Impact of VW Emissions Scandal
1. As per the case study of VW Emissions, the company admitted to fitting the engines of 11-million diesel vehicles across the globe with so-called defeat devices, sophisticated software, twisting the outcomes of tests for nitrogen oxide emissions is considered as the main point. It led towards using devices, turning on pollution controls during the undergoing tests of cars and off when they are back on the road. Such harmful levels of nitrogen oxide lead towards the consequences as these 11-million vehicles fitted with the rogue devices are being recalled in a huge campaign for removing the defeat device (Hotten, 2015). There is a need of simple software adjustment for some models while the others in case of engines are required to be adjusted mechanically. Also, based on the role played by such issue, it involves moral intensity in decision making, as performed by the top management while determining the ethical behaviour as some extent. It involves impact the workplace environment and culture along with the employees and direction, as shaped by the company. VW experienced such moral failure based on its decisive influence, defining the high moral intensity based on the case study (Garcia-Ortega & De-Miguel-Molina, 2019). It involves having ethical or moral considerations, gaining weight in the decision process along with the way people are investing more energy and time in such situations and using more sophisticated moral reasoning overall.
Other than this, customers are able to claim compensation or ask for their money back while being fraudulently selling a car effectively. The company faced challenges as well in relation to the resignation of the CEO along with the suspension of other executives and transforming of VW’s culture. Moreover, the recall action is expected for costing billions of dollars while also facing potential fines, amounting to as much as $18 billion in the US alone along with legal costs from private lawsuits for the company. It results in the way scandal has wiped off nearly 40 per cent of market capitalisation of VW along with setting 6.5 billion euros aside in provisions for covering the initial costs (Topham, Clarke, Levett, Scruton, & Fidler, 2015). Also, the overall cost of the affair is not yet calculable; however, experts are suggesting regarding running to tens of billions of euros. Also, there are some that started speculating regarding a possible break-up of the group. The company’s up-scale niche brands such as Ducati or Lamborghini mooted as possible divestment candidates while the way VW commissioned both external and internal investigations for finding the masterminds behind the deception. Furthermore, a criminal investigation was launched by the German prosecutors and VW denied the accusations of EPA in relation to the bigger 3.0-liter engines while offering no explanation regarding the irregularities as founded by the authorities (Jacobs & Kalbers, 2019). In relation to the irregularities of carbon emission, certain questions left unanswered that includes whether the information was deliberately falsified and by whom.
2. In business, ethical dilemmas are common and to resolve them is a fundamental part for individuals. It requires making trade-off decisions while ensuring social and personal consequences significantly. Also, there is a need of individuals, making ethical decisions where comes Rest’s model of ethical decision-making, involving four stages in the process to describe moral reasoning. It involves both a practical and theoretical perspective where the subject behaviour is based on a variety of contexts and tasks. The four stages include moral awareness, moral judgement, moral intention, and moral action where any one of the failure leads towards a failure of ethical behaviour (Khursheed, Sehar, & Afzal, 2019). Based on the VW’s case study, decision-makers are people in an organization, having power of making strategic decisions such as expansion, acquisitions, or investment. Some of such types include organizational, tactical, operating, personal, policy, non-programmed, and programmed decisions. This involved the use of Rest’s four stage model of ethical decision-making as VW deviated from the model as to “make moral judgment” at stage 2. It has been seen that VW was aware about the presence of having some sort of ethical issue which led towards the deviation that does not take the place at stage 1, to “recognise a moral issue”. The “Defect Devices” designed by the engineers of VW ensured the fitting to cars will leads towards vehicle passing the regulatory, lab-based emissions test (Cremer & Goodman, 2018).
Ethical Dilemmas and Rest’s Model of Ethical Decision-Making
Moreover, the company was awareness about that for passing the test, there is a need of improvising while it is the ethical issue, but with the state of making wrong decision in their judgment. It involves analysing the ability of such defect devices that enables detecting such tests through any factors like engine use, atmospheric pressures, and steering patterns. Also, it includes the use of a fume cleaning technology that helps to pump up to 40 times when used on public roads while defining the legal limit of nitrogen out (Ameen, 2020). Other than this, this scandal blamed through certain rogue software programs based on not knowing about the issue. Nevertheless, this led towards a bigger conspiracy, involving the company’s senior figures in terms of their wrongdoing. This made a good assumption about their goal to make such judgements on the emissions when they were trying to cover it up. Furthermore, false and misleading data was given by the VW engineers and executives to regulators, and with all this covering up, the company showed the deviation taking place in stage 2 (Toebe, 2020). As per the model, this indicated that there was an awareness regarding an ethical issue, but they just made a bad moral judgment.
3. There are several context-related factors, influencing engineers and executives at VW for not whistle blowing on the fraudulent activities. It involves having power over some employees for not whistleblowing; also, the top of food chain involves having more authority over them and for not spilling the beans. Other than this, it includes the culture of VW while having one of an unethical one while knowing what is going on along with having a sort of common behaviour. Also, there is a need of having some reward for people while not to whistle blow such as increasing pay (Merkel, 2015). Moreover, there are people while not wanting to have family or friends for judging them regarding the ethical issues going on at their workplace. When it comes to the whistle-blower in the VW scandal, it involves Karsten vom Bruch, an engineer who worked for Bosch as the company was involved in the software development, enabling carmakers cheating on the emissions of their diesel engines and Bosch fired him. Also, in the case of VW, it involves the way where the company needed employee cooperation but failed to offer a wide-open door for internal whistle-blowers (Kelton, 2016). This led to the way VW extended job protection for them, covered through the pacts of collective bargaining.
Other than this, it involved deceiving the emissions testers regarding the responsibility for the decision while resting some way up in relation to the management chain of VW. Based on the senior decision-makers, there is an involvement of a much larger group of engineers who were aware about the illegal deception along with understanding the consequences and choosing not to reveal it to the media or authorities. This showed that there was the lack of whistle-blowers from this larger group to strike. Furthermore, software engineers’ ethical duties are quite clear in these circumstances, involved the joining agreement with “Software Engineering Code of Ethics”, addressing responsibilities to employers that include confidentiality while making the primacy of the public interest clear with the involvement of conflict of ethical duties (Rogerson, 2018).
Context-related Factors Influencing Whistle-Blowing on Fraudulent Activities
4. VW’s management handled the scandal well while announcing plans in 2016 for spending €16.2 billion “(US$18.32 billion at April 2016 exchange rates)” on rectifying the emissions issues. Also, it planned for refitting the affected vehicles as part of a recall campaign. The company pleaded guilty to criminal charges and signed an agreed Statement of Facts while working on the outcomes of an investigation VW had while being commissioned from US lawyers Jones Day (Rowbotham, 2021). There was a statement set out regarding the way engineers developed the defeat devices, due to diesel models, not able to pass US emissions tests along with deliberately sought for concealing their use. Later, a US federal judge ordered VW for paying a $2.8 billion criminal fine to rig diesel-powered vehicles for cheating on government emissions tests. Furthermore, the unprecedented plea deal formalised the punishment where it was agreed by VW; also, Winterkorn was charged in the US with conspiracy and fraud as well. In 2020, the scandal had cost VW $33.3 billion in penalties, fines, buyback costs, and financial settlements (Rogan, 2021).
Other than this, there are several government and civil actions that are going on in the US and the European Union. This involves locating several affected vehicles while remaining legal to drive where governments and consumers groups are seeking towards making sure that VW has compensated among these owners appropriately for ensuring ongoing operations in the US (AFP, 2020). Furthermore, an earlier admission of the fraudulent activities involves not reducing the negative impact to the company as it is both unlawful and unethical. VW also released the detailed chronology of the knowledge of its senior management as well regarding the emissions crisis. It was based on being the part of its defence in a lawsuit by the investors, claiming regarding the awareness of senior management about the illegal activity that led towards wiping billions of euros of market value of the company (Neate, 2016). This case of VW as shocked the overall automotive industry by its unethical action, highly noticeable by the market players as other automakers. This impacted both indirect and direct stakeholders of the company which ensured senior management to handle the scandal well while working on improving the reputation of VW through reducing the impact of such fraudulent activities.
5. Jeremy Bentham developed Utilitarianism as an ethical theory that involves holding that actions, considered to be morally right while tending to promote happiness or pleasure among all those that are affected by them. It is considered as an ethical and moral philosophy that is based on the principle “greatest happiness to the greatest member” while some differences among their approaches. This involves the quality or state of being used, satisfying an individual’s wants; also, the utilitarianism as the doctrine defining the political and moral rightness of an action, contributing towards the greatest good of the greatest number (Das, 2020). Along with promoting the general happiness of the greatest number of people while having public policy and private morals with the basis of government and sole of justification. Also, the main object of the utilitarianism is enlightened benevolence as the theory of ethics. Other than this, there is a theory of moral duties by Immanuel Kant that can also be applied to this case of VW scandal as well. It is based on individuals inheriting worthy of dignity and respect that involves morality defining a duty based on a deontological ethic (Timmermann, 2013). This also defines an obligation of a categorical imperative in relation to an action, falling in a certain category as well.
Based on the case study, the Utilitarianism is the ethical theory that can be applied to this case by Jeremy Bentham. This theory is considered as a strong defender, involving actions gauging right or wrong that depends on the measure of pain or pleasure it produces. The highest principle of morality for maximising happiness also involves the overall balance of pleasure over pain. Also, there are the morally right thing for doing while leading towards maximising the utility (Schofield, 2013). It involves freedom of enjoying liberties like other citizens along with actions producing happiness or pleasure along with preventing suffering or pain while desiring to adhere to. The main argument of this theory is about open code advocating to make the code accessible to security researchers and owners. Also, the deceptive acts like VW along with the involvement of skills, time, or motivation for combing through millions of lines of code. This case of VW scandal involves better health for the environment and the public in relation to affecting cars, modified, or taken off the road sooner along with reducing harmful emissions (Queen, 2015). It involves discovering security vulnerabilities along with patched sooner while preventing hackers from exploiting them. Other than this, it also involves reducing the number of bugs in the software along with reducing other safety risks because of flawed software.
Overall, these outcomes benefit the general public while enjoying and safer better health with the greater freedom of personalising or repairing their cars and enjoying their pastime. There was an argument raised by the Electronic Frontier Foundation regarding the auto hobbyists that involves making modifications for increasing fuel efficiency and implementing new vehicle functions, modifications, adopted in future car models that leads towards benefiting the public as well (Irlenbusch, 2018). It involves making vehicle code open for creating a new industry of third-party software regarding such companies, modifying, or adding to existing code, to allow owners without coding skills for modifying their desirable cars. Moreover, it involves open-source software to advocate with open source, increasing the quality of the software because of greater collaboration. It also involves allowing car owners regarding the freedom of modifying their software and enabling them to skirt air quality regulations like companies such as Volkswagen while putting the public health at risk (Lynch & Santos, 2016). This led towards EPA taking the stance that allows owners, increasing power and boosting fuel economy overall while increasing emissions from a vehicle engine.
6. In business, ethical dilemmas are faced by certain decision makers which becomes very difficult to solve. While operating in this rapidly changing and dynamic business environment, the use of Tucker’s Five-Question model will become easier for evaluating the VW’s approach to ethics management in the future. Nevertheless, there can be better outcomes while developing this model for helping decision makers in analysing the situation from different ethical aspects. Also, it involves helping them in forming a decision in a logical and clear way for maintaining ethical reputation of the company. Tucker’s Five-Question model is defined as a powerful tool for determining whether a proposed course of action is ethical or not (Shilton, Heidenblad, Porter, Winter, & Kendig, 2020). It involves focusing on the ethical analysis on one proposed course of action rather than comparing the ethical aspects among several alternative choices of action. For VW, there is a need of improving an approach towards ethics management in the future. This involves following a developed code of conduct strictly while making change in culture in terms of making ethical performance a strategic priority. It also involves the need of engaging, communicating, and training employees while providing them support routes as well. There is a need of measuring effectiveness of ethics programs in the workplace while ensuring the way culture is influencing decision making regarding the moral judgement (Morales-Sánchez & Cabello-Medina, 2013). This is based on stakeholders and employees in the company, working while creating a strong ethical culture that ensure motivating every individual to speak and act, considering integrity and honesty, and strongly attracting customers to VW’s products and services overall.
Moreover, this involves helping VW in analysing difficult ethical situations and evaluating different alternatives for resolving ethical dilemmas. Such questions are based on profitability, legality, fairness, and sustainability and sound environment. In the age of transparency, it involves possessing a challenge for business leaders based on the way they view a brand, culture, and strategy, considering them as separate pieces (Verschoor, 2016). This defines that no company culture is perfect along with the constantly evolving nature; also, it is to try presenting a perfect face to the always-on digital world while being bound to fail. Other than this, there is an involvement of taking steps for improving work culture, and sharing compelling stories regarding this journey, with the people and across the globe. While facing this challenge of covering up the emissions scandal, VW is required to improve their approach to ethics management for the future outcomes to be effective (Leggett, 2018). The company admitted in an agreed statement of facts as well regarding the wrongdoing, but VW ensured consistently cooperating with the ongoing investigations while ensuring to improve its image further.
References
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