According to Staheli (2018), Corporate Social Responsibility (CSR) can be defined as the company's responsibility towards society and the surrounding environment while making a profit. This also benefits the company by promoting its brand and building trust between its stakeholders inside and outside.
In this paper, I will discuss an ethical dilemma due to Volkswagen's failure to understand CSR when operating in multiple countries, such as the USA, other than its home country, Germany.
Pillars of Corporate Social Responsibility:
According to (Carroll, 1991), Corporate social responsibility is based on four aspects; the first is the economic responsibility, which is that companies work to achieve profit to ensure their continuity and ability to survive; the second is the legal responsibility, which is that companies must abide by the laws and not violate them to make profits, the third is the ethical responsibility, which is for companies to do what is beneficial and necessary for the society and the environment around them, even if there are no laws for that, and the last of which is the charitable responsibility, which is spending on charitable aspects, contributing to the development of society, spreading awareness and giving a good image of which the company is proud.
Volkswagen Emission Scandal:
According to (Jung & Sharon, 2019), Volkswagen was one of the pioneers in the field of corporate social responsibility in the four aspects above; before the emissions scandal, Volkswagen was the first in the world in the volume of car production and the volume of profits and it was - according to her annual book - proud of the great respect for the laws of the countries in which she operates, the preservation of work ethic and the preservation of the environment, in addition to its significant charitable contributions worldwide.
Until the shock of 2015 when the US Environmental Protection Agency (EPA) issued a notice of violation of the Volkswagen Group of the Clean Air Act; this is due to fraud by the company reprogramming its diesel cars for the results of emission of harmful gases in the laboratory to be less than the dangerous limit, while in fact, the harmful emission is 40 times, which necessitated most countries to take severe measures against the company, especially the United States, billions of fines were imposed, until the company announced in 2016 to spend 18.32 billion US dollars to correct emissions problems, both in its cars and the environment in general.
The Role of Culture in the Ethical Dilemma:
Volkswagen culture is based on a purely hierarchical model as it is followed in German culture; this model represents a strict approach of obedience and loyalty by members of the Board of Directors to the CEO or President, this is regardless of the company's social responsibility and what harms its reputation, CEO (Martin Winterkorn) wanted to make the company the first in the world in the automotive industry when it became the first company in the European Union, the CEO has devised a plan to break into the US market in an unprecedented way.
In 2014, the company sold 5.04 million cars in the US market alone; despite strict environmental protection standards, then it turned out that the company had tampered with the exhaust sensors to enter the US market, which led to significant pollution in the environment and the consequent problems for the company, American culture takes a callous approach against companies that tamper with the environment, this starts with regulations and laws and ends with the popular imagination and the hatred of the American citizen for these companies.
Reforming the Culture of Social Responsibility
In 2016, after changing the corporate governance and most of its board of directors, in addition to the CEO, the company developed a new policy on social responsibility that focuses on raising the level of standards related to sustainability from various aspects, both economic, legal, environmental and charitable (Mačaitytė & Virbašiūtė, 2018).
Conclusion
Corporate social responsibility is based on providing a product or service that works for the benefit of companies and the interest of society alike (Ferrell, Harrison, Ferrell & Hair, 2019); in the case of Volkswagen, the company only worked on its profitability and success, not caring about what is good for society and the environment around it, the company has lost much of its market share and global reputation, recovery in such crises takes a relatively long time.
References
Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-48.
Ferrell, O. C., Harrison, D. E., Ferrell, L., & Hair, J. F. (2019). Business ethics, corporate social responsibility, and brand attitudes: An exploratory study. Journal of Business Research, 95, 491-501.
Jung, J. C., & Sharon, E. (2019). The Volkswagen emissions scandal and its aftermath. Global business and organizational excellence, 38(4), 6-15.
Mačaitytė, I., & Virbašiūtė, G. (2018). Volkswagen emission scandal and corporate social responsibility–a case study.
Staheli, J. (2018). Corporate social responsibility: What's at stake for business leaders today. Secured Lender, 74(2), 30–33. Retrieved from EBSCO multi-search at TUW library.