July 2003 1 In the company of spies: the ethics of industrial espionage Andrew Crane Abstract This paper takes a critical look at the practice of industrial espionage. By focusing on three recent cases of industrial espionage, involving major multinationals such as Proctor & Gamble, Unilever, Canal Plus, and Ericsson, light is shed on current developments in the competitive intelligence gathering ‘industry’ and the ethical problems that are typically surfaced. The argument is made that, from an ethical point of view, industrial espionage can be assessed according to three main considerations: the tactics used in the acquisition of information; the privacy of the information concerned; and the consequences for the public interest as a result of the deployment of the information by the intelligence gatherer. These issues are examined in the context of the three cases, and their implications for the overall definition and assessment of industrial espionage are considered. Keywords Business ethics Competitors Industrial espionage Intelligence gathering Market research Information and communication technology. Introduction Espionage is a word that brings to mind James Bond movies, or the spy stories of John Le Carre. But in recent years, espionage has also become widely associated with business practice too. Industrial espionage is essentially a form of commercial intelligence gathering, usually, but not exclusively, on the part of industry competitors. With global competition intensifying, finding out about rivals’ products and processes has become big business – and competitive intelligence gathering is increasingly seen as an important and largely acceptable form of market research. Although industry representatives, such as the society for Competitive Intelligence Professionals argue that industrial espionage, or spying, is both unethical and illegal, there is sometimes a fine line between the ‘legitimate’ tactics of competitive intelligence gathering and the ‘illegitimate’ practice of industrial espionage (Shing and Spence 2002). In this paper, we shall look at some high profile cases where allegations of industrial espionage involving some of the world’s top companies have hit the headlines, and in so doing, explore some of these grey areas between acceptable and unacceptable intelligence gathering practices. In order to do so, we shall begin with a brief outline of the nature of industrial espionage and competitive intelligence gathering. We shall then proceed to outline our three cases, before discussing the cases in terms of a set of ethical tests that should throw light on how to determine the acceptability or otherwise of the practices concerned. We shall conclude with a discussion of the nature and boundaries of industrial espionage in the contemporary business environment. Industrial espionage and competitive intelligence gathering All organizations collect and make use of some kind of information about their competitors and other organizations. Just as a university will typically investigate which courses are offered by other universities, or may ask a new member of staff