There are likely lots of second-order effects here, so it's hard to tell.

The engineers may have been better rested and thus able to deliver more quickly and reliably thanks to a sense that they had an effective peer support group.

The eventual product quality may have been higher thanks to the additional oversight, review and input - leading to increased market demand.

The support, stability and resulting confidence offered to employees may have spread via word-of-mouth to their familities, friends and extended networks, increasing marketplace faith in the company and trust in the product.

And, perhaps the simplest albeit least thought-provoking explanation: perhaps the additional 40% engineering salary overhead did not have a significant impact on the company finances.

Sell sturdy vehicles with compelling features, like standard front three-point seatbelts in 1959? Volvo did go through the financial wringer into the 1970s, with a rocky launch of the 200-series and the heavy vehicle division being separated from Volvo Cars, but the 700-series was enough to bring them back into solid financial standing.

I don’t think it’s either/or. In my organization people pride themselves of being 150% occupied. But it means they’re doing a half assed job at everything, kicking cans down the road just to keep afloat, and are juggling multiple projects at the same time. The bottom line isn’t much better than if they were 50 or 75% busy because the work quality is so low. We have to redo things all the time as a result. A colleague/close friend of mine is smarter and works at 50 to 75% capacity. Her output is very similar to overworked colleagues because he doesn’t have to redo things several times but a he’s far less tired and makes better decisions. The difference with her is that she doesn’t have a mortgage and her financial commitments are far lower than her income. She doesn’t fear being let go.

Parent comment did not say if they were overstaffed relative to competitors.

What do you imagine is the situation at Apple? Are their products uncompetitive?

Likely due to oligopolism[1].

[1] http://paulgraham.com/re.html

Maybe things like healthcare, childcare and houses were much cheaper back then, so the engineers did not demand high salaries?