<p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p>