I am sure you have all been following an unfolding drama at VW. Rather than focus on the firm alone, however, the article in the URL below highlights the track-record of the whole industry in conditions of regulatory conformity. It seems that evading rules and rules is standard working practice on the market, with any fines that result from being caught viewed as an affordable cost to do business. And so on, and so on. Of course, the Ford Pinto stands as the poster child for “cost-benefit analysis,” and nothing at all much has changed since.

900m for its ignition switch fiasco that resulted in the confirmed fatalities of 124 people is merely the latest in an extended type of pathetic settlements that let everyone off-the-hook. Despite the fact that the Department of Justice discovered that GM knowingly sold faulty vehicles which were resulting in drivers fatalities, no individuals were held accountable as part of the settlement. The list on goes.

So, I am interested in the responsibility of the fault in all this. Who do you consider is most to blame-the regulators for failing woefully to punish firms in a way that discourages rule-breaking, or the companies themselves for taking benefit of the vulnerable enforcement? While there is plenty of blame to around go, I think the regulators are primarily at fault.

By consistently failing to punish firms in a way that enables them know the rule-breaking will not be tolerated and can threaten the firm’s permit to operate if life is endangered, the regulators are condoning part trimming for competitive advantage implicitly. This is the behavior of these were incentivizing, so that is the behavior that resulted.

1. Flexible facilities that grow with your business
2. When am I likely to break even or pull the plugs
3. Palpable “enterprise wide” feeling that systemic change is long overdue
4. The people included must trust each other
5. Bad Debts & Interest

Regulators have the power (and power) to put repeat transgressors out of business-in fact, it is their duty to take action. That they don’t, to me (and to the firms), signals that the behavior is eventually acceptable to those setting the rules. Underpinning the concept of “corporate stakeholder responsibility” (an important component of the Strategic CSR) is the theory that stakeholders have a responsibility to carry the firm to account.

It is this accountability that underpins the theory that companies’ self-interest lies in sticking with their stakeholders’ wants. If stakeholders are unwilling to enforce their ideals by holding companies to accounts, we can only just blame ourselves whenever we don’t get the behavior from companies that people say we seek.