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Business Ethics at Darden: Learning from the Volkswagen Emissions Scandal

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When word of German car giant Volkswagen’s inconspicuously-titled “Diesel Dupe” broke in late 2015, it was hard to imagine anyone spinning it into a positive teaching opportunity.

The scandal erupted when the U.S. Environmental Protection Agency (EPA) discovered that the manufacturer had implanted what it called a “defeat device” that altered the performance of its diesel engine vehicles during emission testing in an effort to improve results. Those results, which Volkswagen later admitted were manufactured, were a core of the company’s marketing strategy for its diesel vehicles. Around 11 million cars were implanted with the device, including eight million in Europe, which disguised hazardous gas emissions that were often 40 times the legal U.S. limit.

At the University of Virginia’s Darden School of Business, Luann Lynch, a professor of business administration, saw opportunity.

With 2016 Darden graduates Elizabeth Bird and Cameron Cutro, Lynch developed a case study following the news. The trio’s work examined how much internal pressure Volkswagen had put on itself to become the world’s leading auto manufacturer by 2018. To do so, the company had to really strengthen its viability in the U.S. market.

“Volkswagen was the darling of Germany and such an economic engine in that country that one could see how it felt like it held the country on its shoulders,” Lynch said in a story on the school’s website.

Once Volkswagen discovered the apparent loophole in emission testing, it began installing the aforementioned defeat device that masked actual emissions. Until the EPA discovered the curious patterns, the software used was known only to a very small group.

“Combined, those factors presented an opportunity for an employee to rationalize what they were doing, given the pressure they were under,” Lynch continued.

Beginning this semester, Lynch will teach her students how and why Volkswagen decided to implement the practice, favoring profits instead of ethics. Looking at business ethics—and ethics gone awry—has long been a point of focus at Darden. When it introduced its first business ethics courses more than 20 years ago, it was among the first business schools in the country to do so.

R. Edward Freeman, another professor of business administration and an academic director of the Institute for Business in Society, has been instilling this idea for years in his students in his business ethics courses.

“That is what we are trying to change at Darden,” Freeman said in a statement. “We try to put business and ethics together in everything that we do.”

Matthew Korman
Matthew Korman is a contributing author and editor for Clear Admit. Since graduating from Rowan University with a degree in journalism and political science, Matthew has worked with numerous academic institutions, in addition to roles as a music industry writer, promoter, and data analyst. His works have appeared in publications such as NPR and Sports Illustrated.