CASE 1.4 IBM\'s Business with Hitler: An Inconvenient Past ludith Schrempf-Stirl

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CASE 1.4 IBM's Business with Hitler: An Inconvenient Past ludith Schrempf-Stirling, and Guido Palazzo ludith Schrempf-Stirling is an Assistant H. Rottke Professor of Management, Robins School of Business, University of Richmond; and Guido Watson stared at the letter and wondered what to Palazzo is Professor of Business Ethics, HEC, rspond while recalling the economic, political, and University of Lausanne social climate in Germany September9,1939:IMHeadquarter, New York. With full attention Thomas J. Watson, president of International Business Machines (IBM) read the PERSECUTION OF JEWS IN GERMANY business letter from Herman Rottke, maerof When Adolf Hitler became Reich Chancellor in 1933 IBM's German subsidiary. Dehomag which arrived he announced his ambition to strengthen Germany's by mid-September 1939, only a few days after Adolf economic and territorial position and to create the (Jew-free) Master Race. Many of his initiated reg- ulations and activities were aimed at bringing this vision into reality. He passed critical discriminating During your last visit in Berlin at the beginning regulations, and he initiated and supported boycotts Hitler had invaded Poland. Dear Mr. Watson: of July, you made the kind offer to me that you might I ? ? illing to arnish the German company machines from Endicot terms. 1.. asked you to leave with us for study pur poses one alphaberic tabulating machine lator out of the American mac against the Jewish population. The extermination of Jews (genocide), however, was not planned from the beginning but gradually developed. Only in 1942 the "Final solution to the Jewish question" was decided at the Wannsee Conference. In total, Hitler's fight against Jews developed in six phases: identification. exclusion, confiscation, ghettoization, deportation, phases took place in order to shorten our long delivery and a col. hines at present in with this request, for which I thank you very much, and have added that and extermination The last two in cases o f urgent need, I may make use of other after the Wannsee Conference (1942). First, Hitler's Nazi regime identified those people You will understand that under today's condi who-according to Nazi philosophy were of tions, a certain need has arisen for such machines, the minor race, ie. Jews. Hitler ordered that a cen- which we do not build as yet in Germany. Therefore, sus be carried out to find out how many Jews lived American machines.... I should like to make use of your kind offer and ask in Germany and where they lived. According to leave with the German company for the time Nazism, it did not matter whether a Jew was a prac- hich ticing Jew or not. Using complicated racial math- are at present still in the former Austria.... This ematics, the Nazis derived at different categories of offer, made orally by you, dear Mr. Watson. .wil Jews (full Jew, half Jew) Having Jewish ancestors undoubtedly be greatly appreciated in many and made a person Jewish. For the Nazis, all kinds of especially responsible circles... We should thank Jews were a threat to the Aryan race and needed to you to being the alphabetic tabulating machines you if you would ask your Geneva organization, atbe identified and excluded from society parts for the maintenance of the machines. Yours very truly the same tme, to furnish us the necessary repairThis second stage, exclusion, began with the introduction of the Aryan Paragraph in 1933. The Aryan paragraph entitled only Aryans to be

Explanation / Answer

1.Legal argument for signing the order to transfer the machines to the German IBM subsidiary is as a business it cannot refuse to provide products and services. As per legal terms, IBM was not having the authority to declare Nazis actions or practices against the society. The process which was started as enabling systematic record of information for census later turned into a tool for classifying a particular community and doing racial atrocities against them.

Economic argument is the company goals to grow the business led it to establish its business practices in Germany, increase the business and spread the business to other European countries. Since the company had invested in the equipment and manpower, results of withdrawing or stopping the support was loss and negative impact on the business.

The ethical argument against the order to transfer the machines to the German IBM subsidiary is that the business supported the practice of Nazis of oppression of Jews. With the help of the machines and systems given by IBM the process of segregation, keeping records etc. IBM should have withdrawn its support and machinery maintenance to Nazis actions of tormenting Jews as it was unethical to involve in activities harming the interest of social communities and supporting racism.

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