Authors: McCormick, Donald W.; Spee, James C.
Source: Organization Management Journal
Company Name: IBM
Number of pages: 10
In 1933 and 1939, IBM's German affiliate, Deutsche Hollerith Maschinen Gesellschaft or Dehomag, obtained the German census contract, and made millions of dollars for IBM by leasing its punch card tabulation machines, which were ancestors of the computer (Black, 2001). The German government tried to prevent IBM from taking its profits out of Germany, and from IBM's point of view, this was the main problem. Germany had created concentration camps and had severely limited the civil rights of Jews and others. Hitler publicly promised to create a master race and dominate Europe. IBM knew this, and knew that the technology would also be used to keep track of Jews, gypsies, gays, lesbians, "work-shy misfits," Jehovah's Witnesses, and political prisoners who were being placed in concentration camps. IBM also knew that Germany was using its punch card machines to coordinate its war effort. At the time of the end of this case, IBM's activities were still legal under US law, and Germany had not yet started the mass executions that were to be known as the Holocaust. Some US corporations stopped doing business in Germany, but not IBM; it was overwhelmingly concerned with profit and market share. The president of IBM, Thomas Watson, received a medal from Hitler in 1937. In 1940, US public opinion turned against Germany, and Watson returned the medal. Outraged by Watson's insult to Hitler, German IBM executives and high-ranking Nazis threatened Watson's control, but they needed punch card technology and had already invested a great deal of money in IBM's technology. Watson was concerned about maintaining control of IBM's German division, shielding IBM from criticism in the US, and keeping it eligible for more German government contracts. At the end of the case, Watson has to decide whether to end IBM's relationship with the Nazis (which means losing all that it had invested and cutting off any possible future contracts), try to continue to make Dehomag work, or come up with some creative third option. (Black, 1984; Heidings, 1934; Heidinger, 1943; IBM Highlights, 1885–1969; New York Times, 1933; New York Times, 1973a,b; 1940a,b,c; Rogers, 1969; USHMM (United States Holocaust Memorial Museum), 2004; Wiesenthal Center, 2004; IBM Highlights 1885–1969, no date; The History Place-Holocaust Timeline, 1997).
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