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Corporate Espionage and Ways to Prevent It

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Corporate espionage is nothing new. It has been in practice for decades and was used during the Cold War by the Soviets to steal U.S. technologies. The global economy has widened the playing field and raised the stakes for corporate competition and espionage, both defensive and offensive. American companies, big and small, lose billions of dollars a year through corporate espionage. There is a huge amount of business at risk if it isn’t detected and prevented. Those who don’t actively pay attention to it and protect their businesses become easy targets for their competitors near and far.

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The difference between competitive intelligence and industrial espionage, is significant. By definition, industrial espionage refers to illegal activities – which range everywhere from outright theft to bribery and everywhere in between. Conversely, competitive intelligence collection is governed for the most part by adherence to corporate and professional ethics which preclude the use of illegal means to obtain information. Moreover, the distinction between the two is in terms of modus operandi. At bottom, the competitive intelligence process consists of collecting information – as elements – which when legally, ethically but rigorously collected and analyzed, can provide the same kinds of information as might otherwise have only been available through such illicit means as theft

Burglary, outright theft or bribery might be some of the ways that criminals would resort to in order to obtain what a competitor may need constituting an act of corporate espionage. Basically there are three primary motivations behind corporate espionage. First, an individual corporation may use corporate espionage to advance their goals towards maximizing shareholder value. Secondly, state-sponsored corporate espionage is an essential ingredient of modern day economic warfare or military application of the intellectual property. Thirdly, special interest groups may conduct corporate espionage to gather data to further their cause (i.e. environment interests).

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It is for this reason the United States Congress passed an Economic Espionage Act of 1996 to criminalize the vice and to specify the nature of punishment that individuals who engage in the act shall be given. In the case study, it is clear that Pan American International Bank has suffered economic espionage and theft that has left many stakeholders worried. This is one of the most important financial institutions in the United States that serves the locals and the international community, especially Latin Americans. The cyberattack on the bank that led to the loss of hundreds of millions of dollars is a theft that borders economic sabotage given the ripple effect it would have on the economy and individual clients of this bank. Spying on organizational clients of this bank, especially major research institutes, is another crime defined in the Economic Espionage Act of 1996 (Sims & Gerber, 2009). This is a very sensitive issue that needs the attention of Denis McDonough, the current Chief of Staff

Immediate action must be taken to ensure that this problem is addressed in the most effective way possible. It is not only necessary to find ways of recovering the stolen cash, but also to determine reasons why the criminals are interested in spying on these major high technology firms in the United States.

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Given these points, intelligence on competitors gathered in a legal way can give a leg up in the fight for market share. But sometimes it’s not enough. Competitors send spies to gather information more often than you would think, judging by the news. Industrial espionage embraces illegal and unethical methods of collecting corporate data. It involves stealing intellectual property and trade secrets to use them for a competitive advantage. The theft of economic information sponsored by foreign states is called economic espionage

It’s done not just for profit but for strategic reasons.

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Rose, S. (2010). For all the tea in China: How England stole the world’s favorite drink and changed history. New York: Viking.

Sims, J. E., & Gerber, B. L. (2009). Vaults, mirrors, and masks: Rediscovering U.S. counterintelligence. Washington, D.C: Georgetown University Press.

Winkler, I. (2005). Spies among us: How to stop the spies, terrorists, hackers, and criminals you don’t even know you encounter every day. Indianapolis, IN: Wiley Publishers.

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