Volkswagen Emission Scandal - Ethics Essay: Analysis And Recommendations.

Background of Volkswagen Emission Scandal

Discuss about the Volkswagen Emission Scandal and Ethics.

Over the past few years, one of the most popular and trusted car manufacturing companies Volkswagen has been dealing with the after effects of their internal scandal known as “Volkswagen Emission Scandal.” This scandal has deeply dented the reliability of the organization. In May of 2014, a research lead by Den Carder of West Virginia University was conducting emission tests on small vehicles from Mercedes, BMW and Volkswagen (Burki, 2015). When the team tested two dissimilar Volkswagen models fitted with the 2-liter turbocharged 4-cylinder engine, the results forced them to ask California Air Resources Board to launch to full scale investigation on Volkswagen. The investigation revealed that the German car manufacturing company was using a “defeat device” in their vehicles to comply with the U.S emissions standards. In the U.S, every car manufacturing company was asked to install software systems to clean the diesel exhaust (Barrett et al., 2015). In the case of Volkswagen, they installed the system in such a way, that it only enabled when the cars were undergoing emission tests, but shut off during normal driving. The company did this to improve fuel economy and efficiency of the vehicles.

After the results of the investigation were revealed, Environment Protection Agency (EPA) issued a notice against Volkswagen in the year of 2015. Now, in this context it was found that the organization was doing it only to cope up with the increasing competition in the market and to deal with its closest rival Toyota. Three reasons were found behind this decision of the Volkswagen management which was pressure, opportunity and rationalization. Volkswagen management was under immense pressure from Toyota as it conquered the top position in the car manufacturing industry of the United States. In this situation, the engineering reputation of the organization was at stake (Rhodes, 2016). In addition to that, failure of German economy also left no choice for the management of the organization. On the other hand, opportunity was also there for the organization to cheat. Modern vehicles are equipped with nearly 100 million lines of software code. Therefore, it was easy for Volkswagen team to hide a cheating device. Besides, in 1970s Volkswagen engineers performed the same activity and installed defeat device to cheat on newly enacted emission standards. At that time the outcome was minimal; a mere $120,000 fine. They never realized that it can jeopardize their company reputation. Besides, it is also stated again and again that the organization did this only to save the organization. However, this decision of the Volkswagen management to equip a “defeat device”   in their vehicles also has an ethical side of its own (Zhang et al., 2016). There, the question was whether this decision can be supported ethically or not. In order to understand that, in the next part of this essay, four common ethical theories are discussed which will also help to find out the ethical issues of the decision made by the management of Volkswagen.

Reasons for Volkswagen's Decision

A well-known ethical theory is Utilitarianism that emphasizes manufacturing the greatest amount of products for the greatest number of people. This theory falls under the consequentiality ethics that means identifying whether an action is measured good or bad unswervingly relates to its consequences (Broad, 2014). Given this, the actions of Volkswagen were moderately oppositional to what a Utilitarian would trust in. Due to this scandal, not good was done to the organization. Customers of Volkswagen faced critical problems as EPA and government of the U.S banned all the cars of Volkswagen. Huge amount of employees of Volkswagen lost their jobs as the management had to spend billions of dollars to rectify the issue. Therefore, from the concept of Utilitarianism, it can be stated that the decision of Volkswagen management was totally unethical.

This segment of the essay will talk about the view of deontology on the Volkswagen case. Deontology complete relates to the normative theories and mostly focuses on the procedures and the choice that an individual or a company has. These procedures or choices are be ethically required, prohibited or allowed. An important ethical stream of the concept of deontology is Kantianism were Kant argues that an individual can act ethically if he can conform the unconditional imperative (Hursthouse, 2013). This means, the management of Volkswagen was bound to act as per the principles of the company. The management should always offer environment friendly and sustainable vehicles able to compete in the market. The defeat device of the company did not harm the safeness of the vehicles but tremendously affected the environment. The management also deceived the emission testing organizations. Consumers could also face higher taxes as their Volkswagen cars were emitting more gases that permitted. From the deontological point of view, it can be stated that the decision of Volkswagen to cheat environment tests is wrong and cannot be declared as an ethical act.

The virtue theory entirely depends on the ethics of Aristotle and identifies “what type of person one is”. This ethical concept looks to find out character traits where four main merits of character are courage, honesty, self control and fairness/justice (Bai, 2016). In regards to these four qualities, Volkswagen failed to meet any of them. The management was not courageous as it intentionally placed cheating device to deal with the competitive market. Here, honesty states treating the employees, consumers and other companies properly. By placing defeat device the organization harmed the consumers and later to deal with the scandal, the management terminated a lot of employees without reason. Besides, the management had no self control as they were ready to take any step to fulfill their expectations and desires. Fairness was also not there as the German company did not produce quality products and implemented unfair business practices.

Ethical Theories and Volkswagen's Decision

Contract theory states that morality consists in the set of policies prevailing behavior that rationale people will admit on the condition that others will agree to them as well (Radtke & Widener, 2016). Two main principles of this concept are,

• There should be guarantees that populace will not hurt each other
• Populace must rely on each other to keep their harmony

In the case of Volkswagen, the organization not only hurt its consumers and employees, but also harmed the communities by producing non-environment friendly vehicles. After the scandal, the consumers of the organization are also losing their faith on Volkswagen. Therefore, this theory also proves that the decision of installing defeat devices was not ethical for Volkswagen.

In order to deal with the problems that the Volkswagen is facing, the management of the organization will have to contribute all efforts and possessions to reestablish the brand of the company. However, the chances to re-brand the company are fairly unlikely. It can join hands with an independent corroboration agency which will be more practicable and reasonably simple to achieve. The costliest option for the Volkswagen management would be to sell one of its brands and develop a bond. However, this is the most expensive alternative for the organization and should be used as a last resort. All of these methods can help the organization to regain its lost position in the market. However, the second option which is to join hands with a corroboration agency would be the best for the company as it will be able to regain the trust of the consumers slowly but steadily.

In the end, it can be concluded that the emission scandal of Volkswagen is unethical from every prospective. The organization not only hampered the lives of the consumers but also harmed the employees by terminating them. Besides, by installing defeat device, the company also affected the environment and contributed to global warming. All the ethical theories discussed in this essay also describe the same. However, it is true that the management of Volkswagen can regain its market position and trust of the consumers. The recommendations that are provided will help Volkswagen to regain its brand image in the future. 

Reference List

Bai, F. (2016). Beyond Dominance and Competence A Moral Virtue Theory of Status Attainment. Personality and Social Psychology Review, 1088868316649297.

Barrett, S. R., Speth, R. L., Eastham, S. D., Dedoussi, I. C., Ashok, A., Malina, R., & Keith, D. W. (2015). Impact of the Volkswagen emissions control defeat device on US public health. Environmental Research Letters, 10(11), 114005.

Broad, C. D. (2014). Five types of ethical theory (Vol. 2). Routledge.

Burki, T. K. (2015). Diesel cars and health: the Volkswagen emissions scandal. The Lancet Respiratory Medicine, 3(11), 838-839.

Hursthouse, R. (2013). Normative virtue ethics. ETHICA, 645.

Radtke, R. R., & Widener, S. K. (2016). The Complex World of Control: Integration of Ethics and Uses of Control. In Performance Measurement and Management Control: Contemporary Issues (pp. 17-38). Emerald Group Publishing Limited.

Rhodes, C. (2016). Democratic Business Ethics: Volkswagen’s emissions scandal and the disruption of corporate sovereignty. Organization Studies, 37(10), 1501-1518.

Zhang, B., Veijalainen, J., & Kotkov, D. (2016). Volkswagen Emission Crisis: Managing Stakeholder Relations on the Web. In WEBIST 2016: Proceedings of the 12th International conference on web information systems and technologies. Volume 1, ISBN 978-989-758-186-1. SCITEPRESS.