Worker Participation, Sustainability, and the Puzzle of the Volkswagen Emissions Scandal

In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, Forthcoming).

University of Oslo Faculty of Law Research Paper No. 2019-23

Posted: 8 May 2019

See all articles by Matthew T. Bodie

Matthew T. Bodie

Saint Louis University School of Law

Date Written: May 6, 2019

Abstract

In September 2015, Volkswagen's "clean diesel" technology was exposed as a sham. Not only were the company's vehicles discharging dangerously high levels of nitrogen oxide, but VW had intentionally rigged its emissions systems to cheat on environmental tests. In the wake of resignations and criminal investigations, the company's governance system came under justifiable attack. Were VW's famously worker-friendly governance policies to blame? This Chapter examines the root causes of the emissions scandal and concludes that VW's governance culture suffered from dictatorial leadership as well as a cozy relationship between management and labor leaders. This culture of complacency led to a lack of accountability at key levels, including executives, shareholders, and regulators. In addition, despite its worker-oriented governance structure, Volkswagen's internal management is still organized along traditional hierarchical lines. Empowered workers, participating at all levels of company governance, would provide a stronger internal culture of compliance, innovation, and sustainability.

Keywords: codetermination, governance culture, accountability, VW, supervisory board, compliance

Suggested Citation

Bodie, Matthew T., Worker Participation, Sustainability, and the Puzzle of the Volkswagen Emissions Scandal (May 6, 2019). In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, Forthcoming).; University of Oslo Faculty of Law Research Paper No. 2019-23. Available at SSRN: https://ssrn.com/abstract=3383449

Matthew T. Bodie (Contact Author)

Saint Louis University School of Law ( email )

100 N. Tucker Blvd.
St. Louis, MO 63101
United States

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