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The discovery in 2015 that car maker Volkswagen (VW) had installed "defeat devices" into its diesel engines to lower emissions during testing exposed a corporate scandal and resulted in a 40% drop in the company's share price in 2 weeks. Although industry analysts questioned whether VW would survive the fallout, its sales quickly rebounded, and in 2017 the firm was the world's largest auto manufacturer. Although this unexpected surge led some to say that the scandal had blown over, there are indicators that VW has not yet fully recovered from the affair, and several issues stemming from it remain to be resolved. An examination of several reports issued as the crisis unfolded highlights the impact on VW and offers lessons for the firm's leaders and public policy makers.
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The Volkswagen emissions scandal and its aftermath
Jae C. Jung
Associate professor of strategy and international business
Henry W. Bloch School of Management
University of Missouri-Kansas City
jungjc@umkc.edu
Elizabeth Sharon
Partnership coordinator
Heart to Heart International
&
Henry W. Bloch School of Management
University of Missouri-Kansas City
eszy4@mail.umkc.edu
Published at Global Business and Organizational Excellence in 2019.
The Volkswagen emissions scandal and its aftermath
Jae C. Jung | Elizabeth Sharon
[Short Abstract for Table of Contents]
The discovery that Volkswagen (VW) had installed devices to lower emissions during vehicle
testing, and the ensuing fallout caused the company's share price to drop by 40% in two
weeks. An analysis of the VW debacle offers lessons for makers of cars and public policy.
[Long Abstract]
The discovery in 2015 that car maker Volkswagen (VW) had installed "defeat devices" into
its diesel engines to lower emissions during testing exposed a corporate scandal and resulted
in a 40% drop in the company's share price in two weeks. Although industry analysts
questioned whether VW would survive the fallout, its sales quickly rebounded, and in 2017
the firm was the world's largest auto manufacturer. Although this unexpected surge led some
to say that the scandal had blown over, there are indicators that VW has not yet fully
recovered from the affair, and several issues stemming from it remain to be resolved. An
examination of several reports issued as the crisis unfolded highlights the impact on VW and
offers lessons for VW and public policy makers.
[Text begins here]
[H1] INTRODUCTION
In September 2015, researchers at the University of West Virginia discovered that
Volkswagen (VW) had been installing a defeat device in each of its diesel engines. This
software enabled the vehicles to pass emission tests under laboratory conditions while
emitting 40 times the level of pollution allowed in the United States during normal use. The
software was installed in 11 million diesel vehicles worldwide, including 590,000 in the
United States
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[H1] EXPLORING THE POST-SCANDAL SALES SURGE
Defying pessimistic predictions regarding its survival, VW recorded strong sales in the years
immediately following the scandal. The company sold 10.3 million vehicles worldwide in
2016 (a 2.8% increase), and 10.7 million in 2017 (a 4.3% increase). Although its Western
European sales, which focused heavily on diesel cars, were sluggish during this period, sales
in developing economies increased substantially: by 20% in China and by 21% in Central and
Eastern Europe (Boston, 2017; Reuters, 2018). The company's US sales fell by 8% in 2016,
but rose by 5.2% in 2017. Several factors beyond VW's control contributed to this
unexpected recovery.
[H2] Deflecting attention
Research on crisis management suggests that the public and the media have a short attention
span: Interest in corporate scandals tends to surge in the first few weeks, and then disappear
once attention is diverted to other events (Mena, Rintamäki, Fleming, & Spicer, 2016;
Zavyalova, Pfarrer, Reger, & Shapiro, 2012). The news that many other German and
American automobile manufacturers had practiced similar deceptive behaviors helped
diminish the attention paid to VW.
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[H2] The impact on individual consumers
Research on crisis management suggests that the perceived harm an event creates is one of
the factors that influence stakeholders' reactions (Mena et al., 2016; Shrivastava, Mitroff,
Miller, & Miclani, 1988). As noted, consumers perceived the harm caused to individuals in
the VW case as small. Although they were upset about having been tricked into buying what
they thought was an environmentally friendly car, for most buyers the inclusion of eco-
friendly features had only a small impact on their decision to purchase a VW (Hennessy,
2015). Before the scandal, VW was not particularly known for its environmentalist priorities,
particularly when compared to such brands as Tesla and Toyota's Prius.
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[H2] The power of environmentally aware consumers
Environmental activists frequently direct attention to corporate scandals in an attempt to force
corporations to take corrective actions; however, they often lack the resources to sustain such
campaigns (Mena et al., 2016; Taylor, 1989). Regarding corporate transparency and corporate
social responsibility issues, millennials are considered most likely to care (Eisenstein, 2014;
Revkin, 2016).
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[H1] DIVERSE APPROACHES TO LEGAL CHALLENGES
VW's immediate concern as the crisis unfolded was to limit the costs associated with the
legal actions that resulted from the discovery of the device. This was a factor over which the
company had some direct control. Even though the defeat device affected all vehicles in
.
every country in the same way, VW adopted different response strategies in different
countries.
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Exploit variations in environmental regulations in different countries. In Canada, for
example, VW's representatives argued that the company did not violate Canada's emission
regulations between 2006 and 2010, since Canadian and US standards were not unified until
2010 (Ayre, 2016; Isidore, 2016; McIntosh, 2016). In European countries and Australia, VW
asserted that respective laws and standards were either absent or less strict than those of the
United States, and that the use of its device did not contravene any laws or regulations that
were in force in those countries at the time (Mortimore, 2016). For example, in a court case in
Australia, VW insisted that Australia's regulations only required that vehicles pass emission
tests carried out in laboratories, and not on the road (Dowling, 2016).
8
In terms of compensation, VW argued that in Europe, there was no reason for any
compensation or settlement beyond the cost of repairing the more than 8.5 million affected
vehicles (Boston, 2016; McAleer, 2016a; Swissinfo.ch, 2017). Similar arguments were
deployed in developing countries.
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Remove stepping stones to other legal battles. VW's leaders quickly realized that
compensating the government or consumers in one country had the potential to create a
stepping stone for claims and lawsuits in other countries when different areas had similar
standards, like Australia and the European Union. If VW were to agree to any type of
settlement or compensation with the Australian government, this would strengthen any cases
against the automaker in the European Union, and vice versa. Thus, the outcomes of lawsuits
in Europe, the United Kingdom, and Australia were highly interdependent. A similar situation
existed in Ireland where several claimants were waiting for the results of a class-action
lawsuit in the United Kingdom before undertaking their own (see Exhibit 1).
React according to markets. VW also adjusted its response according to relative and
potential market size. For example, the Canadian market was considered small compared to
the US market, which had a much larger number of affected consumers (590,000) than
Canada (105,000). This led some to argue that even though the legal situation in the United
States and Canada was identical after 2010, Canadian consumers were treated less favorably
than those in the United States (Ayre, 2016).
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Offer competitive warranties. To win back consumer trust, VW offered competitive
warranties for its products. Its 6-year or 72,000-mile warranty on the 2018 Tiguan and Atlas
SUVs was twice as long as the 3- year or 36,000-mile warranty for comparable SUVs, such
as the Ford Explorer or the Honda CR-V. This gesture of largesse was intended to
demonstrate that VW would take care of its customers' needs.
Shift to electric vehicles. VW's focus on electric cars was partly intended to
emphasize the firm's commitment to building environmentally friendly vehicles. Recognizing
that diesel vehicles no longer have the market appeal they used to, VW has planned to fade
out production of diesel-fueled vehicles and concentrate on the growing market for electric
ones (Ramey, 2016). The company has announced plans to produce 80 models of electric-
powered vehicles by 2025 and to spend $62 billion to advance battery technologies (Petroff,
2018). VW has also entered into a partnership with China's Anhui Jianghuai Automobile to
develop and manufacture new energy vehicles − both fully electric and hybrid cars (Yu,
2016).
[H2] Seizing the opportunity for radical organizational change
After the scandal, VW implemented a lean organizational structure that would facilitate a
direct line of communication to top managers so that fewer errors would slip through the
cracks (Kollewe & Ruddick, 2015). Following public outrage over the defeat device scandal,
Matthias Müller replaced Martin Winterkorn as VW's CEO in September 2015. In April
2018, Müller was succeeded by Herbert Diess, who had spent nearly two decades at rival
BMW. Overall, about half of VW's senior managers were fired after the emission scandal
became public.
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[H1] BUILDING TRUST AND PUBLIC POLICY
The short attention span of consumers and the media can make it difficult for business
practitioners and scholars to evaluate post-crisis actions and improve managerial decision-
making in the long term (Mena et al., 2016).
Looking back, VW faced a variety of environmental and civic charges. Claims and
lawsuits were filed against VW for unfair commercial practices and false advertising claims
(NDTV, 2016; WeClaim.com, n.d.). In the European Union, VW was found to have violated
two consumer laws (Reuters, 2016). The first, the Consumer Sales and Guarantees Directive,
forbids companies from making false environmental claims. The second, the Unfair
Commercial Practices Directive, concerns unfair business-to-consumer commercial practices
in the European internal market (Cancian, 2016). Marketed as environmentally friendly,
VW's vehicles were emitting up to 40 times more nitrous oxide than advertised; the firm's
promotion of its products can be considered "greenwashing" − misrepresenting them as
environmentally sound (Siano, Vollero, Conte, & Amabile, 2017; Watson, 2016). Beyond
fighting its legal battles, VW now needs to recover consumers' trust, and this can take a long
time.
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[H2] For policy-makers
Air pollution remains one of the world's most serious environmental problems: It caused
about 9 million premature deaths in 2015 alone (Das & Horton, 2018). While the United
States Environmental Protection Agency considers an air quality index exceeding 300 to be
hazardous, in various parts of the world it is significantly worse. For instance, in New Delhi it
ranges between 700 and 1,000 (Prakash, Dolšak, Bernauer, & McGrath, 2017). In November
2017, New Delhi's air quality was so poor that United Airlines cancelled flights into the city
for two days (Meza, 2017). The problem of air pollution is not restricted to developing
nations. A recent study conducted in the United Kingdom reported that walking in a highly
trafficked street caused harm to respiratory and cardiovascular functions (Sinharay et al.,
2018)
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they needed?]
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EXHIBIT 1 VW's actions and outcomes (as of October 2017)
Country VW's actions Outcomes Pending developments
Australia
(Barber, 2016)
Refused any type of
settlement with
government or consumers
Class action lawsuit involving more than
90,000 Australian consumers, seeking
approximately $100 million
Brazil
(hani.co.kr, 2016)
After negotiation with the
government, VW came to
a settlement over
violating emission
standards
Negotiated settlement, $2.4 million
Canada
(Huffington Post, 2016;
Sagan, 2017)
Reluctant to grant
requests for government
and consumer settlements
Consumer compensation: $2.1 billion (~
$5,100–8,000 each)
Civil penalties: $11.2 million
China
(Amad, 2015)
Agreed to fix affected
vehicles to align with
emission standards
Chinese environmental group filed lawsuit
Germany
(Edelstein, 2017; Godoy,
2016; Pleskot, 2016; Rust,
2016)
Refused any type of
settlement with
government or consumers
250 consumers reached settlements;
amounts unknown
1,000 consumers filed for a class action
lawsuit, seeking up to $5,200 each
1,400 investors sued for $9.2 billion
Investors partnering with BlackRock suing
for more than $2.1 billion
German state of Bavaria suing for
$783,000
German state of Hesse suing for $4.3
million
Germans state of Baden-Wurttemberg
suing for $446,000
India
(Raj, 2015)
Agreed to fix affected
vehicles to align with
emission standards
Ireland
(Shannon, 2017)
Refused any type of
settlement with
government or consumers
800 Irish consumers waiting for the results
of the UK versus VW case before perusing
their own settlement
Italy
(WeClaim.com, n.d.)
Refused any type of
settlement with
government or consumers
Autorità Garante della Concorrenza e del
Mercato fined VW for $5.35 million;
waiting court decision
I
Netherlands
(Ridley & Sterling, 2017)
Refused any type of
settlement with
government or consumers
Class-action lawsuit involving 220,000
consumers –180,000 Dutch and 40,000
from the United Kingdom – seeking an
estimated $4,700 to $5,800 per consumer
South Africa
(Holmes, 2016)
No action taken,
including a recall
agreement to fix vehicles
South Korea
(Choe, 2016;
Chosunilbo&Chosun.com,
2017; NDTV, 2016; Seo,
2017)
Compliant with requests
for government
settlements and consumer
vouchers
South Korea Ministry of Environment
settlement: $12.7 million
Penalties for forgery: $ 16 million
Penalties for false advertisements: $32
million
Consumer vouchers: $224.1 million ($830
each)
Consumer compensation of $270 for 4,000
consumers in class-action lawsuit
Spain
(Munoz, 2016; Reuters,
2016b)
Refused any type of
settlement with
government or consumers
One consumer recovered 10% of the
vehicle's value ($5,350)
The Organization of Consumers and Users
will file a class-action lawsuit; 5,500
consumers have filed as of October 2016
Switzerland
(Swissinfo.ch, 2017)
Refused any type of
settlement with
government or consumers
Consumer Protection Association for
French-speaking Switzerland joined the
European class-action lawsuit
Consumer Protection Organization for
German-speaking Switzerland suing for
$3,000-$7,000 per vehicle
United Kingdom
(Ridley & Sterling, 2017)
Refused any type of
settlement with
government or consumers
Class-action lawsuit involving 220,000
consumers – 40,000 from the United
Kingdom and 180,000 Dutch – seeking an
estimated $4,700 to $5,800 per consumer
United States
(Cabraser, 2016; Tabuchi,
Ewing & Apuzzo, 2017;
United States Department of
Justice, 2017; Winton, 2017)
Compliant with requests
for government and
consumer settlements
Consumer compensation: $10 billion (~
$10,000 each)
VW dealer compensation: $1.2 billion (~
$1.85 million each)
Settlement with the US Environmental
Protection Agency and California Air
Resources Board: $2.7 billion
Research to lower diesel emissions: $2.0
billion
Civil penalties: $1.5 billion
Additional funds to repair buyback vehicles:
$3 billion
EXHIBIT 2 Worldwide settlements (as of March 2017)
Country No. of cars with defeat device Amount of settlement
Australia
(Barber, 2016)
90,000
Brazil
(Fox News, 2015; Hani.co.kr, 2016)
17,000 $2.4 million
Canada
(Huffington Post, 2016; Sagan, 2017)
105,000 $2.11 billion
China
(Zhang, 2016)
1,950
Germany
(Edelstein, 2017)
2.5 million (250 settlements reached –
amounts unknown)
India
(Raj, 2015)
323,000
Ireland
(Boston, 2016)
110,000
Italy
(Kollewe & Ruddick, 2015)
650,000
Netherlands
(Dutchnews.nl, 2016)
160,000
South Africa Unknown Unknown
South Korea
(Choe, 2016; Chosunilbo&Chosun.com, 2017; Nam, 2016; NDTV, 2016)
200,000 $284.8 Million
Spain
(Munoz, 2016; Palacios, 2016)
700,000 $5,350
(one consumer settlement)
Switzerland
(swissinfo.ch, 2017)
180,000
United Kingdom
(Hotten, 2015)
1.2 million
United States
(Tabuchi et al., 2017; Winton, 2017)
590,000 $23 billion
... Triggered by these disclosures, the Volkswagen AG stock lost 40% of its value within only two weeks. Customers, law enforcement authorities, and government representatives alike demanded clarification of all legal infringements and financial compensation for those affected (Jung and Sharon 2019). In total, Volkswagen incurred estimated costs of 32 billion euros (Menzel 2020). ...
... In total, Volkswagen incurred estimated costs of 32 billion euros (Menzel 2020). With other automotive firms too being subject to federal investigations, not only Volkswagen but the German car industry as a whole had to cope with a substantial loss of both customer and shareholder trust (Jung and Sharon 2019). ...
... We chose this study context, as global automotive supply chains are seen to be less responsive, integrated, and visible compared to other sectors (e.g. consumer goods or pharmaceutical industry) (Shibin et al. 2020). This very well applies to the German automotive industry, which is further characterised by complex supply networks (Christopher and Holweg 2011), high dependence on upstream supply chain entities (Steven, Dong, and Corsi 2014), highly formalised buyer-suppliers relationships (Durach and Wiengarten 2017), and, finally, extensive external sustainability pressures triggered by the emission scandal in 2014 (Jung and Sharon 2019). With all these characteristics demanding the implementation of SSCM, the German automotive sector serves as the perfect setting for our investigation. ...
In recent decades, supply chains have become a critical source of competitive advantage. Yet, in the Germany automotive industry, supply chains have turned out to be untransparent and prone to sustainability breaches, with the recent Volkswagen manipulation scandal exemplifying the financial and reputational consequences. Many firms today, therefore, focus on what is called sustainable supply chain management (SSCM). While drivers, barriers, and performance implications of SSCM have been widely explored, little is known about its implementation process. Building on the foundations of organisational change, this study inductively analysed 54 sustainability reports from three German automotive triads between 2014 and 2019. Our results led to an SSCM implementation framework that sequentially employed the nine most prominent implementation stages and related change measures. The framework expands our knowledge on the SSCM implementation process; furthermore, it serves as an example for industry experts aiming to turn their supply chains into sponsors for sustainability.
... Third, from 2014 onward, the major discrepancies between officially reported and actual emissions from VW diesel vehicles have been highlighted in external audits carried out by various independent North American organizations, in particular the International Council on Clean Transportation (ICCT), the California Air Resources Board, and West Virginia University researchers (Bovens, 2016;Bowen et al., 2018;Mujkic & Klingner, 2019;Rea, 2017). The resulting investigations have led to multiple convictions of VW by U.S. courts, including, as of 2020, fines of nearly $30 billion, the recall of 580,000 diesel vehicles sold in the United States, and the imprisonment of several of the company's executives and engineers for fraud (Eigruber & Wirl, 2020;Gaim et al., 2019;Jolly, 2019;Jung & Sharon, 2019;O'Kane, 2019). However, numerous lawsuits are still pending, including those brought by shareholders of the VW Group and by various countries where cars equipped with fraudulent software have been sold-more than 11 million cars, according to VW's estimates (Euronews & Agence France-Presse, 2019; Gompertz, 2019;Holder, 2019). ...
... The majority of research on the Dieselgate remains focused exclusively on the VW case, on the reasons that may explain the fraud perpetuated by this car manufacturer, and on the case's implications (e.g., Aggeri & Saussois, 2017;Bovens, 2016;J. C. Jung & Sharon, 2019;Mujkic & Klingner, 2019). Some studies have focused on the strategic and economic issues that prompted VW to attempt to enter the U.S. market with inexpensive and seemingly clean diesel vehicles (Aggeri & Saussois, 2017;Bovens, 2016;Mujkic & Klingner, 2019;Siano et al., 2017;Zhang et al., 2021). Research has also highlighted the difficul ...
This article analyzes the main neutralization techniques used in car manufacturers' sustainability reports to disclose on the Dieselgate scandal. We conduct a conventional qualitative content analysis of 72 sustainability reports, covering the period 2013-2017, from 15 car manufacturers that were accused of unethical behaviors related to the measurement of diesel vehicle pollutant emissions. We then present a framework based on four configurations of neutralization techniques, namely, "head in the sand," "self-proclaimed green leadership," "wait and see," and "start of a new era." We describe that the manufacturers used heterogeneous neutralization techniques. Furthermore, the sustainability reports analyzed are relatively opaque and disconnected from the accusations made against the companies, which are widely reported by external sources. This article contributes to the emerging literature on the defensive impression management practices used to rationalize corporate misconduct in this area.
... Experts initially expressed little optimism about the company's future (Jung/Sharon, 2019;Welch, 2019). It was becoming ever more apparent that if the Volkswagen Group wanted a realistic chance at recovery, it needed an extensive reformation of its corporate culture (Mansouri, 2016). ...
... A number of former executives have described the latter as toxic, autocratic and characterised by a "climate of fear" (Ewing, 2015 as cited in Sapozhnikov, 2018: 48 The Group's proactive and reformative approach soon proved fruitful. The years following the eruption of the scandal saw the company quickly bouncing back from its financial losses with a 2.8% increase in vehicle sales in 2016 and a 4.3% increase in 2017 alone (Jung/Sharon, 2019). ...
-
![Lisa-Marie Mendel]()
This study conducts a corpus-based linguistic analysis of the crisis communication strategies adopted by the Volkswagen Group in its main channels of stakeholder communication following the 2015 diesel emissions scandal. The theoretical foundation for this analysis lies in two major branches of crisis communication research corresponding to the two crisis outcomes, which tend to be pursued most vigorously in the context of corporate crises: image repair theory and trust repair theory. Drawing on and integrating elements of Benoit's Theory of Image Repair Discourse, Coombs' Situational Crisis Communication Theory (SCCT) and Fuoli and Paradis' Model of Trust Repair Discourse, this study formulates a series of research hypotheses about the image and trust repair strategies deployed by Volkswagen in its press releases, its CSR reports, its sustainability magazine Shift and its official webpage contents published between 2015 and 2020. Given that Volkswagen's emissions test manipulations fall into the organisational misdeed crisis type characterised by elevated external attributions of crisis responsibility, a predominance of accommodative crisis communication strategies able to offset negative public sentiment against the company was predicted. The mixed quantitative and qualitative research approach adopted in the linguistic analysis allowed for a diachronic and cross-textual study of lexical frequencies based on numerical data on one hand and a content-oriented investigation of salient lexical clusters and environments (collocations and concordances) on the other hand. The findings largely confirm the research hypotheses formulated on the basis of scholarly recommendations for the effective use of crisis communication strategies. In the early stages of the crisis, Volkswagen prioritises its ethical responsibility of informing the public about the details of the crisis and takes on a rather defensive stance in its image and trust repair efforts, which manifests itself in the use of an attenuated form of the mortification / apology image repair strategy, enabling the company to appease stakeholders by expressing regret without incriminating itself through an admission of guilt. Linguistic devices of dialogic engagement functional to the lexical realisation of the trust repair strategy of neutralising the negative reinforce this communicative stance. In the more advanced stages of the crisis, however, the accommodative image repair strategy of corrective action, which attempts to repair the damage caused by the crisis and prevent its reoccurrence, becomes most dominant. Moreover, trust is re-established during this phase primarily with the help of linguistic devices of attitude serving the trust repair strategy of emphasising the positive. Although Volkswagen's crisis communication can generally be considered successful, stakeholder evaluations in the form of short interviews and contributions in Shift Magazine reveal a series of weaknesses in its crisis response, for instance its failure to openly accept crisis responsibility and establish a transparent dialogue with its stakeholders, discrepancies between communicated and implemented corrective action and excessive self-praise. These findings can provide valuable guidance to crisis managers dealing with similar corporate crises in the future.
... Volkswagen installed a software that was programmed to allow their vehicles to pass testing performed by the Environmental Protection Agency (EPA) but pollute up to 40x the federal maximum when on the road [27]. The governance failure of the company potentially had a negative effect on its stock price and financial performance, on top of reputational damage [28]. ...
-
![Percy Jinga]()
The current climate change is significantly caused by anthropogenic greenhouse gases, particularly CO2 released by burning of fossil fuels. Climate change is predicted to disrupt production systems and supply chains of businesses, potentially affecting their financial performance. ESG investing, the consideration of environmental, social and governance factors by asset managers will likely play a crucial role in combating climate change. To attract ESG funds, companies will have to reduce their carbon footprint, among other actions. When companies reduce scope emissions, they help achieve a goal of the Paris Agreement of limiting average global temperature increase to below 2°C above pre-industrial level. The aim is to identify factors that are likely to increase uptake of ESG investing. The increase in number of ESG investors and their assets, higher financial performance of ESG-linked investments, and increasing regulatory and investor initiatives are likely to increase the impact of ESG investing in reducing greenhouse gas emissions. In addition, investors are becoming more environmentally conscious when making investment decisions. Although some challenges persist, including inconsistency in terminology, huge amount of data to analyze and heterogenous rating standards, ESG investing is likely to play an important role in influencing entities to reduce their carbon footprint.
... Future research should analyze whether narcissistic individuals engage in UPB in long-term. The study claimed that for narcissistic individuals engaging in UPB in long-term might not bring admiration, which these individuals are looking for, since cases of committing UPB might simply become revealed to the society after some period and may result in serious reputation damage and financial losses (Jung and Sharon, 2019 ...
-
![Munisa Toirova]()
- Yoonjung Baek
Purpose The purpose of the current research is to study the relationship between narcissism and unethical pro-organizational behavior (UPB), and also examine whether status striving mediates the relationship between narcissism and UPB among individuals with high organizational identification. Design/methodology/approach Data that was used to test the research model were collected from five companies in the trading sector in Tashkent, Uzbekistan. The final sample included 200 responses, among all participants 29.5% were in a leadership position. Findings The current research found that narcissism leads individuals to exhibit a willingness to engage in UPB. Furthermore, status striving mediates the relationship between narcissism and UPB among individuals with high organizational identification. Research limitations/implications Research did not use actual reported UPB but measured employees' willingness to engage in UPB. Practical implications Organizations should develop special ethics guidance to change the employee's perceptions of UPB from the act of helping or protecting the organization to undesirable behavior in the organization. Moreover, the organization may develop an ethical counseling program, by which individuals may perceive that ethical behavior is valuable for the organization. Originality/value Current study examines the relationship between narcissism and UPB. Moreover, it provides empirical support for the notion that the relationship between narcissism and UPB is mediated by status striving among individuals with high organizational identification.
... Recent research focused on Volkswagen"s fraud and the Diesel gate case as interrelated events (Barrett et al., 2015;Jung & Sharon, 2019).Nevertheless, little research to date has investigated the factors that intensify the use of green washing by the world"s major automakers. In an attempt to fill this gap, this study identifies the organizational and institutional factors that have intensified green washing by the key automakers at the international level. ...
- Jan Boehmer
- Virginia S. Harrison
Research question How does corporate social irresponsibility affect a brand during a worldwide health crisis? This study investigates how Adidas' announcement to withhold rent payments in Germany and the ensuing public criticism impacted its brand metrics. Research methods Nationally representative survey data on sentiment, reputation, purchase intent, and behavior for five major sporting goods manufacturers spanning 1,096 continuous days is combined with Google Trends and stock price data to estimate the causal impact of Adidas' social irresponsibility using a series of Bayesian structural time-series models. Results and findings Adidas took a significant initial hit in sentiment and reputation immediately and months after the scandal. However, purchase intentions, consumer behavior, and stock prices indicate that the company continued to be a preferred brand. Implications Findings suggest that the pandemic affected the outcome of Adidas' behavior in two ways. While the initial impact was likely amplified by the heightened public attention to corporate behavior during the crisis, lower-funnel and long-term effects might have been mitigated by the rapid development of the pandemic that caused public attention to shift.
Background: Long-term exposure to pollution can lead to an increase in the rate of decline of lung function, especially in older individuals and in those with chronic obstructive pulmonary disease (COPD), whereas shorter-term exposure at higher pollution levels has been implicated in causing excess deaths from ischaemic heart disease and exacerbations of COPD. We aimed to assess the effects on respiratory and cardiovascular responses of walking down a busy street with high levels of pollution compared with walking in a traffic-free area with lower pollution levels in older adults. Methods: In this randomised, crossover study, we recruited men and women aged 60 years and older with angiographically proven stable ischaemic heart disease or stage 2 Global initiative for Obstructive Lung Disease (GOLD) COPD who had been clinically stable for 6 months, and age-matched healthy volunteers. Individuals with ischaemic heart disease or COPD were recruited from existing databases or outpatient respiratory and cardiology clinics at the Royal Brompton & Harefield NHS Foundation Trust and age-matched healthy volunteers using advertising and existing databases. All participants had abstained from smoking for at least 12 months and medications were taken as recommended by participants' doctors during the study. Participants were randomly assigned by drawing numbered disks at random from a bag to do a 2 h walk either along a commercial street in London (Oxford Street) or in an urban park (Hyde Park). Baseline measurements of participants were taken before the walk in the hospital laboratory. During each walk session, black carbon, particulate matter (PM) concentrations, ultrafine particles, and nitrogen dioxide (NO2) concentrations were measured. Findings: Between October, 2012, and June, 2014, we screened 135 participants, of whom 40 healthy volunteers, 40 individuals with COPD, and 39 with ischaemic heart disease were recruited. Concentrations of black carbon, NO2, PM10, PM2.5, and ultrafine particles were higher on Oxford Street than in Hyde Park. Participants with COPD reported more cough (odds ratio [OR] 1·95, 95% CI 0·96-3·95; p<0·1), sputum (3·15, 1·39-7·13; p<0·05), shortness of breath (1·86, 0·97-3·57; p<0·1), and wheeze (4·00, 1·52-10·50; p<0·05) after walking down Oxford Street compared with Hyde Park. In all participants, irrespective of their disease status, walking in Hyde Park led to an increase in lung function (forced expiratory volume in the first second [FEV1] and forced vital capacity [FVC]) and a decrease in pulse wave velocity (PWV) and augmentation index up to 26 h after the walk. By contrast, these beneficial responses were attenuated after walking on Oxford Street. In participants with COPD, a reduction in FEV1 and FVC, and an increase in R5-20 were associated with an increase in during-walk exposure to NO2, ultrafine particles and PM2.5, and an increase in PWV and augmentation index with NO2 and ultrafine particles. In healthy volunteers, PWV and augmentation index were associated both with black carbon and ultrafine particles. Interpretation: Short-term exposure to traffic pollution prevents the beneficial cardiopulmonary effects of walking in people with COPD, ischaemic heart disease, and those free from chronic cardiopulmonary diseases. Medication use might reduce the adverse effects of air pollution in individuals with ischaemic heart disease. Policies should aim to control ambient levels of air pollution along busy streets in view of these negative health effects. Funding: British Heart Foundation.
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![Jae C. Jung]()
- Su Bin "Alison" Park
In September 2015, Volkswagen (hereafter VW) made news headlines all of sudden regarding recalls of nearly 500,000 diesel cars in the U.S., branded as VW and its upscale Audi. Within a few days, VW saw a massive sell-off of its stock, wiping out $16.9 billion of market value of the company. Later, VW admitted that its 11 million diesel vehicles in the world were equipped with a defeat device disguised laboratory diesel-exhaust emissions tests. After the scandal erupted, VW's economic situation was damaged from worldwide recalls, loss of sales, and decreased stock market price. The total cost of VW's losses was yet to be determined due to the immense calculations and early period of the scandal. However, experts estimated the scandal would cost tens of billions of dollars or beyond to the company.
- Mark R. DesJardine
- Pratima Bansal
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![Yang Yang]()
Even though organizational researchers have acknowledged the role of social and environmental business practices in contributing to organizational resilience, this work remains scarce, possibly because of the difficulties in measuring organizational resilience. In this paper, we aim to partly remedy this issue by measuring two ways in which organizational resilience manifests through organizational outcomes in a generalized environmental disturbance—namely, severity of loss, which captures the stability dimension of resilience, and time to recovery, which captures the flexibility dimension. By isolating these two variables, we can then theorize the types of social and environmental practices that contribute to resilience. Specifically, we argue that strategic social and environmental practices contribute more to organizational resilience than do tactical social and environmental practices. We test our theory by analyzing the responses of 963 U.S.-based firms to the global financial crisis and find evidence that support our hypotheses.
This study explores a new type of greenwashing behaviour, through the lenses of the "communicative constitution of organizations" (CCO), which challenges the dominant view in corporate social responsibility (CSR) studies. A theory-building case study was carried out by analysing the Volkswagen scandal. Both qualitative and quantitative data were obtained via a content analysis of both 2012–2014 CSR reports of the Volkswagen Group and a sample of 1151 U.S. newspaper headlines concerning Dieselgate, together with semi-structured interviews with former managers from Volkswagen. From a theoretical perspective, the study extends the greenwashing taxonomy by identifying a new type of irresponsible behaviour, namely "deceptive manipulation". This reinforces the CCO perspective according to which sustainability communication acts as a constitutive force. In terms of managerial implications, the study suggests some approaches to prevent this specific type of greenwashing.
- Vinit M. Desai
Although much is known regarding how individual organizations respond to accidents, scandals, and other disruptions that directly affect their own operations, scrutiny following disruptions can spread to impact other organizations in the same field. Yet existing research provides little guidance regarding how these other organizations respond when an entire field's legitimacy is threatened. Drawing on institutional theory, I examine how organizations may undertake efforts to minimize disruptions and defend activities within their field. Findings suggest that defensive efforts depend on similarities between stricken firms and potential responders and on how constituents attend to related issues across the field.
We extend research on social evaluations and crisis management by explicating the sociocognitive mechanisms that influence how an organization and its external evaluators perceive and respond to the onset of a crisis. Specifically, we highlight the role of social approval-evaluators' general affinity toward an organization-not only as a critical outcome of crisis management but also as an important antecedent.We first identify the distinct aspects of social approval and explain why it is an important perception in a crisis context. We then detail how managers attempt to limit the probability and magnitude of social approval losswhen responding to a crisis, and how an organization's existing endowment of social approval affects this decision. We theorize that social approval will serve as either a buffer or a burden in influencing evaluators' crisis sensemaking and attributions. As a result, we argue, organizations endowed with higher and lower levels of social approvalmay be motivated to take less responsibility at the onset of a crisis than has been previously theorized. We conclude with a discussion of the broader managerial and social implications of our theory and how it expands our understanding of the crisis management process.
- Sébastien Mena
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![Jukka Rintamäki]()
- Peter Fleming
- André Spicer
Why are some serious cases of corporate irresponsibility collectively forgotten? Drawing on social memory studies, we examine how this collective forgetting process can occur. We propose that a major instance of corporate irresponsibility leads to the emergence of a stakeholder mnemonic community that shares a common recollection of the past incident. This community generates and then draws upon mnemonic traces to sustain a collective memory of the past event over time. In addition to the natural entropic tendencies toward forgetting, collective memory is also undermined by instrumental 'forgetting work', which we conceptualize in this paper. Forgetting work involves manipulating short-term conditions of the event, silencing vocal 'rememberers' and undermining collective mnemonic traces that sustain a version of the past. This process can result in a reconfigured collective memory and collective forgetting of corporate irresponsibility events. Collective forgetting can have positive and negative consequences for the firm, stakeholders and society.
Source: https://www.researchgate.net/publication/332327135_The_Volkswagen_emissions_scandal_and_its_aftermath
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