Corporate reputation depends on how companies cope with the role of corporate social responsibility (CSR). The CSR approach is particularly important for global corporations since their activities affect people in many countries. Volkswagen’s unethical actions led to an emissions scandal that aggravated after the manufacturer admitted to installing the emissions software on eleven million cars (Wall Street Journal, 2015). The scandal’s consequences included reputation damage, however, the response by the society had to change to prevent misconduct. This paper discusses Volkswagen’s approach to CSR, mainly that it is unconcerned with ethical responsibility and focused on profits, therefore justifying increasing regulation and control of automakers.
The global approach to CSR comprises economic, legal and ethical responsibilities, and corporations must address regional differences in regulations to ensure that they comply with legal standards in all countries (Stanwick & Stanwick, 2015). Volkswagen dismissed the balanced CSR approach and prioritized economic activities that lead to competitive advantage, manufacturing many cars for profit i.e. eleven million cars with manipulating software (Wall Street Journal, 2015). This proves that the automaker’s CSR goal was economic and indicates the need for improving ethical and legal responsibilities, for example by increasing regulations and testing more cars for their emissions standards compliance.
Furthermore, the scandal points to the fact that corporations view their CSR as an opportunity to expand operations, however, the harmful effects of diesel cars on the environment remain unaddressed. Considering that unethical innovations are the basis for competitive advantage, new responses are needed. Research points to the importance of democratic control as a barrier to self-interested and rampant business (Carl, 2016). The society needs to respond by increasing the regulation such as additional emission tests and stringent controls. Considering the global CSR approach by Volkswagen during the emissions scandal, the response should include testing more cars, intensified regulation, and democratic control of automakers in order to ensure that the global CSR approach by automakers is democratically checked and balanced i.e. ethical, legal and economic.
- Carl, R. (Oct 1, 2016). Democratic business ethics: Volkswagen’s emissions scandal and the disruption of corporate sovereignty. Organization Studies, 37 (10), 1501-1518.
- Stanwick, P. A., & Stanwick, S. D. (2015). Understanding business ethics. SAGE Publications.
- Wall Street Journal (Sept 22, 2015). Five things on the Volkswagen emissions scandal . YouTube. Retrieved from https://www.youtube.com/