International Corporate Governance and Control:

The Volkswagen Case Study

International Corporate Finance

Y

By:
Aurelius Stevan Ruslie
130422009

International Business Networking

UNIVERSITAS SURABAYA
2024
 International Corporate Governance and Control:
The Volkswagen Case Study

The characteristics of international businesses are determined by the fundamental

significance of international corporate governance and control in this age of continuous global
expansion. Through a critical lens, the complex interactions between the structures, procedures,
and guiding principles that regulate relationships between stakeholders on a truly global scale are
examined. It is critical for organizations to have a thorough awareness of the numerous
complexities of corporate governance as they travel to more complicated legal, cultural, and
economic environments. International Corporate Governance and Control covers legal and
informal systems that have an enormous effect on decision-making processes, which include
shareholder rights and corporate structures and board dynamics. This discipline, which acts as a
foundation for openness, responsibility, and moral behavior in an increasingly complex and diverse
global corporate environment, is crucial for businesses aiming to align their operations with
expectations from around the world in this era of increased connection.
The applicability of International Corporate Governance and Control is clearly
demonstrated by Volkswagen's governance issues. The theory's commitment to neutrality and
checks and balances is supported by these concerns, which are evident in the governance structure's
lack of independence and the government's significant position as a large shareholder. Internal
power dynamics and conflicts of interest were allowed to worsen at Volkswagen due to the lack of
a properly independent governance structure, which ultimately contributed to the emissions
scandal. According to the theory, for corporate governance to be effective, there must be a balance
between power and influence as well as a focus on responsibility and transparency—two things
that Volkswagen's governance model obviously lacks.
Volkswagen's ownership structure departs from worldwide corporate governance standards
due to its hybrid nature, which combines government ownership, labor influence, and family
control. To promote trust among stakeholders, the idea highlights how crucial it is to match
ownership and control structures with international norms. In Volkswagen's instance, the
combination of different goals and the absence of clear power structures made it difficult to build
a strong governance structure that could stop and deal with misbehavior.
Beyond its direct stakeholders, Volkswagen's governance failings have an impact on the
larger conversation about corporate governance change. To handle new issues, the "International
Corporate Governance and Control" idea promotes governance systems that are flexible and
always improving. Because of Volkswagen's experience, governance procedures have been
reconsidered, and talks about the need for more universally recognized governance structures to
prevent potential problems of this kind have been started.
 The world community is paying closer attention to corporate governance procedures
because of the emissions issue. This idea suggests that to guarantee consistency and efficacy
beyond national boundaries, corporate governance needs to be guided by global standards. The
need for a thorough, globally synchronized strategy to corporate governance is highlighted by
Volkswagen's governance mistakes. For businesses to remain trustworthy and sustain ethical
standards in an increasingly globalized society, they must acknowledge the interconnections of
their acts and follow the globally acknowledged norms established in the theory.
In conclusion, there is a close relationship between the theory of "International Corporate
Governance and Control" and Volkswagen's governance issues, which are particularly obvious in
the context of the emissions scandal. The government's significant ownership risk, the lack of
independence, and the unusual ownership structure all depart from globally recognized standards
of excellence. This instance highlights how important it is for businesses to quickly align their
governance structures with international standards, placing a strong emphasis on accountability,
openness, and flexibility to avoid governance mistakes and maintain their reputation in the global
business world.
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