It has long been a topic of debate on the pros and cons of growth and competitiveness through unrelated diversification of large business enterprises. This article explores the impact of corporate diversification on business competitiveness of Westinghouse Electric Corporation in the U.S. steam turbine market, over close to two decades of the postwar period.
Westinghouse has been deemed to be a prime example of the decline of U.S. industrial enterprises through overdiversification during the 1960s, but there were important other factors, as well as the earlier “timing” of declining its core business competitiveness than commonly indicated, to understand the relation between the pursuit of diversification and declining competitiveness.
Two factors, namely entry of munitions business in the 50s and insufficient R&D investment in incremental innovation during the early 60s, are important for explaining the decline in competitiveness in the Westinghouse core business, suggesting judicious examination about the impact of the military-industrial complex on the declining of industrial enterprises that can be investigated to further understand the history of big business.
The findings also highlight the importance of looking at strategic plot (e.g. “building the total electric city”), as well as managerial belief for corporate growth, with top management perceiving ‘unrelated’ business as ‘related’ by expanding the traditional strategic belief of “the benign circle of electric power,” in studies of diversification with business competitiveness on Westinghouse. Also considered is an examination of competition-based forces that led to unreasonable diversification and the decisive impact brought on by a gap in scale of required resources. The article may extend our understanding of how top management integrates changes in the external environment and internal resources into corporate strategy in modern business enterprises.
60 years ago, S.P. Hays analyzed the federal government’s resource management policies and the professionals involved in this conservation movement. This led him to discover that local resource users opposed the scientific and centralized approach of professionals in federal agencies. The term, “the Conservation Era,” coined by Hays, is reassessed in this article through case studies of two federal agencies—the US Department of Agriculture (USDA) and the US Reclamation Service (USRS).
In the early twentieth century, the US government launched the Reclamation Project and started systematic supports to settlers in the western United States. During the project, the USRS and the USDA established experiment farms and began investigating irrigated agriculture in the West. The farms were operated by USDA officials in cooperation with state experiment stations and state universities. While the two federal agencies sent advisors to farmers from the fiscal year 1915 onwards, similar projects under the Smith-Lever Act were underway. They were managed by the USDA and state universities.
The USDA and state authorities oversaw most of the support projects. Although the target of support included something new—irrigated agriculture—there was neither an expertise exchange between the USDA and the USRS nor a proposal to support new methods. Thus, its nature was not different from existing agricultural extension activities. This finding does not support Hays’ explanation. The characteristics of federal resource management policies and the role of experts he claimed do not necessarily apply to all the policies.
The experiment farm was established in a manner that indicates that the two government agencies had organized and strengthened cooperation before Congress increased the budget for agricultural support in 1914. While the two agencies are often portrayed as adversaries at the beginning of the twentieth century, it wasn’t always the case.