大众丑闻分析

Introduction

On September 18, 2015, Volkswagen shocked the world because the .

Environmental

Protection

Agency’s

(EPA)

notice

that

Volkswagen’s

“clean diesel” vehicles were found to be in violation of the Clean

Air Act. Then, the Volkswagen emission manipulation scandal has given

rise to hot discussions about the root reasons of the scandal. Through

analyzing aspects of the 2015 Volkswagen emissions test rigging scandal,

this essay aims to use the theories of corporate social responsibility

(CSR)

governance

and

group

thinking

to

explain

the

problems

at

Volkswagen. Then, based on theories of organizational behavior, this

paper will suggest changes to organizational practice to prevent such

incidents from happening in the future.

Questions about the Volkswagen scandal

There exists a question at Volkswagen is that did members of the

supervisory and management boards know about the rigging of emissions

tests

According

to

John

(2015),

the

2014

report

of

the

supervisory

board declared that “the Supervisory

Board was directly involved in

all decisions of fundamental importance to the Group”. This question

raised an attention to the Volkswagen’s organizational structure. From

the

perspective

of

CSR,

Volkswagen,

seeing

‘sustainability’

as

an

objective,

has

Management

Board

and

Supervisory

Board.

Reporting

to

the Management Board are twenty members of the Supervisory Board who

are

responsible

for

monitoring

management,

approving

important

corporate decisions, and appointing the members of the Management Board.

The following analysis find the value destruction in Volkswagen can be

attributed to the bad CSR governance and group thinking.

CSR governance

The

term

of

CSR,

stem

from

1970s,

stands

for

corporate

social

responsibility

which

focuses

company’s

sustainability

development.

Business

Dictionary

defines

CSR

as

company’s

sense

of

responsibility towards the community and environment (both ecological

and social) in which it operates.

)

In modern organizations, awareness of CSR is increasing fostered

and CSR governance has played a vital role to facilitate sustainable,

environmental friendly development and reputation for corporations. In

general, the internal organizational CSR structure can be subdivided

into

two

levels:

the

vertical

(governance)

and

the

horizontal

(operational)

(Kathuria

et

al.,

2007).

Additionally,

CSR

governance

involves

structures

at

the

top

management

level

and

reporting

lines

and within the control of CSR strategy. Eccles et al. (2014) found that

companies engaged in sustainability are more likely to have a separate

board

committee

responsible

for

CSR

than

companies

without

a

sustainability

strategy.

Since

human

resources

is

led

by

a

separate

department

and

the

corporate

function

should

be

supported

by

an

organizational structure. At the operational level, coordination among

the

departments

is

key

to

ensuring

smooth

processes

and

a

coherent

pursuit

of

corporate

objectives

to

efficiently

use

resources

and

competencies (Asif et al., 2013). Furthermore, Lock, I. and Seele, P.

(2016) concluded three types of CSR governance including single-headed

type, two-headed type and infused type.

Explanation of CSR governance problem in Volkswagen

At

the

vertical

level,

CSR

governance

has

two

tasks:

strategy

formulation and oversight. It is worth noticing where CSR departments

are

anchored

in

the

body

of

the

organization.

In

Volkswagen,

CSR

governance is aware of putting CSR department: Supervisory Board into

the top level. And the strategy will be emphasized many times. However,

“assessing

th

e

organizational

integration

of

CSR

in

daily

business

practices

and

routines

is

critical

for

distinguishing

between

CSR

‘talk’ and CSR ‘walk’” (Baumann

-Pauly et al., 2013, p. 3). Recent

studies

show

that

placing

the

CSR

department

at

the

top

management

level can help exert high strategic value and needs and get the support

from the senior level or even chief executive officer’s (CEO) (Pollach

et al., 2012; Morgan et al., 2009; Elving and Kartal, 2012).

At the horizontal level, given CSR department at the top management.

Although it is difficult to find the reason why Volkswagen installed

their ‘defeat device’ to cheat the tests

, we could assume the reason:

the type of CSR department is not useful for the top managers’ decision

making. In order to compete in the market, Volkswagen did it best to

sell cars, which is made easier by misleading the environmental tests.

Although Volkswagen has an ambitious strategy to explore an attractive

and environmentally friendly range of automobiles, it can be regarded

an excuse. Volkswagen may have toed to cheat to create low polluting

values, otherwise they were not allowed to expand bigger markets like

the USA (Hermans, M., & da Cruz Caria, P. (2016).

In

fact,

at

the

operational

level,

single-headed

type

reports

directly

to

the

board

of

management

and

put

the

weight

on

both

the

strategy implementation and performing (see FIGURE1); two-headed type,

an

indirect

governance

structure,

reports

to

the

supervisory

board

rather than the board of management and mainly concentrates on managing

more than strategy formulation (see FIGURE2);

…

FIGURE 1

THE

SINGLE HEADED

TYPE OF CSR STRUCTURE

FIGURE 2

THE

TWO- HEADED

TYPE OF CSR STRUCTURE

~

Obviously, the structure of Volkswagen belongs to two-headed type

including supervisory board. To be exact, it does not report to the

board of management, but instead reports to the supervisory board. Thus

the weakness of two-headed type CSR structure is to lose the direct

link

to

the

executive

management.

And

it

can

lead

to

that

the

sustainable

value

and

problems’

reflection

do

not

communicate

with

the management board in time.

Groupthink

Groups

have a tendency to

minimize

conflict

and therefore do not

explore

alternative options. According to Janis (1971), groupthink happens when

powerful pressures are put upon group members to think in a particular

way.

Explanation of group thinking problem in Volkswagen

After

the

exposure

of

the

scandal,

Volkswagen

attributed

this

software to a couple

of software

engineers who have

been fired. Latterly,

CEO

Martin

Winterkorn

resigned,

stating,

“I

am

doing

this

in

the