The Diversification and Business Competitiveness of Postwar Westinghouse Electric:

Strategic Narrative from the 1950s to the 1960s

Abstract

This article is a reexamination of the relationship between the diversification strategy that Westinghouse Electric pursued in the postwar years and the decline in the competitiveness of its turbine business that resulted. It has been undertaken from the perspectives of management’s strategic awareness and its ability to adapt to the environment. In contrast to the vast amount of previous research that holds unrelated diversification to be the root cause for Westinghouse’s decline, this article clarifies that the primary factors for this were the constraints on human resources of the 1950s and the errors in innovation investments of the early 1960s. Furthermore, it points out that the strategic justification for diversification contained both a “strategic narrative” meant to conform with existing resources and the “strategic belief” that would support it.