VW has been engulfed by an emissions scandal, which has wiped nearly €26bn (£19.06bn) off its market value. The company is said to have been caught cheating on US air pollution tests, having installed software known as “defeat devices” in the electronic control module of diesel vehicles issued between 2008 and 2015.
CEO Martin Winterkorn became the public face of the scandal, with allegations suggesting that he ignored warning signs about the emissions in 2014. This led to his recent resignation.
Researchers at Aalto University in Finland and Cass Business School are now debating whether VW will do “what so many other corporations have previously done in similar cases; remove any traces that may act as a reminder of the scandal.”
This, the researchers claimed, will likely determine whether VW will repeat the same mistake later on.
Businesses often succeed in playing down large instances of corporate irresponsibilities by using several methods, the report suggested. Companies may downplay the harm that an event has caused, shift the blame onto someone else or move attention away from the scandal to another issue. According to the researchers, VW is looking to heap the blame for a collective failure onto the shoulders of a few individuals – such as Winterkorn.
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“Companies also seem to put lots of effort into forgetting the scandal in the longer term,” the report stated. “Firms get rid of people who might remember what went wrong, by gagging them, pushing them out of the company or sidelining them. Businesses have also tried to remove traces of the scandal by stamping out stories of the scandal and getting rid of records or technologies which may serve as reminders of the scandal.”
The researchers considered the forgetting of corporate scandals to be a double edged sword. On the one hand, putting past mistakes behind you helps a company keep a positive image of itself and move on. But when companies forget a past scandal, its bosses end up repeating it again.
“Volkswagen has already taken a sensible step with an apology,” the report said. “The speed with which a firm assumes full responsibility for an event and asks for forgiveness from stakeholders is likely to facilitate collective forgetting. Volkswagen now needs to show that it is actually doing substantive things about the scandal. It should not just create short-term fixes. People want to know that it is addressing root causes.
“In the longer term, a firm needs to ensure that it remembers the lessons it learns during a scandal. This is hard, because people naturally want to distance themselves from their mistakes. But forgetting is a mistake. It makes it tough to learn. To avoid this, corporations need to keep some of the people around who have learned from the mistake. This means avoiding the knee jerk reaction of doing a symbolic cleaning out of the company following a scandal.”
The report maintained that companies need to hold onto reminders of what went wrong. These might be stories of wrong-doing or even evidence of what went wrong, which can serve as powerful reminders for employees of what not to do in the future.
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