The War of the Currents was a real competition between two important industrial figures – Thomas Edison and George Westinghouse – over which type of power would become the dominant standard for distributing electricity across the United States. Edison was the initial combatant and championed direct current or DC, in which electricity would flow in one direction as batteries do. Westinghouse favored alternating current or AC in which the electricity reversed its flow in regular periods. After Edison successfully demonstrated a limited distribution system of DC, its limitations at scale began to appear and questions arose as to how DC power could be generated and distributed nationwide. Westinghouse was convinced that AC was better suited for scale and could be reliably and safely transmitted over much longer distances. A third figure, Nikola Tesla, played a critical role in the story – as he was initially an employee of Edison but would be fired and then joined Westinghouse’s side.
The movie portrays the tension that rose into open conflict between the DC and AC camps. Edison was perhaps too committed to the investments put into DC and too concerned over his legacy, and so began a campaign to out AC as extremely dangerous and unfit for use. Westinghouse initially did not respond to such claims until they grew into a smear campaign. Despite being openly opposed to any use of electricity to harm another human being, Edison began electrocuting animals as a way of demonstrating AC’s supposed danger. As these tactics slowly eroded support for AC power, Westinghouse responded with a campaign of his own.
What ended the war was the 1893 World’s Fair in Chicago, followed by the construction of a hydroelectric plant in upstate New York that delivered AC current. This showed that AC was the better standard.
In a seminal review article in 2020, Nina Bandelj published “Relational Work in the Economy” that directly contrasts relational work from the embeddedness perspective which we covered in Episode 127 on the works of Granovetter. In that perspective, the “structure of relations [influences] economic outcomes. In contrast, relational work [predicts] whether an economic transaction is accomplished and how depends on the viable matches of relation, transactions, meanings, and medias of exchange” (Zelizer, 2012: 255). Within the relational perspective, economic actors make distinctions about classes of money (sometimes referred to as “colors of money”) that determine social and cognitive ways that money is utilized. Sometimes, the exchange may be disreputable or morally objectionable, such as for the purchases of vices or illegal goods, in which cases the exchange may occur in a hidden (“obfuscated”) fashion such as bundled with other legitimate purchase or brokered through third parties. Emotions are also important as some actors try to influence the mind of the other party to make (or not make) a purchase, such as how real estate agents or used car salespersons attempt the hard sell – invoking the client or customer’s emotional responses to convince them that they want to buy that house or car even when it is not in their best interests to do so.
The Tushman-Anderson article helped us consider the impacts of technological breakthroughs and how they increase uncertainty and complexity in organizational environments. Their study examined three industries – minicomputer, cement, and airlines from their inception to the 1980s, showed that how breakthroughs appeared foretold their impact. So-call competence enhancing discontinuities would emerge from existing firms and result in less turbulence in the environment; while competence-destroying ones would come about from new firms and create more turbulence.
The Cole-Chandler article covered impression management, the study of how firms respond to threats from specific events or campaigns orchestrated by others. Using the war of the currents, they presented an idea of competitive impression management in which a firm tries to alter the perceptions of a competing firm, much like how Edison used the electrocutions of animals to warn off AC supporters. Cole and Chandler’s modeled the war in a series of stages that showed how the communications of the main antagonists fed the interests of other actors in the environment and their responses, provided a rich look at how the tension rose and then ultimately how it resolved.
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You may also download the audio files here: Part 1 | Part 2 | Part 3 | Supplement
Watch or Read with us:
Gomez-Rejon, A. (Director). (2017). The Current War [Film]. The Weinstein Company.
Cole, B. M., & Chandler, D. (2019). A model of competitive impression management: Edison versus Westinghouse in the war of the currents. Administrative Science Quarterly, 64(4), 1020-1063.
Tushman, M. L., & Anderson, P. (1986). Technological discontinuities and organizational environments. Administrative Science Quarterly, 31(3), 439-465.