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Firms and Collective Reputation

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Firms and Collective Reputation

The Volkswagen Emission Scandal as a Case Study

CESifo Group Munich,

5 min read
5 take-aways
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What's inside?

Volkswagen’s emissions scandal inflicted reputational damage across the German automotive industry.

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Volkswagen’s admitted deception involving diesel car emissions in 2015 violated the standards on which the German automotive industry stakes its vaunted worldwide reputation. In one ethical breach, a single firm’s conduct negatively affected the US sales, stock prices and consumer opinions of other German carmakers. In this technical but compelling report, academics Rüdiger Bachmann, Gabriel Ehrlich and Dimitrije Ruzic present an important look at the power of reputation in business. getAbstract recommends their analysis to policy experts and executives.


The actions of one can affect the well-being of many. Such was the case with the Volkswagen (VW) emissions scandal that tarnished the reputation of the German auto industry and inflicted spillover damage on BMW, Smart and Mercedes-Benz.

In September 2015, the US Environmental Protection Agency notified the VW Group, the parent company of Volkswagen, Audi and Porsche, that it had committed a violation. The complaint alleged the presence of a “defeat device” in diesel-engine cars that cheated on emissions-compliance testing. The vehicles passed the...

About the Authors

Rüdiger Bachmann is an associate professor at the University of Notre Dame. Gabriel Ehrlich is an assistant research scientist at the University of Michigan, where Dimitrije Ruzic is a PhD candidate.

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