Introduction
Industrial espionage refers to the unethical access of a business’ trade secrets with the aim of attaining a competitive advantage. It is often done by an insider who gets employment with the primary aim of stealing the information for a competitor. The issue may entail activities such as technological surveillance, bribery, and blackmail. It is majorly associated with technological companies (Hou & Wang, 2020). Competitive intelligence refers to the collection and evaluation of actionable information about a competitor with the aim of developing a competitive advantage. It differs from industrial espionage as it is an ethical approach to collecting information (Ranjan & Foropon, 2021). Despite their differences, both tactics can lead to ethical and legal implications for a company. The paper discusses a historical event of industrial espionage and an example of competitive intelligence that is unethical in business.
Historical Event of Industrial Espionage
Description of the Event
A famous event of industrial espionage involved International Business Machines Corporation (IBM) accusing Hitachi Ltd. of stealing its computer technology in the early 1980s. During the period, few organizations were involved in the manufacture of computers. The computers were large and expensive, increasing the level of competition among the manufacturers. This feature could have been the reason behind Hitachi’s payment of $648,000 to attain important information from IBM. The stealing implicated many of the organization’s executives, with multiple numbers of arrests (Sherman, 1983).
IBM filed a lawsuit against Hitachi for illegal attainment of its trade secrets. Hitachi entered a guilty plea and was fined $10,000 for the damages. Kenji Hayashi, a senior engineer, was fined $10,000. Isao Ohnishi, a software manager, was fined $4,000. They were both put on unsupervised probation and were not allowed to conduct any business in the United States. Contrarily charges against Kanimaga Inoue were resolved without a trial. Inoue worked as a programmer at Hitachi’s branch in San Francisco, California. Similarly, Keizo Shirai’s case was also resolved without a trial. Employees who were not involved in the Espionage Act were not directly affected by the lawsuit (Sherman, 1983).
Lessons Learned from the Event
The case revealed that the technological sector is highly competitive as it is associated with innovativeness. Consumers in this industry are more loyal to organizations with the best and new ideas. The case also tries to show that it is tough to topple a dominant company in the technological sector. It can be shown by Hitachi’s willingness to pay massive amounts of money to be able to topple IBM (Sherman, 1983). Despite the efforts, IBM continued to perform well. In addition, it shows that sometimes, business organizations may engage in activities that do not align with their values. Many executive personnel may be involved in espionage activities with the aim of improving their productivity. Ethical standards that are initiated to guide a business’ operations are often overlooked. Therefore, organizations may need to educate their employees to improve their adherence to various ethical principles (Kinmonth, 2021).
From another aspect, the event shows that even with technological advancement, organizations tend to have weak areas that outsiders may utilize to access their secrets. Therefore, they need to monitor their assets and processes to reduce the occurrences of espionage. It also depicts that espionage acts are punishable by law (Sherman, 1983). Organizations and employees who are involved in the events may be fined high amounts of money when found guilty. Besides, they may also lose their reputation, which may affect their sustainability. The success of IBM’s lawsuit reveals the importance of legal frameworks and the international cooperation of investigation agencies. For instance, without the involvement of the Federal Bureau of Investigations (FBI), the culprits may never have been arrested (Kinmonth, 2021).
The espionage issue also depicts the importance of developing security awareness at every level of a firm. The management needs to develop measures that help in reducing the risks of espionage. The employees need to be educated on how to apply the measures for them to be effective. It also reveals that organizations need to vet their employees to determine the background of those holding sensitive positions or those who are able to access confidential information. They also need to vet their visitors to determine their intentions. These acts may lead to early identification of potential information risk. Also, IBM’s actions show that firms need to develop suitable response and mitigation plans after an espionage incident (Hou & Wang, 2020).
Impact on Industrial Espionage Today
Despite Hitachi engaging in a primary offence, the judgment was lenient. The company apologized and paid the required fines. Some of its employees were prohibited from working in the United States. Despite these drawbacks, it is observed that Hitachi’s operations continue to flourish, with the organization expanding to include products such as renewable energy devices and healthcare technology solutions (Sherman, 1983). From this aspect, Hitachi’s case tends to motivate organizations to engage in espionage activities as they may only be required to pay small amounts of fines if they get caught. This feature may explain why there has been an increase in the number of espionage cases across the globe. Research shows that foreign companies have been penetrating the networks of European and American organizations on a regular basis since the 1990s. It has led to an increase in the level of technology theft.
With the advancement of technology, espionage today primarily involves the use of strategies. Instead of organizations paying insiders to reveal confidential information, they utilize hackers who apply cyber tools to bypass an organization’s web security. Hitachi’s espionage involved workers from different regions. For instance, some of the culprits were working in Japan, while others were in the United States. This feature inspires espionage to be carried out on a global scale with lower risks of getting caught. It is also noted that the advancement of espionage strategies also leads to the improvement of complicated counter-intelligence strategies. The failure of IBM to realize espionage quickly inspires organizations today to hire cybersecurity personnel with advanced skills to counter cybercrime incidents (West, 2021).
Competitive Intelligence
Example of Competitive Intelligence
While competitive intelligence is considered to be more moral than industrial espionage, there are times it can cross the line. Insider trading is an example of competitive advantage being used in an unethical manner. It entails the use of confidential information about other organizations for personal gain (Ranjan & Foropon, 2021). A high-profile scenario of this issue involved Martha Stewart in 2001. She sold stock in ImClone after attaining insider information that the organization’s new drug would not get FDA approval. The information meant that if Martha did not sell her stocks, she would get losses because the organization was going to have a negative performance in the stock market. While she had used the information for a good purpose, she crossed the line by attaining confidential information using unethical means. She was sued for engaging in unethical activity (Liu & Miller, 2019).
Ways of Avoiding the Line
Avoidance of insider information is essential in maintaining a positive reputation for a company. To prevent crossing the line using insider information, organizations need to focus only on utilizing information that is presented to the public. To increase its access to public information, an organization may need to hire employees with vast experience in research. They can attain information from company reports, industrial analyses, mass media, and organizations’ websites. The strategy ensures that in case of a competitive advantage, a firm can trace to a fair source of information (Ranjan & Foropon, 2021).
Moreover, firms need to critically analyze sources of information to determine if they are legal. Sometimes, unauthorized people may access insider information and release it to the public without getting a firm’s consent. The act means that despite the information being accessible, it is illegal. By understanding the nature of a source of information, it is easier to avoid adverse legal implications for unauthorized access to a company’s confidential information. A firm also needs to create a strong network with other organizations in the industry. The act enables it to increase its legal sources of information. Participation in industrial conferences may help the management to understand emerging issues regarding various organizations (Ahern, 2020).
In addition, firms need to utilize technology that supports practical analysis of available data. It ensures that a firm relates essential information to its rivals without the need to get private information about its operations. Having good data analysts enables a firm to attain insight into other forms of competitor analysis, thus reducing the need to use insider information. Business entities also need to develop a culture of creativity and innovativeness. Utilization of new ideas helps a firm to stay ahead of its competitors, thus enabling it to dominate the market. As a result, the act increases its capability to utilize fair methods of operations (Ahern, 2020).
From another aspect, business organizations need to enforce strict policies regarding information utilization. The policies need to be guided by principles of business ethics. Implementation of these policies should be followed by training of employees. The process enables them to be aware of ethical and legal implications if they are involved in the use of insider information for their gain. In addition, the management needs to initiate regular monitoring programs. Monitoring ensures that a firm’s competitive intelligence activities align with the legal and ethical expectations. In case of any problems, regular monitoring ensures that the issues are identified and controlled on time (Ranjan & Foropon, 2021).
Conclusion
Criminal justice provides specific guidelines on how businesses should operate. Information access and usage may lead to law offences such as theft and breach of trust. The paper shows that industrial espionage is an unethical practice that affects an organization’s reputation. It majorly involves organizations in the technological industry since the firms have the technical abilities to access confidential information. Hitachi’s involvement in espionage is shown to have had legal implications for the organization and some of its employees. The act may also have inspired espionage acts that have occurred in later years. While competitive intelligence is considered to be more ethical than espionage, there are times when its usage crosses the line. An example of such a scenario entails the use of insider trading. To avoid this, an organization needs to utilize strategies such as the enforcement of solid policies.
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