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VOLKSWAGEN EMISSIONS SCANDAL: A CASE STUDY IN CORPORATE FAILURE

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Volkswagen Emissions Scandal: A Case Study in Corporate Failure

Introduction

The Volkswagen emissions scandal was a major corporate scandal that erupted in 2015.

Volkswagen was caught installing defeat devices in its diesel cars that allowed them to pass

emissions tests in the laboratory while emitting significantly more pollutants in the real world.

Volkswagen's image and finances suffered from the scandal, which prompted legal and

regulatory issues. According to the EPA, Volkswagen's diesel cars emitted 40 times the

permitted nitrogen oxides (Maamoun, 2021). Air pollutants like nitrogen oxides may cause

respiratory issues, cancer, and heart disease (Ritz, Hoffmann and Peters, 2019: 881).

Volkswagen admitted placing defeat devices in 11 million cars, including in the US and Europe

(Ozen, 2020). The corporation was fined $ 2.8 billions by authorities and sued by customers and

investors (Jacobs and Kalbers, 2019). Businesses of all sizes should learn from Volkswagen's

pollution debacle. It illustrates that even successful firms may make big blunders and that robust

ethical and social responsibility practices are crucial. The scandal also highlights the importance

of transparency and accountability in business.

Contextual Areas

Social

The Volkswagen emissions scandal had several negative social consequences. The

incident weakened consumer trust in the car sector. This situation might lead to a drop in new car

sales, and, on top of that, the scandal worsened air pollution, potentially harming people's health

(Jung and Sharon, 2019). Customers distrusted carmakers and were less inclined to purchase new

automobiles after the crisis. Since the car sector generates employment and taxes, this might

affect the global economy. The scandal also had a negative impact on public health. Volkswagen
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diesel vehicles released nitrogen oxides and particulates higher than allowed. Pollutants may

cause asthma, heart disease, and cancer (Jung and Sharon, 2019). The scandal was expected to

have caused thousands of premature deaths globally.

Spatial

The Volkswagen emissions scandal was a global scandal, negatively impacting air quality

and public health in many different countries. The crisis was especially serious in Europe and the

US, where Volkswagen sold many diesel automobiles. China and India also suffered from the

scandal's air quality effects (Jung and Sharon, 2019). This scandal shows the worldwide effect of

environmental issues and the interconnectedness of the economy. Cars sold in one nation may be

driven in another, and pollutants travel far. This implies that pollution from foreign automobiles

may affect a nation despite strong emissions restrictions (Bouzzine and Lueg, 2020). The

Volkswagen emissions scandal reminds us to collaborate on environmental issues. We need

more rigid pollution laws and sustainable energy investments. We must also educate people

about selecting eco-friendly automobiles.

Economic

Volkswagen suffered economically from the emissions crisis. Volkswagen paid

approximately $30 billion in penalties, recalls, and lost sales due to the scandal (Maamoun,

2023). This has hurt the company's finances and capacity to invest in new innovation.

Volkswagen's reputation suffered from the scandal. Volkswagen automobiles are now less

trusted, and investors are less eager to invest. Volkswagen's future sales and profitability may

suffer. The scandal is a reminder that companies can face severe financial consequences for

unethical and illegal behavior. It also reminds consumers and investors that business ethics

increasingly influence spending choices.

Planning Areas

Market Research Data

Volkswagen conducted comprehensive market research to assess the demand for diesel

cars, focusing on the European and United States markets. According to Ogunkunle and Ahmed

(2019) diesel automobiles are in high demand in both areas. Due to their fuel economy,

European and American customers preferred diesel automobiles over gasoline-powered vehicles,

according to these peer-reviewed sources. According to this research, customers wanted diesel

automobiles and were prepared to pay more. These peer-reviewed sources' findings likely

influenced Volkswagen's diesel vehicle manufacturing and marketing strategies. With this

knowledge, Volkswagen could customize its products to user tastes and capitalize on diesel

vehicle demand. Volkswagen may have used this data to justify diesel model premiums based on

fuel economy.

Creativity

Volkswagen developed a notorious defeat device to falsify diesel emissions testing. This

device, as highlighted in peer-reviewed sources by Castille and Endress (2023), was a highly

intricate piece of software with the ability to recognize when a vehicle was undergoing emissions

testing. Under laboratory conditions, the defeat device activated pollution controls to ensure the

car fulfilled emissions regulations. This technology became pernicious under real-world driving

scenarios. These publications noted that Volkswagen automobiles with this defeat mechanism

produced much more pollutants outside the lab, exceeding legal limits and contradicting the

environmental standards they had supposedly satisfied during testing. Volkswagen deceived

regulatory agencies and customers by appearing compliant during emissions testing but
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significantly increasing pollutants in real-world driving.

Idea Generation

Volkswagen engineers faced a major technical problem when they recognized that

satisfying the strict new emissions regulations would need major diesel engine redesigns. During

the examination, they considered a defeat device. The developers believed a defeat device might

help Volkswagen meet emissions regulations without affecting diesel vehicle performance or

fuel economy. Several peer-reviewed publications illuminated this crucial part of Volkswagen's

emissions problem. Marsili, (2023) report explains Volkswagen's deception, whereas Measso,

(2022) examination explains the scandal's technicalities. The 2022 O’Regan’s study thoroughly

examines the emissions scandal's software. These academic studies agree that Volkswagen's

engineers knew they had to change the engine architecture to meet the new emissions

regulations. The engineers' conviction that a defeat device might exceed emissions requirements

while maintaining performance and fuel economy is consistent with this peer-reviewed research.

This proof shows Volkswagen's technical teams' seriousness and use of the defeat device to meet

emissions regulations.

Idea Evaluation

Volkswagen engineers weighed the dangers and advantages of a defeat device. The perks

included meeting new pollution regulations without redesigning its diesel engines. The main risk

of constructing a defeat device was regulator detection and fines. Volkswagen might be fined

billions and charged with a crime for deploying defeat devices in its vehicles. Volkswagen would

also lose credibility if it cheated on pollution testing. Developing a defeat mechanism allowed

Volkswagen's diesel engines to satisfy stricter pollution regulations without major design
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adjustments. Creating emissions-compliant engines was costly and time-consuming. Volkswagen

could achieve pollution regulations faster and cheaper using defeat devices.

Data Working

Volkswagen engineers created the defeat device using emissions test data. This data

helped them configure the gadget to detect automobile testing and activate emissions controls

only during the test. For example, the engineers may have used data from emissions tests to

determine the steering wheel angle, vehicle speed, and ambient temperature that the car is

typically operated at during emissions testing. They could then configure the defeat device to

activate emissions controls only under certain situations. Volkswagen engineers created a

powerful defeat mechanism to deceive regulators using emissions test data. The system detected

when the vehicle was being tested and activated pollution controls only during the test, enabling

Volkswagen automobiles to pass emissions tests while generating more pollutants in real life.

The Volkswagen emissions scandal shows data's risks. Know that data may be utilized

unethically or illegally. It is better to be skeptical of data and mindful of its limits.

Relevant Areas

Finance and Budgets

Volkswagen allocated a significant budget to the development of the defeat device. The

corporation spent funds to recall and repair automobiles after the incident. Development of the

defeat device was complicated and costly. Volkswagen engineers developed a software program

to detect testing and activate pollution controls only during testing. Their defeat device had to be

hidden from regulators and consumers. It was costly to recall and repair impacted automobiles.

Volkswagen recalled millions of cars and installed new software to meet pollution rules. The

Volkswagen emissions scandal impacted the corporation financially. The corporation paid
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billions in penalties, settlements, and recall and repair expenses.

People Management

Volkswagen engineers created and installed the defeat device. Under pressure to satisfy

new pollution rules, engineers thought the defeat device was the best approach (Maamoun,

2021). Volkswagen's pollution problem poses personnel management concerns. Why did

Volkswagen engineers create a defeat device instead of meeting new pollution regulations

legally? Why did Volkswagen's leadership let engineers build and install the defeat device

despite the legal risks? Due to pressure, Volkswagen engineers may have devised the defeat

device to satisfy new pollution regulations. Volkswagen was competing with other

manufacturers and had extensively invested in diesel technology. The defeat device may have

been a fast workaround for engineers who didn't have time to devise a genuine technique to

fulfill the higher pollution regulations.

Volkswagen engineers may have been unethical. They created the defeat device while

knowing it was unlawful and immoral because they thought it would benefit the corporation.

Volkswagen executives contributed to the pollution crisis. They let the engineers build and

install the defeat device, even knowing the legal implications. Volkswagen executives were

likely immoral. The Volkswagen emissions scandal emphasizes ethical leadership. Leaders must

foster honesty and compliance in their companies. They also need to hold their employees

accountable for their actions.

Legal Concerns

Volkswagen understood the legal dangers of creating and installing the defeat device.

However, despite the risks, the company developed the device (Arbour, 2022). Volkswagen's
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defeat device development and installation violated environmental regulations in numerous

nations. The defeat device caused Volkswagen automobiles to release far more nitrogen oxides

than intended. Air pollutants like nitrogen oxides may cause respiratory issues, heart disease, and

cancer. Volkswagen violated consumer protection laws by deceiving authorities and customers

(Arbour, 2022). Consumer protection laws ban deception and misleading corporate activities.

Volkswagen's promoting its diesel automobiles as ecologically beneficial was deceptive since

they emitted much more pollutants than expected. Businesses of all sizes should learn from

Volkswagen's pollution debacle. Businesses must understand and reduce their legal risks.

Businesses must be upfront with customers and authorities.

Resource Planning

Volkswagen invested in the defeat device, car recalls, and repairs. Designing the defeat

device needed tremendous technical and financial resources. Volkswagen engineers had to

design software to recognize when the vehicle was being tested and activate pollution controls

only then (Maamoun, 2023). They had to hide the defeat device from authorities and customers.

Recalling and repairing impacted automobiles needed substantial money. Volkswagen recalled

millions of cars and installed new software to meet emissions rules. Resource planning is

important after the Volkswagen emissions crisis. Businesses must carefully assess their resource

needs to succeed. They need a backup plan for unforeseen circumstances.

Marketing and Communication

Volkswagen promoted their diesel vehicles as eco-friendly and fuel-efficient. However,

the corporation did not inform customers of the defeat device (Jung and Sharon, 2019).

Volkswagen's marketing of its diesel cars was misleading and deceptive. Even though its diesel

automobiles emitted much more emissions than required, the business advertised them as
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ecologically beneficial. Marketing must be honest and upfront after the Volkswagen emissions

crisis. Businesses must disclose their goods and services to consumers. They should not

misrepresent their goods or services.

Critical Assessment and Evidence

The 2015 Volkswagen emissions crisis illustrates corporate ethics and societal

responsibility gone wrong. In this controversy, Volkswagen intentionally misrepresented its

diesel vehicles' pollution levels to consumers and regulators. Damage to air quality was one of

the effects of this wrongdoing. Peer-reviewed sources, such as Jung and Sharon, (2019), detail

the scandal and show that Volkswagen's diesel vehicles emitted more pollutants than required,

raising air pollution. Volkswagen's diesel automobiles also breached greenhouse gas limitations,

worsening climate change. Arbour, (2022) emphasize Volkswagen's environmental impact,

underlining the need for ethical corporate practices. This scandal affected customer trust,

especially in the car sector. Jacobs and Kalbers, (2019) investigated the automobile sector post-

scandal and found that trust loss might hurt new vehicle sales. Businesses of all sizes may learn

from the Volkswagen emissions debacle. It stresses the relevance of ethics and social

responsibility in all corporate activities. Businesses must be transparent with consumers and

regulators to recover public confidence.

Businesses have a special obligation as corporate citizens and community members.

According to Brennan and Everett (2014), they should behave responsibly and consider their

activities' social and environmental impacts. Economic growth-driver entrepreneurs have a

particular role. They must be ethical and socially responsible while creating companies and jobs.

Measso, (2022) and Castille and Endress (2023) advise entrepreneurs to examine their

environmental and social impacts. Businesses must also engage with local communities.
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According to corporate social responsibility research, funding charity groups and engaging in

public policy debates is crucial for business-community connections. Finally, corporations must

be ethical and socially accountable. This requires fairness, justice, and a deep understanding of

their environmental and social consequences. As seen in the above research, academic literature

emphasizes linking business activities with ethical norms, emphasizing the need for enterprises

to follow these principles.

Conclusion

Volkswagen's emissions issue was a significant business disaster that damaged its brand

and financial standing. This controversy highlights the significance of business ethics and social

responsibility. It emphasizes the hazards of fraud, non-compliance with legislation, and the need

for openness and responsibility in business. Businesses may follow numerous tips to avoid future

Volkswagen emissions issues. Companies must first design and execute strong ethical and social

responsibility policies. The organization's culture should reflect these concepts, directing

decision-making at all levels.

Transparency and accountability must also be promoted. Businesses should aggressively

promote honesty, integrity, and transparency. This culture encourages stakeholders to take

responsibility and enables workers to speak out against unethical behavior. Companies should

invest in strong systems and controls to prevent fraud and noncompliance. These systems should

prevent and identify fraud and immediately handle ethical violations. Community involvement is

another important business responsibility component. Businesses should actively support

community and philanthropic events to build connections and benefit their communities. Finally,

firms must constantly assess their environmental and social impacts. Sustainable and socially

responsible company practices should minimize environmental impacts and address social
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issues.
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Reference List

Arbour, M.E., 2022. The Volkswagen Scandal at the CJEU: Defeat Devices between the

Conformity Guarantee and Environment Law. European Journal of Risk

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Bouzzine, Y.D. and Lueg, R., 2020. The contagion effect of environmental violations: The case

of Dieselgate in Germany. Business Strategy and the Environment, 29(8), pp.3187-3202.

Castille, C.M. and Endress, T., 2023. New Work and Collaborative Cheating–Lessons from the

VW Emission Scandal. In Digital Project Practice for New Work and Industry 4.0 (pp.

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Jacobs, D. and Kalbers, L.P., 2019. The Volkswagen diesel emissions scandal and

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Maamoun, A., 2023. Greenwash And Ask for Forgiveness Later: A Case Study. Global Journal

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Marsili, N., 2023. Group assertions and group lies. Topoi, pp.1-16.

Measso, A., 2022. Event-based ecosystem structuring: lessons from the Volkswagen emissions
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O’Regan, G., 2022. Ethical Software Engineering. In Concise Guide to Software Engineering:

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Ogunkunle, O. and Ahmed, N.A., 2019. A review of global current scenario of biodiesel

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Ozen, B., 2020. " An Ethical Organizational Communication Analysis of Volkswagen.

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