INTERACTIVE SESSION: TECHNOLOGY I
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150 Part One Organizations, Management, and the Networked Enterprise
INTERACTIVE SESSION: TECHNOLOGY
I
Volkswagen Pollutes Its Reputatton with So-ftvvaretoCheatEmissicins
Testing
Volkswagen Group AG tried to aim highby embalTk~ ing on a strategy to bypass ‘Ibyota as the world’slarg.est auto maker. One part of that strategy called for tripling u.s. sales in a decade by promoting “clean” diesel-powered cars promising low erniSSlol’!-s Ilr).d high mileage without sacrificing performance. It turned Qut that about 580,000 cars. in. the United States and almost 10.5 million. more clean diesel models sold worldwide by VW under its vw, Audi, and Porsche brands weren’t really “green” at all.
On September 18,2015, the U.S. Environmental Protection Agency (EPA) issued a notice ofviolation of the Clean Air Act to the Volkswagen Group after finding that vol1$.swagen had intentiona11y programmed turbocharged directinjection diesel engines to activate certain emissions controls only during 1aboratolTY emissions testing. The programming caused the vehicle’s nitrogen oxide (NOx) output to meet U.s, standards during regulatolTY testing bu.t emit up to 40 times more NOx When the Gars were actually driven on the road. Volkswagen put this software in about 11 mi1lioncars worldwide, and in 500,000 in the United States, during model years 2009 through 2015.
Volkswagen was able to get away with cheating on emissions tests for years because it wa~ hidden in lines ofsoftware code. Only after investigations by environmental groups and independent researchers did Volkswagen’s deception come to light. Many functions in today’s automobiles are controlled by millions ofUnes ofsoftware program code, inc1uq.ing monitoring carbon monoxide and nitrogen oxide levels to help a car control the amountofpollutants it emits. Diesel engines don’t emit much carbon monoxide, but they generally emit a greater amount of nitrogen oxide (NOx), a cOmponent in lowatmosphere ozone and acid rain. The United States has tougher NOx standards than Europe, where diesel cars are more common.
Diesel-powered cars use sensors and enginemanagement software to monitor and limit emission levels. The software can control how much NOx is produced during combustion by regulating the car’s mix of diesel fuel and oxy{Sen or by deploying NOx traps to capture the pollutant and catalysts to clean emissions. However, these pollution-reducing measures also reduce fuel economy.
VW did nQtidentifyt4e software 01′ engine component that:was used tOfalsify emissionstf!lstresults; Experts be1i.eve thafbye~llhlinitlgdataon steering, tire rqtation, and acceleratoruse,asoftware program would be able to determine whether a car w’8lsbeing actually driven Qn the road or Qn an emissionstestingbed.anq.adjust engine performa.r).ce and emissions to passth~test.
In 2007 Volkswagen decided to abandon a pollution-control tecl:mologydeveloped by MercedesBenz and Boscha,lld instead used its oWll.internally deVeloped technology, This t00kplace at the same time thatVW’shaT{.i~driVing:chiefexecutive Martin Winterkorn started pressuring his managers with muchhigher growth targetsfor the U.S;carmaiket. In order to increase market share,VW needed to build the lalTger cars fayoredby Americ<;l;ns~anCiit also had to comply with the Obama administration’S toughening standards 6nmileage. Allautornakers developed strategies to meet the new mileage roles, and VW’s ~ocused on diese1.However, dieselen~nesi while offering better mileage, also emit:more $n10gforming pollut;;l:nts thi;lu conventional engines. VW strategy came. up against AmeriQanair pal1utiol’l standards, whiCh are stricter than those in Europe. Cheating OIl emissionstests solved multipleprob-1ems.Cars equipped with the “cheating” software were a1Jle to deliver better mileage and performance while VW avoided having to pay fore~pensiveand cumbersome pollution-control systems.
VW started installing the software to cheat emissions tests in2008 aftet learning fhatits new diesel engine, developed at great expense for ~ts growt,h strategy, (;ould not meet pollution stat;ldardsin
U.S. and other countries. Rather thanhqlt productibn and discard years ofresearch and develOPment, VS decided the best course .ofaction was togarilethe system. It is unclear whom VW rnanage:ment was responsiblefor this decision. Lawsuits by NewYork, MalTYland, and Massachusetts hayecharged that doZ”ens ofengineers and managers, includingVW’schief executive, were involved.
Volkswagen’s cheating on aut.o emissioT!s tests is not an isolatedintident: Theentire automobile industlTY has a histolTY oftlTYing to rig emissions and mileage data, which began as soon as•govern:i:nents began regUlating automotive emissions in the early
Chapter4 Ethical and Socialtssuesin Info~matlon Systems 151•
1970s..Ford was fined $7.8 mi11ion in 1998 for using defei3-t devices enabling Econoline vansto reduce emissions to pass testing and then to exceed pollution limits when driving at highway speeds. General Motors paid $11 million in fines in 1995 for the defeat devices that secretly overrode the emissions control system at times on some ofits Cadill,,+<;: cars. Caterpillar; Volvo, Renault, and other manufacturers were fined $83.4 million in 1998 forusing defeat devices. Auto manufacturers have also used other ploys to demonstrate better performance and gas mileage, such as taping cars doors and grilles to improve aerodynamics or making test vehicles lighter by removing the back seats.
The erpiss.ions scandal has shaken not just yolkswagen but the entire auto industry. Volkswagen pecame the target ofregulatory iiwestigations in m1Jltiple countries, and Volkswagen’s stock price fell in value by a third in the days immediately following the cheating revelation. Chiefexecutive Winterkorn resigned, and the head ofbrand development HeinzJakob Neusser, Audi research .md development head Ulrich Hackenberg, and Porsche research and development headWolfgang were suspended. Volkswagen announced plans to spend $’7.3 billion, later
CASE STUDY QUESTIONS
1.
Does the Volkswagen emission cheating crisis pose an ethical dilemma? Why or why not? If so, who are the stakeholders?
2.
Describe the role ofmanllgement, organization, and technology factors in crcllting VW’s softWtlre
raised to $18.32 billion, on recti£yingthe emIssions issues and planned to refit the affected vehicles~s part ofa recall campaign. The scandal raised awareness of the higher levels of pollution being emitted by all vehicles built by a wid:e range of car makers, including Volvo, Renault, Jeep, Hyondai, and E1iat, which under real-world driving conditions are prone tp exceed legal emission limits.
The emissions crisis has also sparked discussions about how to deal with other kinas ofsoftwarecontrolled machinery besides automobiles. It is believed that such JllaGhines will generally be prone to cheating and that their software source code should be made accessible to the public.
SO;1T(;es: Jack Ewing and Hiroko ThbU(‘,.hi, ‘Volkswagen Scandal Reaches All the Way tq the ‘Ibp, LawsQits Say,•New York. Tim(JIl, J1lly 19,2016; GeoifreiSmlth Roger PariofL “Hoaxwagen: March 15 2016; Associate.d Press, “:Qerinan Prosecutors II),yest~gatlng Missing Data in vwScandal,• June 9, 20H:1; “Volkswagen and the Cheating Software, ” York ‘rimt3s, September 2.3, 2015; Hakim and Hiroko Thbuchi, ”Volkswagen Thst Rigging Ifollows a Long Auto Industry P<lttern,” New York Times, September 23; 2.015; Danny Hakim, Aaron M. Kessler, and Jack Ewing, “As Volkswagen Pushed to Be No. I, Ambitions Fueled a Scandal,’ New york Times, September 26, 2.015; and Jack Ewing, •Volksw&gen scheme Said to. Have in 20.08,’ New York Umes, October 4, 2015.
cheating problem. Th what extent was management
res:po~sible? Explain your answer.
3. Should all software-controllmg machines be available for public inspection? Why or why not?
Employment: Trickle-Down Technology and Reengineering Job Loss
Reengineering work is typically hailed in the information systems community as a major benefit of new information technology. It is much less frequently noted that redesigning business processes has caused millions of mid-level factory managers and clerical workers to lose their jobs. Several economists have sounded new alarms about information and computer technology threatening middle-class, white-collar jobs (in addition to blue-collar factory jobs). Erik Brynjolfsson and Andrew P McAfee argue that the pace of automation has picked up in recent years because of a combination of technologies, including robotics, numerically controlled machines, computerized inventory control, pattern recognition, voice recognition, and online commerce. One result is that machines can now do a great many jobs heretofore reserved faT humans, including tech support, call center work, X-ray examination, and even legal document review (Brynjolfsson and McAfee, 2011). These views contrast with earlier assessments by economists that both labor and capital would receive stable shares ofincome and that new technologies created as many or more new jobs as they destroyed old ones. However, there is no guarantee this will happen in the future, and the income wealth share oflabor may continue to fall relative to capital, resulting in a loss of high-paying jobs and further declines in wages.
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