Corporate Social Irresponsibility (CSIR) of Volkswagen

The Volkswagen Fraud Scandal

The surprising news that Volkswagen (VW), the largest automaker in Germany, was implicated in a fraud involving more than 11 million automobiles broke in September 2015 and was reported by international newspapers. As a result, the fraud's aftereffects had greater negative socioeconomic effects, unheard-of harm to the company's reputation, and diminished shareholder value.

The Confusion Surrounding Volkswagen's Actions

The confusion grew even more when it was discovered later that the organization had published itself as a corporate citizen in the same month on its website and that it was solely responsible for the activities brought on by the scam. Moreover, the company raised their social and economic objectives to the same tier with its financial status. Ordinarily, as a requirement of the company’s corporate culture, this behavior is availed public to all the company’s stakeholders (Fornbrun 87).

The Significance of Corporate Social Responsibility (CSR)

The firm is positively rated globally for taking part in the United Nations Global Compact in the International Report Initiative and CSR indices. Unfortunately, the CSR contradiction and Corporate Social Irresponsibility is common phenomena in the current regime. Therefore, the significance of the CSR is not derived from the direct effects and risks for the organizations involved and interested parties, but also poses some implications for other agencies, as this scenario is likely to increase skepticism and jeopardize the confidence in, and the credibility of the CSR (Linulti and Muller 1929).

The Solution: Emphasis on CSR Policies

Therefore, to solve the problem mentioned above, the chief executive officer (CEO) of the company needs to emphasize on the companies CSR policies as a plan to divert the attention far away from unethical behavior. The company’s CEO can achieve this by compensating and counterbalancing socially irresponsible behavior by using CSR as the washing image to regain the reputation and credibility of the interested groups.

Armstrong’s Concept of Social Irresponsibility in Management

Problem Statement Using Concepts from the Book

Armstrong’s work in the article Social Irresponsibility in Management pioneered an approach to the CSIR concept, stating that “irresponsible behavior refers to the acceptance of an alternative that was proposed by the decision maker to be valueless to other available alternatives regarding their effects in a problem when collectively evaluated together (Armstrong 186). Therefore, this implies that one party at the expense of the whole system and that the act was not responsible in case evaluated by a vast majority of the professional observers and they would then consent to that to the final decision.

Discrepancies in the Concept of CSIR

Although the concept is around 40 years old, interest in the subject has not received an impulse until recent times. The revision of the literature allows us to observe conceptual discrepancies around three major issues that are discussed below. Nevertheless, the first dimension in which the works that study the concept of CSIR differs focuses on analyzing who judges the irresponsibility of behavior (Linuthi and Muller 1928).

Impartial Observers vs. Interest Groups

Accordingly, a set of academic articles develops the concept of CSIR focusing on the idea that the definition of irresponsibility should be made by “impartial observers,” that is, those who have no direct interest in the organization. On the contrary, other studies, through a focus on interest groups, determine who decides what is and is not irresponsible. Armstrong, a pioneer in the study of CSIR, is the first author who posits that impartial observers, through their subjective perceptions, are those who would determine if the behavior is irresponsible.

Subsequent studies by Armstrong Green (213) and Herzig and Moon (1877) also agree with this initial definition, positing that CSIR is the failure of CSR towards the expectations of society in general, without specifying which group of interests it damages, whereas society, in an impartial way, is in charge of evaluating if a company is socially irresponsible. Subsequently, (Murphy and Schlegelmilch 1807) also define CSIR from a perspective of partial observers, although with nuances.

In this regard, (Jones and Tench 300) propose a definition of socially irresponsible behavior from a psychological and subjective perspective, based on the perceptions of observers. For these authors, social irresponsibility could be defined as the carrying out of acts that violate certain perceived standards of social responsibility and which are judged by external observers, interest groups and voters, that is, behavior is perceived to be responsible or irresponsible in the “real world” and part of the environment surrounding the company.

Possible Solutions

a. Alternative 1: Develop a realistic connection.

i. Advantage

The diversified strategy is carefully developed and undertaken after the detailed analysis of the organization resources and the environment. The analysis is centered on the financial implications of the company’s performance. However, the analysis needs to be of low-risk investment with a possibility of high returns.

ii. Disadvantage

The method requires significant human and financial resources during the implementation of the unmarred diversified strategy. However, this is likely to harm the core business of the company.

b. Alternative: Total commitment beyond Financial Commitment

i. Advantage

The method aids in building the company’s reputation against other to the public in the same industry by remaining focused on the corporate social responsibility standards.

ii. Disadvantage

The disadvantage of this method is that, as much as it calls for full commitment, other programs in the company may be forgotten.

c. Alternative 3: Integration of Programs

i. Advantage

The program helps the companies in integrating their commitment and values in their main business.

ii. Disadvantage

The method has some financial implications to the organization since implementing such programs requires financial commitment which has a negative impact.

Conclusion and Recommendations

Although the initial works on the concept of CSIR from a more philosophical perspective advocated that impartial observers should assess behavior, the need to reconcile this view with a more applied orientation has generated a tendency to consider that irresponsibility is assessed based on the perception of harm to the stakeholders of an organization.

Works Cited

Armstrong, J.S. “Social irresponsibility in management”, Journal of Business Research, Vol. 5 No. 3, 2015, pp. 185-213.

Fombrun, C.J. Reputation: Realizing Value from the Corporate Image, Harvard Business School Press, and Cambridge, MA, 2016.

Herzig, C. and Moon, J. “Discourses on corporate social ire/responsibility in the financial sector”, Journal of Business Research, Vol. 66 No. 10, 2013, pp. 1870-1880

Jones, B., Bowd, R. and Tench, R. “Corporate irresponsibility and corporate social responsibility: competing realities”, Social Responsibility Journal, Vol. 5 No. 3, 2015, pp. 300-310.

Lin‐Hi, N. and Müller, K. “The CSR bottom line: preventing corporate social responsibility”, Journal of Business Research, Vol. 66 No. 10, 2013, pp. 1928-1936.

Murphy, P.E. and Schlegelmilch, B.B. “Corporate social responsibility and corporate social irresponsibility: introduction to a special topic section”, Journal of Business Research, Vol. 66 No. 10, 2013, pp. 1807-1813.