Organizational wrongdoing in supply chains: the emissions scandal revisited in a network perspective

Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Detroit (2022)

Résumé:

(Introduction) The automotive industry is undergoing the first major transformation since internal combustion engine vehicles attained the status of dominant design in the late 1920s (MacDuffie, 2021). Automotive value chains are disrupted by the need to deliver battery electric vehicles, while supply chains are restructuring around the quest for raw materials, batteries, and electric-motor components. These changes in chains happen in a context of high uncertainty about what will be the dominant design in the field of sustainable mobility, that causes higher and higher industry (dis)orders (Lüthje, 2019).

Most of the time, the evolution of the value and supply chain around electric technologies is treated as something natural for the automotive industry. Asking questions like “how are vehicle producers adapting to increased electrification?”, or “what role are assemblers playing in directing this transition?” goes apparently in this direction. At least two strong assumptions sustain this standpoint: (1) that vehicle producers are adapting to new paradigms of mobility, and (2) that assemblers are playing a role in directing the transition towards them.

But this alleged smoothness needs to be problematized if we want to provide a truthful depiction of automotive industry trends around electrification without falling into normativism. For example, it is well acknowledged that the automotive industry not only adapts to regulatory novelty – novelty as in the case of newer stringent emissions standards – but also tries to influence it in favor of certain technologies (Schweitzer et al., 2021). And evidence shows that automakers do not always direct the transition towards clean mobility, but instead use cheating techniques on emissions tests (Transport & Environment, 2016).

(Purpose) Our proposal aims at criticizing the aforementioned assumptions by showing a negative example of how a smooth evolution of the value chain in the name of sustainability targets did not take place: the Volkswagen emissions scandal. More specifically, our research question asks if the automotive vertical network of supply (as a proxy of the value creation chain) can function as a criminogenic environment when tackling the grand challenge of climate change and emissions reduction. In posing such a question we follow recent calls for the confrontation of matters of wrongdoing in operations and supply chain management (e.g., Arnold et al., 2012; Castro et al., 2020) and of coordination of corrupt activities (Aven, 2015). Moreover, the question of the supply network as a criminogenic environment in the context of product innovation is supported by studies underlining the ambiguous role of suppliers (especially Tier Is) in creating value for NPD (e.g., Lawrence et al., 2015).

(Methodology/design) The research is designed as an in-depth analysis of the Volkswagen emissions scandal as a single revelatory case (Siggelkow, 2007; Yin, 2009). The case is exemplary because Volkswagen AG, as a carmaker, has a clear vertical network structure of supply and the cheating scandal is considered the biggest instance of organizational wrongdoing of the last years. Data are US court proceedings of both civil and criminal justice - since the scandal had been primarily investigated by US authorities (for an overview of the Dieselgate, see Cruden et al., 2018) – and interviews conducted with informants in Volkswagen AG and its suppliers involved in the cheating scheme.

(Main findings) Preliminary findings advance our understanding of the mechanisms underlying the construction of the Volkswagen emissions scandal. In the scandal construction:

  • no independent organization but the network organization concurs. At least three nodes of the Volkswagen network are co-conspirators: Volkswagen (different entities), Robert Bosch (different entities) and IAV GmbH. The wrongdoing construction cannot be fully explained without considering the relationship of Volkswagen to these actors and their interdependence: e.g., in terms of everyday network management (à la Vaughan, 1990, 1996), and knowledge/tasks partitioning, relational embedding, power/framing contests across firm boundaries (à la Whitford & Zirpoli, 2014, 2016).
  • Wrongdoing is not necessarily implemented as deviance from routines conformity (à la Vaughan, 1999), but may be normally embedded in them (à la Palmer, 2013). Standard practices of supply, production and innovation across firm boundaries may indeed pursue wrongdoing exactly as they pursue efficiency (Ashford & Anand, 2003).

(Practical and theoretical implications) From a practical perspective, this study acknowledges that the evolution of the automotive value chain does not come without contestations from the industry. Both automakers and suppliers may (1) fake to adapt instead of adapting to new regulatory requirements and (2) present inertia to change instead of driving it. Understanding how fake to adapt and inertia to change may materialize could help regulators to detect them on the one hand, and organizations to take precautions against them on the other. From a theoretical perspective, the study aims at contributing to the stream of literature on industry structuring (e.g., Jacobides et al., 2016) by pointing out the importance of identifying diverse political and latent contests in it.

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