How does a firm become a better corporate citizen

How does a firm become a better corporate citizen

How does a firm become a better corporate citizen?

Businesses are under tremendous pressure to grow and be profitable. Publicly traded companies face even more pressure as they must answer to multiple owners, shareholders, and investors. Add to that, an ever-changing landscape in which to conduct business; not to mention the regulatory and compliance requirement from multiple segments of society, just to name a few. And let us not forget competitors in your business space. In the past, corporate leadership held that shareholder value, increasing it, was their primary responsibility and focus. Lately, however, corporate leadership has been rethinking that strategy. All stakeholders’ interests are now being viewed as important. Stakeholders are the shareholders, owners, but equally important to a company’s success are their employees, customers, vendors and suppliers, the community in which the company inhabits, as well as a host of regulating/compliance agencies.

Companies must remain ever vigilant; any misstep, or heaven forbid, false step, can prove disastrous. and managers must stay the true course to guide their companies to success in this current business landscape; do not turn aside to the right or the left (Deut 5:32b). Missteps and false courses can hurt a company; reputations can at best be tainted, or at worse destroyed. Revenue can be unrealized or diverted to repair damage. If leadership is not vigilant, traveling the wrong path can lead to dissolution of a business, as with WorldCom (Kubasek et al., 2019 p 22). The result of wrongdoing is death (Rom 6:23a). A company’s wandering can land them anywhere on this spectrum.

An example of a company that did not take into consideration all its stakeholders in recent history was Volkswagen. They neglected to consider all their stakeholders, and by doing so, they hurt all their stakeholders as well as badly tarnishing their reputation. Volkswagen (VW), the auto giant, found itself on this spectrum. On September 22, 2015, VW admitted to using a “defeat device” to circumvent emissions requirements in the United States (US) to bolster diesel automobile sales in the US market (Schiermeier, 2015, para. 1). Greater that 500,000 automobiles in the US and more than 11 million worldwide contained these “defeat devices” (Schiermeier, 2015, para. 2). News of this false step left many in the auto industry flabbergasted. A host of questions ensued: What were they thinking? How did this happen? Why did someone not say something? Why did this happen? How could this be prevented? How can we make sure this never happens again? And even more questions.

In his October 2015, ABA article, Volkswagen: Where were the Lawyers, Paul Lippe asks the big question, where were the Lawyers? Where were the folks tasked with keeping the company from veering off the right path? (Lippe, 2015, para.1). Lippe wrestles with who is responsible, the lawyers or the engineers. He proposes 7 scenarios of how the company could have derailed (Lippe, 2015, para. 7). He assigns a percentage to the likeliness of the possibility, with one possibility (possibility 5) carrying the greatest percentage of 50, “The Volkswagen engineers neither discussed with nor hid what they were doing from Volkswagen’s in-house lawyers, and the in-house lawyers didn’t realize what was going on.” (Lippe, 2015, para. 7).

As authorities investigated further, more became known regarding the management of the company. Ferdinand Piëch, chairman of Volkswagen Group’s supervisory board from 2002 to 2015, was an authoritarian (Jung & Sharon, 2019, p 9) One of the men who worked closely with the chairman intimated that if an engineer did not meet the chairman’s expectations during a test drive, the engineer could find a one-way ticket on his desk, indicating that he was fired (Poier, 2020, p 37). A caustic working environment does not lend employees putting themselves out there to do the right thing. Therefore, governments have stepped in to protect employees who blow the whistle on those who would make false steps (Kubasek et al., 2019 p 129-130).

Some critics feel that VW did not go far enough in rectifying the problem. In their article, The Volkswagen emissions scandal and its aftermath, Jung and Sharon provide research and suggest step by step actions that VW management could have taken to properly deal with this scandal reassure public (Jung & Sharon, 2019, p 10).

Research on crisis management indicates that in the aftermath of a company’s misstep, leaders need to:

“Protect stakeholders from harm, not protect their own reputation”,
“Find relevant information quickly and disseminate it to stakeholders”; and
“Show their concern for victims” (Jung & Sharon, 2019, p 11)
VW’s managers responded poorly to these admonitions. Instead of accepting responsibility and acknowledging the severity of the situation to improve their corporate image, as past studies suggest, they skirted responsibility (Jung & Sharon, 2019, p 11).

It is easy, from the comfort of one’s own position to say, “I would do this, or I would not have done that.” As a leader, however, I must understand that this is the current environment that business is conducted in. What would I do if I were the lawyer, or the engineer tasked with preventing something like this from happening? I would hope that like the introduction to last week’s module, I would take the bible into the boardroom with me. I would hope to imitate the faith of Shadrach, Meshach, and Abednego, who stood up to an authoritarian boss, even in the face of death (Daniel 3 12-24). I would hope to have the courage to be a whistle blower. To first report to my immediate manager, and if that did not work, to my manager’s manager. And if that did not work, report the false steps to a regulatory body/agency (Matt 18: 15-20).

Again, if I were CEO of the diesel division at VW, and this situation was brought to light, how would I respond? What steps would I take to prevent something like this from happening in the future? Paul, helping and advising some dear friends in Corinth told them that the right response to a mis-step, or wrongdoing was to face it and accept responsibility for it see that justice is done (2 Cor. 7:10-11). I hope they follow the recommendations put forth by Jung & Sharon.

“Publicly acknowledge the company’s faults. Taking responsibility for any wrongdoing is the first step to recovering ‘ trust in the firm.

Formulate and implement strategies that recognize the roles of diverse stakeholders in VW’s future and align them with the new emphasis on electric vehicles. This will help to promote the image of VW as a green company.
Donate to research on reducing air pollution and other environmental concerns.
Participate in green energy projects, such as ride hailing and car sharing.
Work with suppliers to devise environmentally friendly parts and vehicles.
Improve employee job security to motivate employees.
Communicate with stakeholders as partners who contribute not only to VW’s future, but also to the future of other stakeholders.” (Jung & Sharon, 2019, p 12)
VW displayed poor corporate citizenship. Their greed hurt the very people they were trying to serve, the shareholders. Not only were the shareholders hurt, so were the employees, the communities in which they did business, the customers, the environment, and their reputation. Instruct the wise and they will be wiser still; teach the righteous and they will add to their learning. Prov 9:9. “Managers are key to whether a company and its employees will act ethically or unethically. The values held by managers, especially the top-level managers, serve as a model for others who work at the company” (Lawrence & Weber 2020 p 103).


Barker, K. L., Strauss, M. L., Brown, J. K., Blomberg, C. L., & Williams, M. (Eds.). (2020). NIV study bible. Zondervan.

Jung, J. C., & Sharon, E. (2019). The Volkswagen emissions scandal and its aftermath. Global Business and Organizational Excellence, 38(4), 6-15.

Kubasek, N. K., Browne, M. N., Barkacs, L., Herron, D., & Dhooge, L. (2019). Biblical Worldview Edition of Dynamic Business Law. NJ Kippenhan.

Lawrence, A.T., Weber, J. (2020). Business and Society: Stakeholders, Ethics, Public Policy (16th Ed.). McGraw-Hill Education.

Lippe, P. (2015, October 13). Volkswagen: Where were the lawyers? ABA Journal. to an external site.

Poier, S. (2020). Clean and Green–The Volkswagen Emissions Scandal: Failure of Corporate Governance? Problemy Ekorozwoju, 15(2).

Schiermeier, Q. (2015). The science behind the Volkswagen emissions scandal. Nature News.

Strauss, M. & Hubner, A. (2021, July 8). EU fines Volkswagen, BMW $1 bln for emissions cartel. Reuters.

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How does a firm become a better corporate citizenHow does a firm become a better corporate citizen


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