Corporate Social Responsibility in Automobile Industry
This research studies the concept of corporate social responsibility (CSR) and corporate social performance (CSP) with the view to determine its implications and limitations for International Business. This paper will
review automobile industry from the standpoint of corporate social responsibility. Also, the paper will employ the Volkswagen emissions scandal, also referred to as Dieselgate, as a case study in corporate misbehaviour. The paper will use the case to show how corporate social responsibility can radically change the well-established automobile industry.
Automobile industry poses a high value for International Business studies as it encompasses lots of manufacturers and organizations that compete and cooperate in the design, development, and manufacturing,
marketing, and selling of vehicles. The product, a car itself, is highly differentiated because of the complex nature of demand. Therefore, the industry is highly segmented as each vehicle model has to target a specific
consumer base. Today’s globalized world, due to the high social awareness and instant spread of information, create demands for international businesses, to make their activities adherent to the broad needs of stakeholders, such as consumers, environment, staff, suppliers and shareholders, especially for large corporations of automotive industry. Therefore, international business organizations should comply with
corporate and industry code of conduct, in particular CSR-strategies. CSR is defined as a company’s delivery of long-term value in financial, social, environmental and ethical terms. Any company or better to say its senior
management is responsible for its effect upon the society, environment and business atmosphere (Kotler & Lee, 2005, p. 10).
The Volkswagen emissions scandal, also referred to as Dieselgate, is a misconduct by VW which marketed supposedly “clean” TDI (Turbocharged Direct Injection) diesel-models in the US market (Bovens 62).Volkswagen has been found guilty of falsifying emissions tests on its diesel engine cars. The company has created a software that allows a car to meet the emission criteria only while it is being tested. VW has embodied near 500 thousand cars with that software in the US, and admitted having done the same with another 11 million cars around the world. Those cars are models with diesel engine, such as Passat, Jetta, Golf, and Audi A3. Thus, a VW vehicle produces unsafe pollutants, namely nitrogen oxides, 40 times above the standard set by the US environmental protection agency. VW has failed its consumers for not adhering to CSR-strategies. As a result, for the first time in a decade, the company has reported first quarterly loss of nearly $3 billion, not to mention, prestige and trust losses that the company is sure to suffer for a long time.
Cârstea suggests that Dieselgate may as well be the biggest scandal in the recent automotive history, however the author mentions that Volkswagen is not the only circulated name, as “other manufacturers had to explain