Mercedes Benz and Volkswagen and the Failure of Corporate Social Responsibility

Introduction

The world in present days continues to be featured by constant and growing social and environmental issues. Moreover, the politics of deregulation and liberalisation have weakened the regulative capabilities while multinational organisations (MNCs) have increased in size and social and environmental affect. Sustainability of present economy and capability of MNCs to address social and environmental challenges in order to enhance environmental conditions are some of the key issues faced by people. Concentrating on the strength of business to enhance social and environmental condition can have certain impact on reputation. However, in present days, due to unethical business activities, MNCs have failed to fulfil the Corporate Social Responsibilities (CSR) resulting in loss of market reputation (Jung & Bin, 2016).

Literature Review

According to Mossmann (2010), the word social basically signify the interaction between individuals. An organisation can act socially towards the employees or the societies adjoining the plants. The organisation thus only provides advantages to a specific group, rather than the entire society. The work responsibility signifies to social performance. It expresses honesty and can be described as the attribute of being accountable to someone for something. Accordingly, Oshana (2001) stated that a responsible organisation requires to be accountable for its activities and consequently attempts to enhance the honesty in order to satisfy the expectations of individuals who have stake in the organisation. If an organisation’s actions have clear adverse impact, society will expect the organisation to take responsibility. Bakan (2004) summarised that responsibility can be a response to social request which ascend if organisational functions have undesirable influence on the society. In other words, responsible function can be organisation’s reaction to society’s criticism of its functions. Bakan (2004) also stated that organisational behaviour is always featured by responsibility as a form of self-consciousness and ethical promise. This type of responsibility is determined by the ambition to make the proper management decision in order to fulfil social prospects. Accordingly, CSR activities are always affected by active normative decisions of diverse individuals who have interest in the organisation. According to Herzig & Schaltegger (2011), organisations can enhance the regular profit making functions by different socially responsible functions. Although organisations themselves desire not to perform in socially liable manner, they also notify the shareholders regarding the social involvement. Many organisations regardless if size are informing their stakeholders frequently regarding the social and environmental performance through proper reporting.

According to Herzig & Schaltegger (2011), environmental stewardship or environmental safety is one of the most vital scopes of CSR. Evolving during 1980s and 1990s as a response to accidents, environmental tragedies and environmental concerns such as climate change and global warming, the courtesy towards environmental issues has increased. Hoffman & et. al., (2007) stated that environmental performance disclosure and recording is particularly vital in industries which are traditionally considered as those involve in environmental damage, for example oil and gas organisations along with industries which are related with transportation. For example, vehicle producers are regarded as representatives of transportation segment and are involving in CSR activities with respect to car recycling, use of green technology, green supply chain management and environmental management arrangements (Martinuzzi & et. al., 2011). Nevertheless, committing to detailed sustainability reporting does not signify that the report is generated from dependable source of information with respect to sustainability or socially responsible performance. Zhakypova (2016) described that organisations involve in many kind of unethical behaviour by providing disinformation to maintain strong reputation among public and to shape positive image. There are various anxieties in academic literature which typically intensify as organisations involve in functions which confirm these criticisms, as it occurred in recent scandal of Volkswagen and Mercedes Benz. This scandal represents the case of contradiction between reporting and actuality, as these occurrences demonstrated in the organisational environmental performance reporting.

Research Objectives and Research Questions

The research will intend to answer the following questions

“Why failure in CSR occurred in Volkswagen and Mercedes Benz?”

“What is the impact of the CSR scandal of Volkswagen and Mercedes Benz on corporate reputation?”

“How can they improve the CSR performance?”

The key objectives of the research are to:

Analyse the importance of CSR in automobile organisations

Analyse how Volkswagen and Mercedes Benz has failed to fulfil the CSR and

Analyse the impact of the scandals on the corporate reputation of the organisations

Provide recommendations for enhancing the CSR performance

Methodology

There are three key approaches for undertaking a research which are qualitative, quantitative and mixed. In this research, the qualitative approach will be used. The reason for using qualitative approach is that the subject cannot be described in numeric terms and no statistical relationship can be made between variables. Besides, there are three key designs which can be used in any research which are exploratory, descriptive and causal. In this research the exploratory design will be used. The key focus of the research will be to obtain ideas and insights regarding the CSR issues faced by Volkswagen and Mercedes Benz. The research will be based on providing better understanding of the situation of both organisations with respect to CSR. There are many popular methods of exploratory design such as literature search, in-depth interview, focus group and case study. In this research both literature search and case study method will be used (Nargundkar, 2003).

There are two kinds of data which can be used in a research which are primary data and secondary data. In this research, only secondary data will be used. The reason for using only secondary data is that obtaining primary data on this subject will be challenging since, no organisation would not desire to reveal any kind of negative information to external parties. Furthermore, obtaining primary information will also be expensive and time consuming and will require more resources. Therefore, secondary data will be used in the research to obtain information regarding the subject. Various online sources such as books, journals, articles and news will be used as a part of data collection.

Timetable

The research will take about five months to complete. Following Gantt chart demonstrate the timetable for the research:

References

Bakan, J., 2004. The Corporation – The Pathological Pursuit of Profit and Power. New York: Free Press.

Herzig, C. & Schaltegger, S., 2011. Corporate Social Responsibility. In J. Godemann & G. Michelsen, editors. Sustainability Communication Interdisciplinary Perspectives and Theoretical Foundations. Springer Science.

Hoffman, A. J. & et. al., 2007. Organizations, Policy and the Natural Environment: Institutional and Strategic Perspectives. CA: Stanford University Press.

Jung, J. C. & Bin, S., 2016. Volkswagen’s Diesel Emissions Scandal. University of Missouri.

Mossmann, J., 2010. Corporate Social Responsibility in the Modern World-System A Case Study of German Automobile Corporations’ Social and Environmental Responsibilities in South Africa. Stellenbosch University.

Martinuzzi, A. & et. al., 2011. CSR Activities and Impact of the Automotive Sector. RIMAS Working Papers.

Nargundkar, R., 2003. Marketing Research-Text & Cases 2E. Tata McGraw-Hill Education.

Oshana, M., 2001. Responsibility: Philosophical Aspects. In Smelser, N. J. & Baltes, P. B. (eds.) International Encyclopaedia of the Social & Behavioural Sciences. Oxford: Elsevier Science Ltd.

Zhakypova, A., 2016. Dissecting Corporate Sustainability Reporting: VW Emissions Scandal case. VW and Corporate Sustainability Reporting. [Online] available at: http://nature.berkeley.edu/classes/es196/projects/2016final/ZhakypovaA_2016.pdf [Accessed 08 March 2017].

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