ABSTRACT This paper examines how well‐intentioned organizations can descend into unethical behavior, using the Volkswagen emissions scandal as a case study. Traditional approaches emphasize a gradual escalation of wrongdoing, but our analysis uncovers stage‐like shifts in deceptive practices. Adopting a cybernetic perspective grounded in perceptual control theory (PCT), we frame the escalation of deception as a self‐regulatory, multilevel, goal‐directed process. PCT explains how systems use feedback loops to manage discrepancies between perceived and desired states. Our findings reveal how four critical feedback loops—reflecting the organization's attempts to reconcile goals with external disturbances—drove the evolution of deceptive behaviors. This study offers a fresh lens for understanding how such scandals unfold, addressing a gap in the literature. It also provides actionable insights into managing ethical risks, highlighting the importance of integrating ethical considerations into organizational control systems to prevent maladaptive behaviors.
Tanner et al. (Sun,) studied this question.