In September 2015, the United States Environmental Protection Authority (EPA) revealed that the Volkswagen had fitted eleven million cars globally with defeat devices that cheated on the amount of emission released into the atmosphere (O’Dwyer, 2015). EPA discovered that the actual emission on the roads was 40 times higher than factory tests. The decision by the company to use deceptive methods that endanger human health was socially irresponsible and has put its corporate social responsibility and business ethics into scrutiny. The company’s behaviour can be explained through corporate social responsibility approaches namely value-based, normative, and results CSR.
Value-based CSR encompasses corporate social performance theory and stakeholder theory. Corporate social performance theory (CSP) states that business people have an obligation to spearhead policies and corporate decisions which are desirable in regard to the values of the society. CSP looks at the products, societal expectations, and activities that promote environmental sustainability (Mele, 2008). The outcome of the corporate behaviour is fundamental in determining its performance regarding social responsibility. In this regard, Volkswagen’s behaviour compromised the ideals of corporate social performance. Stakeholder theory of CSR focuses on individual stakeholders who have a stake in the company or organization. The stakeholders include employees, customers, suppliers, shareholders and the community within which the company is located (Mele, 2008). Volkswagen must have an obligation to the various stakeholders by creating value for them. Thus, the decision to use default devices was meant to increase revenues for the stakeholders even though it failed to observe ethical standards.
Normative CSR focuses on an organization’s value system. Value is central in corporate social responsibility because it affects managerial decisions, routines and reasoning (Mele, 2008). From the perspective of critical theory, corporate social responsibility should focus on liberating humanity from enslaving circumstances. The behaviour that Volkswagen exhibited failed to acknowledge this theory. Results based CSR focuses on maximizing results for shareholders in a company. Under this theory, emphasis is placed on the interest of shareholders. Managers are under obligation to produce the best results in order to sustain the confidence of shareholders (Mele, 2008). The theory supports increased financial transparency and corporate decisions that can increase profits. This theory could have inspired the management of Volkswagen to cheat on emission in order to realize positive results. Aside from the approaches to CSR, various ethical theories explain the corporate behaviour of Volkswagen.
From a deontological standpoint, it is imperative to investigate whether the actions of the company adhered to fundamental rules of corporate social responsibility. Deontological or normative ethics is premised on adherence to certain rules (Wickert et al., 2016). Thus, an action is regarded as moral if it adheres to the rules or obligations. In view of the Volkswagen, it is clear that the company failed to adhere to the rules of corporate social responsibility. The company violated its fundamental principle of responsibility and sustainability.
While analysing the ethics of values (axiology) for the company, it is important to underscore the centrality of care as a value (Caroll, 2015). Did the company’s actions show care for humanity? For a long time, Volkswagen has been known to be a champion of quality. This perception has been disapproved by the scandal. The company failed to show care and value for humanity because it put emphasis on profit maximization over promotion of human health.
From a teleological perspective, the company ought to have underscored the need for positive outcomes for the greatest number of people. Utilitarianism theory is hinged on the greatest happiness principle. The actions of the company should have been aimed at producing happiness to a great number of people (O’Dwyer, 2016). However, the company failed to observe the utility principle because the use of defective devices compromised environmental sustainability and put the lives of millions of people in host countries at risk. By the time of revelation, 8.5 million cars were already in use in Europe. In the best interest of utilitarianism and teleological ethics, the company should have embraced business practices that promote the greater societal good.
References
Carroll, A. B. (2015). Corporate social responsibility. Organizational Dynamics, 44, 87-96.
Melé, D. (2008). Corporate social responsibility theories. Print
O’Dwyer, K. (2016). Utilitarianism: a protection for Volkswagen’s immoral, but legal, emissions cheat? Print. Retrieved from http://www.corporateresponsibilitynetwork.com/wp- content/uploads/regents-160128_utilitarianism.pdf
Wickert, C., Scherer, A. G., & Spence, L. J. (2016). Walking and talking corporate social responsibility: Implications of firm size and organizational cost. Journal of Management Studies.