Authors: Andrew D. Pressey; David Houghton; Sheena Leek
On 18th September 2015, the Environmental Protection Agency (EPA) in the US announced that car manufacturer Volkswagen (VW) had purposely programmed certain diesel models to trigger emissions controls during laboratory testing regimes to artificially reduce the level of nitrogen oxide levels emitted (through the use of so-called ‘defeat devices’), to meet regulatory standards. It is estimated that in excess of ten million VW models were released onto the market globally between 2009 and 2015 that were fitted with the software to evade accurate detection of emissions during testing. VW’s actions placed it in violation of the Clean Air Act in the US as well as defendant of numerous legal actions in a number of countries from regulatory bodies and dissatisfied customers. VW’s stock price plummeted and it was estimated that its fines could exceed $10 billion in the US alone. VW admitted its intentional misconduct: “With this [defeat device] software, it was possible for the vehicle to recognise laboratory conditions and the engine control could switchover to emitting compliant nitrogen dioxide levels”. Michael Horn, CEO of VW Group of America conceded that “We’ve totally screwed up,” and that they had been “dishonest with the EPA, and the California Air Resources Board and with all of you”. One VW board member asserted that the individuals “who allowed this to happen, or who made the decision to install this software” behaved criminally, and asked “why the board wasn’t informed earlier about the problems when they were known about for over a year in the United States”. By the end of September 2015, VW had suspended a number of executives including head of brand development, head of research and development, and head of engine and transmissions development, and the CEO of VW Group (Martin Winterkorn) resigned. Although the individuals responsible within VW are yet to be identified, what is clear is that a network of personnel within VW conspired to intentionally develop software to deceive emissions testing agencies, thus engaging in professional misconduct. The purpose of this paper is to provide an understanding of industrial network misconduct. Specifically, the study seeks to understand the characteristics of network misconduct – how networks attempt to conceal their activities to avoid detection, why managers engage in such actions and the potential evolution of networks of misconduct as they attempt to conceal their wrongdoing. At present, research in industrial marketing has rarely engaged with illicit marketing management practices or so-called ‘dark networks’, thus resulting in an incomplete understanding of contemporary industrial marketing. Failure to understand the ‘dark side’ of real-life marketing management practices jeopardizes an accurate and precise understanding of our discipline
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Publish Year: 2016
Conference: Cape Town (2016)