1. ¹Department of Management, College of Business and Economics, California State University Northridge, Northridge, CA, USA
2. ²School of Business, University of Redlands, Redlands, CA, USA

Correspondence: Donald W McCormick, Department of Management, College of Business and Economics, California State University Northridge, 18111 Nordhoff St., Northridge CA 91330. E-mail: dwm2@cwru.edu

Abstract

In 1941, one of IBM's most profitable customers was the German government. Germany leased IBM's punch card tabulation machines (ancestors of the computer), and used them in its war against France, the United Kingdom and others. They were also used to conduct the census, to keep track of Jews and other "undesirables", and to operate the concentration camps. In 1937, Hitler awarded Watson a medal. By 1940, however, US public opinion had turned against Germany and he returned the medal. Outraged, German IBM executives and high-ranking Nazis threatened IBM's control over its subsidiary. Although its activities were legal under US law, IBM was concerned about maintaining control of its German division, shielding itself from criticism in the US, and remaining eligible for more German government contracts. Watson needed to decide whether to maintain IBM's lucrative relationship with Germany, make a clean break (and lose all its assets), or perhaps do something entirely different.