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Corporate Social Responsibility is a self-regulating business model that helps the company be socially accountable to itself, its stakeholders, and to the public. It incorporates environmental and social concerns into a business.
Volkswagen (VW) is a German automotive Corporate Social Responsible company with headquarters in Wolfsburg. The company was ranked 7th in the Fortune Global index of biggest companies in the world. It is also the founding member of the Volkswagen group – an international corporation that is responsible for a variety of truck and car brands, including Audi, Lamborghini, SEAT, Bentley, MAN, Skoda, Bugatti, and Scania. Nowadays, there has been a developing agreement, particularly among U.S. organizations, that CSR is fundamental and valuable both to the groups it benefits and to the organizations themselves. Thus, companies seek to be socially responsible; however, in 2015 there was an emissions scandal in the VW group that influenced the trust of stakeholders.
Personal Purpose: Corporate social responsibility is an extremely significant concept in the business world. The example of Volkswagen best illustrates how a multi-national corporate culture affects a company’s values with respect to CSR and the environment. Thus, this case holds a great importance.
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Research Goal: The research goal is to explore how the scandal affected Volkswagen group, what were the results that CSR had on customers, and how customers perceive the company after the scandal.
Hypothesis: The emission scandal in the Volkswagen Group impacted the perception of CSR negatively, damaging the image of the business and its credibility among the stakeholders.
Methodology: The primary research involves a survey conducted on a group of 30 responders. The responders were asked following questions: „Do you recognize Volkswagen brand?”, „How do you rate this company?”, „Have you heard about the emission scandal?” In your opinion, is the company socially responsible?”. Moreover, additional research on this subject will be based on literature, media reports, specialist publications, and internal company records.
Difficulties: A difficulty in conducting this research was selecting the most valuable facts among many informations regarding the VW scandal. Furthermore, a limitation to this study is its small and unrepresentative sample of 30 respondents. The results obtained do not allow for drawing general conclusions.
Corporate Social Responsibility in Volkswagen Group
Subchapters:
- Explanation of Corporate Social Responsibility
In 2004, Professor Manfred Pohl initiated the idea of Corporate Social Responsibility (CSR) during a conference on Corporate Ethics in Frankfurt. After this event, CSR became one of the most desirable factors in the corporate world. Referring to Carroll, the CSR idea has incorporated an extensive variety of economic, legal, ethical and philanthropic exercises of business execution at any given point in time, with no hierarchical request.
- CRS in Volkswagen Group
The Volkswagen Group has designed an administration structure for organizing maintainability and CSR. Its most elevated panel is the Group Board of Management (Sustainability Board), which sets goals and objectives towards being more and more socially responsible. The VW company claims to be the most sustainable automotive company.
Volkswagen group has 192 social projects around the world. They are interested in a variety of topics like voluntary work, vocational training, education and science, health care, culture and arts, nature conservation, regional support, sport, traffic education and others. The most common projects involve nature conservation: they have 40 projects around the world, what may or may not mitigate the damage done to their reputation after the emissions scandal. 20 of the projects are in Europe.
Benefits of Being Socially Responsible
In today’s digital, fast-paced world, each business, big or small, needs a CSR system set up. If a company’s CSR is not actualized, it risks disaster as the trust of the people who are signed with the benefits of the business is lost. Companies today are more likely to be socially responsible, as many argue that there are a number of benefits to the institution itself. Some of them are presented above.
Subchapters:
- Improved Workforce
A worker with a sure disposition towards the company will be less likely to search for occupation elsewhere. It may likewise be probable that the company will gain a greater amount of vocation requisitions. Secondary influences of CSR with respect to worker well-being and motivation are huge.
- Satisfied Customers
Research shows that a strong record of CSR improves clients’ mental attitude towards the company. If a customer likes the company, he or she will buy more products or services and will be less willing to change to another brand.
- Positive PR
CSR gives the opportunity to share positive stories online and through conventional media. Companies no longer have to squander cash on costly publicizing campaigns. Instead, they create free exposure and gain advantage from word of mouth promotion.
- Costs Reductions
Organizations decrease costs when implementing CSR by:
- Employing a more effective staff contract and maintenance
- Actualizing vitality investment funds programs
- Overseeing potential dangers and liabilities more adequately
- Decreasing interest in conventional publicizing
- Long-term Perspectives
CSR allows the business to create a strong, consistent brand. It shapes a more sustainable society, what also acts positively on the relationship between companies and the stakeholders. Thus, the company can focus on setting a long-term goals and objectives, having a loyal range of customers.
Volkswagen’s Emission Scandal
Subchapters:
- The background
Volkswagen group implemented emissions software in 10.5 million diesel cars around the world. The cars were able to change between two modes. Cars had a “defeat device” to detect throttle, steering, and other inputs used during testing. In this test mode, the cars met all federal emissions levels, but while driving normally the cars surpassed over 40 times the limit of emissions. The computer in the car switches to another mode that significantly changes exhaust-gas recirculation, fuel pressure, and injection timing. And a in few models that have AdBlue, the amount of urea fluid sprayed in the exhaust was also changed. This system makes the car faster, but it produces large amounts of smog, over 40 times the federal limit.
- Consequences of the Scandal
Upon discovery, Volkswagen group made an agreement with the U.S. District Court Judge to pay 14,7 billion of dollars in compensation to car owners and address environmental damage. After that, they mailed all current owners of theses car and announced a $10 billion buyback program. It gave owners the opportunity to sell the car back to the company for a price between $12,500 and $44,000, depending on the model of the car. The VW group started buying the cars from owners in November 2016. Owners who did not sell the cars got compensated between $5,100 and $10,000 for diminished resale value, plus a free emissions repair.
CRS after the Emission Scandal
Subchapters:
- The internal impact on the company
The Volkswagen group suffered a huge failure in terms of CSR. Even if they paid for their mistakes, they still had an advantage over other companies that are producing cars by creating environmental friendly cars that were actually poisoning the environment. This scandal led to the resignation of the CEO, the Porsche engine chief and the Audi head of R+D, but the biggest problem was the person that was head of CSR who allowed this to happen. The head of CSR denied that he knew anything about the contaminating engines. In light of this scandal, many people may conclude that CSR was just a marketing exercise for Volkswagen group.
- The external impact on the company
The company partly showed that they do not care about pollution or social responsibility but rather about money. Their cars were poisoning the planet by emitting 40 times the legal limit of nitrogen oxide, and it did not matter for them as long as they could get more profit by doing it.
- The After-match
To begin making improvements, Volkswagen decided to create electric cars. They also announced that in 2025 this group would sell one million electric cars with 30 EV models. They will produce an electric coupe, SUV and Phaeton limousine. Volkswagen is putting its full power behind a move into electric autos, as the world’s biggest automaker moves far from ignition motors and tries to distance itself from the embarrassment that has weighed on the organization for a long time.
To What Extent is VW Group Socially Responsible?
Subchapters:
- The Sample Group
In order to gather information on whether VW Group was being socially responsible, primary research was conducted on a group of 30 respondents. Their characteristics are presented in Table 1. Respondents’ characteristics.
- Primary Research
- Respondents were firstly asked if they recognize Volkswagen brand.
- Even though Volkswagen is recognizable, it does not seem to be perceived as a desired car brand. Hence, respondents were asked to evaluate VW cars in terms of quality, reliability and prestige.
- It was also enquired whether respondents had heard about VW emission scandal.
- Finally, the respondents were asked if they perceive the company as socially responsible.
Conclusions
The findings of this research increased the awareness regarding the importance of corporate social responsibility and its relation to the environment, as well as brand name and reputation, and customer satisfaction. There is also a direct link between a company’s financial performance and a role for SCR and the environment, especially in relation to the promotion of a company financial performance that indirectly enhance customer satisfaction and brand.
Thus, Corporate Social Responsibility is indeed a crucial concept in the business world. This further indicates that the emission scandal negatively influenced VW Group’s reputation and the overall status and therefore, the company needs to undertake further efforts to change its social perception.
As the topic seems to be not only interesting but also very significant, and the company will continue its CSR actions, an investigation of this topic should be continued in the future.
