What happens if you are caught acting unethical?

In light of the VW scandal, ethics in business is a hot topic. If caught acting unethical, a consumer can lose serious trust in its business creating negative knock on effects in sales.

The business sector hosts many historical unethical stories, one relevant to my blog is between Virgin and BA. In the early 1990’s Virgin moved from Heathrow to Gatwick, intensifying their competition with British Airways. A large scandal arose between the two airlines where Virgin accused BA of ‘Dirty Tricks’. Branson claimed BA used spoiling tactics, private investigators, and that BA had recruited ‘Hunters’ who would poach Virgin passengers and make them travel BA instead (Branson, 2007, p. 357). Both the Sunday Times and the Guardian wrote articles backing Branson’s claims. However, BA seemed immune to the criticism due to their long history of a positive reputation. Enough evidence was eventually found for Virgin to sue BA and Lord King for libel, where they won damages of £110,000 for Virgin Atlantic, and £500,000 for Richard Branson, and paid a £3 million legal fee (Branson, 2007, p. 392).

Although it was claimed that “the directors were not party to any concerted campaign” (Branson, 2007, p. 394), Lord King retired a few months later in June 1993, emanating signs of a guilt. These tactics are signs of an unethical leader in terms of deception and breaching agreements. Lord King was lucky because executives of companies could face criminal charges if they “break laws and engage in unethical behaviour that leads to harmful practices for employees” (Zeiger, 2015).

Although BA managed to get out of this legal battle fairly unscathed, this doesn’t always happen. VW weren’t as lucky, simply because the extent they went to, to cheat the emissions tests is undeniable. VW lost peoples trust in their company, resulting in the loss of 30 billion euros of costs so far (Sheahan, Cremer, & Chambers, 2016).

 

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