A Risk-Based Approach for Mitigating Ethical Lapses

In early 2008, the CEO of Volkswagen announced a 10-year plan that called for tripling the company’s U.S. sales by 2018. The executive gave marching orders to engineers to come up with a new technology that would enable VW to lower emissions of the new cars. The engineers failed to come up with a device that could do the job. Instead they deployed a defeating software would defeat the testing process. The 2009 VW Jetta clean diesel was launched in April 2008 and followed by the introduction of similarly equipped VW Golfs and Audi A3s. Over 145,000 vehicles were sold in the U.S. in three years. The scheme was eventually exposed, costing the company millions of dollars. This paper describes the organizational reasons why the emissions cheating occurred. It also provides recommendations regarding how organizations could prevent similar behaviors from occurring in future.