed in VW cars that were sold in the United States to influence the way the vehicles’ engines behaved (Burki 2015; Ewing 2015). When the software detected that the engine was being tested on emissions, it would alter its (engine) performance to show different results. The discovery of this software by the Environment Protection Agency (EPA) was widely described as corporate dishonesty (Schiermeier 2015; Hakim & Bradsher 2015). The breakthrough led to a large drop in sales for the company, as people were dismayed with the outright fraudulence (Breenkert 2010).
The EPA ordered VW to recall over 600000 of its cars suspected to have been fitted with the software from the American market (Rhodes 2016). The company was required to compensate the owners of the recalled cars (Barrett et al. 2015). The company suffered massive losses since the cars affected by the software covered a range of different models manufactured between 2009 and 2015. They included Jetta, Passat, and Beetle. In June 2015, VW stated that it would spend roughly $10 billion to purchase back the affected cars in the American market. The cars totaled about 475,000. The theory of stakeholders is a major pillar in the management of corporations today. It posits that the voice of all stakeholders should be heard regarding all matters of consequence.
In other words, no major decision should be undertaken by the organization without involving the stakeholders for whose benefit the organization is constituted (Gibson 2012). This theory takes away from the traditional view that only the shareholders matter and that the objective of a corporation is solely to increase the value for shareholders (Gelter 2016). About the VW emissions scandal, many stakeholders were affected, for instance, customers, shareholders, the environment, and the government. VW customers were affected since they suffered the inconvenience of having to wait for their cars to be replaced. Additionally, VW exposed them to pollution since the cars produced up to 40 times the allowed amount of nitrogen emissions (Oldenkamp, van Zelm & Huijbregts 2016).
Installing the defeat device breached various laws regarding the protection of the environment. One of the laws broken by VW is the Clean Air Act (CAA). Section 203(a)(3)(b) of CAA prohibits the use of devices that knowingly circumvent the detection of the breach of emission standards (Elson, Ferrere & Goossen 2015). The EPA has been keen on ensuring that imported vehicles, particularly those that run on diesel, conform to the set standards. As such, VW was found to be guilty of introducing into the US cars that did not satisfy the regulations governing emission standards. For this reason, it was speculated that the company could be fined up to $37,000 for each car that contained the defeat device (Kollewe 2015).
In total, VW would be liable to pay nearly $18 billion as fine to the EPA over the said breach. Additionally, according to Kollewe (2015), some activists have urged that the VW executives in charge of the American branch should be prosecuted for flouting the CAA knowingly. The natural law theory posits that legal authorities are set based on the existing moral standards. Scholars such as Thomas Aquinas have held that law and morality overlap to the extent that they cannot be separated (Carlson 2013). In a relationship with this view, environmental protection laws are based on the belief that polluting the environment not only harms people but also threatens the survival of future generations. Thus, VW violated the tenets of morality by failing to act as the custodian of integrity. From a critical point of view, VW’s actions were devoid of goodwill. In pursuit of profits, many MNCs deliberately neglect their unspoken responsibilities to society and the environment.
Arguably, all laws, whether natural or enacted by humans, exist for the sole purpose of maintaining order in society. This position is backed by the assertion of numerous natural law theorists. The theorists deny the notion that the law stands alone without the influence of morality. The view by the proponents of natural law theory holds if one considers that many illegal acts also carry an immoral aspect. For instance, theft is both a crime under federal law and a moral wrong (Ryff & Singer 2013). This simple fact proves that it is nearly impossible to eliminate morality from the law without severing the basic tenet that supports the said regulation. Thus, based on having acted immorally, VW undoubtedly broke the law. Further, the ‘Golden Rule’ requires people to act in a manner, which results in desirable outcomes, even to themselves. In other words, a person should do to others what they would be comfortable having it done to them (Ryff & Singer 2013).
Karl Llewellyn’s legal realism holds that the law results from what the judges do while they are deciding cases. Given this view, judges are likely to consider the moral aspects of any case before making their ruling. From a critical perspective, it is crucial to appreciate that even though judges are viewed as being above the emotional influence, the truth is that emotions play just as much of a role as the facts of a case. At the same time, emotion appeals to natural law more than it does to state-made regulations. This concept supports the argument that VW was in breach of natural law. Professor Hart and Lord Devlin argued that law is informed by morality. For his part, Hart believed in a connection between crime and sin. Hence, the law should be concerned with how to enforce morals. On the other hand, Devlin maintains that some moral guidelines are put in place for the good of the society in a manner that their breach should be punishable in the same fashion as any law (Pojman, Pojman & McShane 2015). Devlin was contributing to the belief that public morality exists. In other words, morality is not always a matter of private concern. Similarly, Professor Dworkin supported the view that morality is intertwined with law, although he differed with Hart and Devlin on morality aspects that shape the law.
VW’s actions contravened the commonly accepted normative ethical theories, which concern themselves with how one should act from a moral perspective (Anand, Ashforth & Joshi 2004). Such theories offer a systematic attempt to explain what is morally right in any given circumstance. The general presumption is that a morally correct action should result in a positive outcome. In particular, consequentialism holds that the conduct of an individual must form the basis of evaluating the rightfulness or wrongfulness of his or her act (Dierksmeier 2013; Vaughn 2015). In this respect, the intention of an act may be good. However, if the result is undesirable, the actor cannot be said to have done the right thing (Banaji, Bazerman & Chugh 2003).
In other words, consequentialists believe that the end justifies the means. However, this Machiavellian assertion may face much opposition in today’s society where cheating to gain an advantage is frowned upon. Going back to VW, the company’s action was wrong because it resulted in the concealing of another bad actor in the name of unauthorized emissions. Conversely, the unilateralism theory looks at the contentious action from the perspective of one individual. For instance, VW could have been justified that its defeat device resulted in positive results for its case. As such, it could be least concerned with how its actions affected others.
Nevertheless, the challenge of utilitarianism is that the actions of one person usually affect other people, particularly regarding pollution. The environment does not belong to a single individual. Hence, no one person can be allowed to perpetrate acts that are harmful to the environment. Thus, VW’s actions cannot be defended based on utilitarianism because their impact was far-reaching. However, while consequentialism differs significantly from unilateralism, VW could have relied on Dobrin’s 8 questions (Shain & Newport 2014) to establish the right action to take. Importantly, Dobrin’s 8 questions also require the actor to think of the possible justification for his or her action (Fontrodona, Sison & de Bruin 2013). As such, a person does not jump into action without thinking about how it will affect others. Had VW utilized Dobrin’s 8 questions, it would have realized that the defeat device would hurt innocent people.
Notwithstanding the consequentialist arguments, some actions are wrong, even though they provide a positive outcome. In other words, a wrongful action cannot be deemed right simply because the outcome it produces is desirable to some people. Deontology is the approach of ethics that focuses on the rightfulness or wrongfulness of action, as opposed to the expected outcome. Therefore, from the deontological perspective, VW was wrong for the simple reason that its action propagated deceit. It does not matter that the company benefited by avoiding the detection of excessive emissions. What matters is that the whole process was based on software that advanced a lie. The justification of this view is that the right deeds outweigh what is deemed good.
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An example is where a person proposes to kill all people inhabiting a land, hence making the said land not to support agriculture. While the remaining population would benefit from the actions by having sufficient food, a deontologist will still find such action wrongful. VW was motivated by the desire to make money. Hence, it did not consider the impact that its action would have on the aforementioned stakeholders. Modern deontology, as proposed by Immanuel Kant, introduces the concept of the categorical imperative (Dierksmeier & Celano 2012). The concept states that some actions are compulsory. For example, when one is thirsty, the person must drink water. Any good action should appear so to all people that it affects. Similarly, Kohlberg’s stages of ethical reasoning explain that some actions may be taken as good if they are in pursuit of greater excellence.
What VW did constitute a lie since the company produced a fraudulent item. The move to install the device contravenes the virtue theory, which emphasizes the need to promote virtues or moral characters. The feminist theory argues that relationships are important and that actions should be geared toward protecting them. VW did not care for its relationship with its stakeholders. Instead, it engaged in actions that could sever the relationship held with its key pillars, namely, customers and the government. This position is in contrast with the theory of egoism advanced by Adam Smith positing that action is positive if the doer decides freely to undertake it (Broad 2014). This theory by Smith is not justified, particularly in the case of the emission scandal. From a pluralistic perspective, VW, which has close to 120 manufacturing bases and a huge number of workers, would have demonstrated its interest in engaging in ethical actions that do not affect its business locations and employees and consequently its CSR agenda (Rorty 2006).
VW acted against the Corporate Social Responsibility (CSR) theory, which places various obligations upon corporations, including economic, legal, philanthropically, and ethical accountability. In this respect, the CSR theory maintains that for every major decision that a corporation makes, it must involve all its key stakeholders (Rhodes 2016). Therefore, VW needed to have consulted all key stakeholders, most important customers, and the US government. The underpinning argument for the CSR theory is that corporations control vast resources. Hence, they must be accountable for their actions. Additionally, companies are seen as citizens in a community who must then act in the best interests of all other members for smooth co-existence. VW’s unethical behavior was a total disregard of the ethical aspect of the CSR theory.
VW acted unethically by introducing the defeat device in its cars to avoid detection by emission tests. The action threatened any efforts made so far to protect the environment. By so doing, the company was only interested in raising profits. Hence, it was unconcerned with the moral issues that arose from its ill-driven move. Consequentialists believe that even if a wrongful action brings about a positive result, it will remain wrong. Many philosophers support this view by arguing that the law and morality are inseparable. Hence, VW not only broke various laws but also interrupted its relationship with stakeholders.
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