Who Is Responsible for Corporate Misconduct?

By N. Craig Smith and Eric W. Orts – in INSEASD Knowledge.

With incidents of corporate misconduct never far from the headlines, the philosophical question of whether firms should assume responsibility for individuals’ actions has practical consequences.

VW may have taken a big step towards resolving its emissions scandal in the United States with its recent guilty plea (at a cost of more than US$4.3 billion!), but its troubles in Europe are far from over. Luxembourg has launched criminal proceedings and more countries may follow after the European Commission made it clear it felt member states had not done enough to crack down on emissions test cheating.

It seems safe to assume that VW’s cheating was not the act of a single rogue engineer, but when scandals like this occur, where does the moral responsibility lie? Is it solely the responsibility of the individuals who developed and implemented the software? Or is the firm itself, which likely put pressure on employees in various ways, also to blame? If so, to what extent? And what does it mean to say that a business as an entity is morally responsible?



Povl Tiedemann
April 2017


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