The latest emissions scandal at Volkswagen reveals how easily corporate reputations can come tumbling down and how quickly stakeholder relations (e.g. with customers, with governments and even with own employees) can be severely damaged or even evaporate. Whereas under different conditions, companies could claim ignorance (e.g. child labor deep in their supply chains), it is obvious that in the VW case there is an explicit intentionality of fraud, at least by some people at the company. Since the scandal erupted, VW has been doing a lot of "talking" and not so much "doing". That, in my opinion, is the wrong approach. Apologies are useful only to the extent that they are accompanied by concrete action focused on rectifying this mess. VW needs to be as transparent as ever in terms of the process and the outcome of any internal investigation, and about the consequences for those that are found to be responsible for the fraud, no matter how high up they might be. It is the time to be as open, and as frank as possible, not a time to hide. Fixing the cars themselves is, of course, the least that the company can do. There are bigger challenges in terms of fixing the violation of trust with customers, and policy makers, and the betrayal of the values of their own employees. It might well be the case that corporate culture and core values at VW are not as cohesive and as consistent as top management might have assumed; this should lead to a close examination of structures and processes as well as incentives at the company. In the past, some companies not only recovered from major scandals but importantly, they subsequently became leaders in their industries on issues of responsibility and accountability. It is not clear at this point whether VW will be one such company, but that window of opportunity is closing down quickly.

You can also listen to a BBC interview that Prof. Ioannou gave following the resignation of the CEO here (at minute 48).