Globalisation and Corporate Espionage

University Zuyd Faculty of International Business Communication Maastricht, 01-04-2013 Angelo Echtermeijer 0915947 Group A Study: International Business & Languages Pre-Masters Academic Writing Skills Lecturer: Larissa Stutterheim Writing Assignment: Globalization Essay and Literature Review

Introduction What do you think about when globalisation is mentioned? You might think about the increase of competition between companies. Or perhaps you think about the potential of losing national culture. But do you think about corporate espionage? You should. Globalisation is more than just an increase of the interconnectivity between countries worldwide and had a lot of effects on the business environment. Then there is industrial espionage, a growing threat to businesses worldwide. Even though globalisation is often perceived as a good thing, it has resulted in the increase of a threat called industrial espionage. This paper starts with a literature review of the subject globalisation based on two articles. This is followed by the research gap, showing that previous literature did not mention the relation between globalisation and industrial espionage. Then, this research gap is explored in a literature review on industrial espionage based on two articles. Finally, this paper is ended with an overall conclusion, which is that there is a correlation between the development of both globalisation and corporate espionage.

The Numerous Aspects of Globalisation: A Literature Review The term globalisation has rapidly evolved into a hot topic, and has been used in multiple different articles and contexts. In one of these articles, The social dimension of globalization: A review of the literature by Bernhard G. Gunter and Rolph van der Hoeven, the authors consider globalisation to be [...] the gradual integration of economies and societies driven by new technologies, new economic relationships and the national and international policies of a wide range of actors, including governments, international organizations, business, labour and civil society (Gunter & van der Hoeven, 2004, para. 1). The article written by Gunter & van der Hoeven (2004) and the article of Preble (2010) comment on the debate regarding globalisation by investigating, analysing and reporting on the advantages and disadvantages of globalisation. Both articles also include recommendations.

Advantages According to the data of the World Bank and IMF (as cited in Gunter and van der Hoeven, 2004, p. 10) international trade has increased due to the liberalisation of trading across the globe. Also, competition between developing countries has increased. Elliot (as cited by Preble, 2010, p. 333) confirms the increase of competition, and mentions another advantage that resulted from the increased competition: lower prices that hold back inflation. Other advantages of globalisation include the fact that, between 1989 and 2004, global FDI and portfolio equity investment across the world have increased (Gunter & van der Hoeven, 2004). Finally, Preble (2010) identified other advantages of globalisation such as higher standards of living, higher paid jobs created at home (U.S. Chamber of Commerce, as cited in Preble, 2010, p. 333) and much more varied goods being offered (Hill, as cited in Preble, 2010, p. 333).

Disadvantages The data of the World Bank and IMF (as cited by Gunter and van der Hoeven, 2004, p. 12) point out that there are huge differences in the amount of portfolio equity investments in the different income groups, in which high-income countries take account for approximately 90 percent of the world portfolio investment. Also, according to Gunter van van der Hoeven (2004), it is broadly accepted that globalisation leads to insecurity. This includes economic, social and political insecurity. There are other disadvantages, such as unemployment at home, pressure on current loans and abuse of human rights and environmental degradation (Tonelson, as cited in Preble, 2010, p. 355). Also, the threat of losing national culture and identity (BBC News, as cited in Preble, 2010, p. 355) and the threat of a decline in democracy (Preble, 2010) are two disadvantages of globalisation.

Conclusions and recommendations Gunter and van der Hoeven (2004), and Preble (2010) conclude that globalisation has lead to economic growth and that the advantages of globalisation are larger than the disadvantages. However, both authors also have some recommendations regarding globalisation. According to Gunter and van der Hoeven (2004), the majority of literature advises that there should be a development round of trade negotiations and a new financial architecture. Preble (2010) recommends that national policy should focus on the rise of export and on forming barriers to multinationals, in order to prevent them from cancelling a direct investment in a quick and painless way. More recommendations by Preble (2010) are to provide better information on the advantages of globalisation and sovereign nations should protect their own interests better than they have done in the past. Finally, regarding the natural environment, it is recommended that strict policies are created for developing countries and that existing rules are better regulated and that more multinationals should focus on sustainability of the environment.

Analysis of the literature John F. Preble comments on the debate regarding globalisation and linking the subject to four areas: jobs, inequality and poverty, national sovereignty and cultural diversity and the natural environment. This opposed to Bernhard G. Gunter and Rolph van der Hoeven, who demonstrate the impact of globalisation from a more economic perspective, on wages, taxes, poverty, inequality, insecurity, child labour, discrimination based on gender and migration. Both articles The sources used in the article of Preble and in the article of Gunter and van der Hoeven range from 1974 to 2008 and are written in multiple countries, although most sources originated from English-speaking countries which might have resulted in a biased observation by the authors.

Research gap Both Gunter and van der Hoeven (2004) and Preble (2010) stated that competition between companies has increased due to globalisation, but left out what the effects of this change were on the way businesses try to outsmart competitors. It might be possible that because of an increase in competition, companies have started operating more competitive. Some businesses might even cross certain legal or ethical lines to gain market advantage over their competitors. Because of the fact that both authors did not mention any of this at all, research has been done regarding industrial espionage. The purpose of this research is to fill this research gap, and to create awareness for the relationship between globalisation and corporate espionage.

The Increasing Threat of Industrial Espionage: A Literature Review Besides spying on governments for national security purposes, there is also spying on businesses for commercial reasons. This is called industrial espionage, also known as corporate or business espionage. Mostly this consists of businesses spying on competitors with the goal to increase their own market advantage with the information they might gain. Target information of industrial espionage includes future plans, product designs and manufacturing processes (Jones, 2008). Basically, industrial espionage is an illegal way of commercial information gathering and is often considered as unethical (Crane, 2005). The articles written by Jones (2008) and Crane (2005) provide detailed information on industrial espionage, including the different techniques being used. Jones (2008) also shows why industrial espionage never been easier, while Crane (2005) focuses on the gray area between industrial espionage and standard information gathering for commercial purposes. Both authors end their articles with recommendations.

Techniques A lot of the techniques used today are only possible thanks to the invention of the computer and the usage of the computer within all sorts of businesses. Many new techniques have been developed to make use of the increasing use of computers within various business aspects. Due to the use of computers, large volumes of information are stored electronically. This has a direct negative impact on the ability to protect data (Jones 2008). Crane (2005) confirms that it is indeed harder to protect electronically stored information. One common technique of industrial espionage is the theft of laptops or computers. Revealed by securityfocus.com, as cited by Jones (2008), 10% to 15% of the laptops were stolen with the purpose of selling the information they contained. The Computer Security Institute / FBI Computer Crime and Security Survey, as cited by Jones (2008), estimated in 2002 that the

average loss as a result from a stolen laptop was approximately US$89000. Only a small percentage of this loss actually comes from the costs of the stolen laptop itself. Other common techniques that take advantage of the increasing use of computers involve using key loggers, spyware and creating back doors. Techniques such as wire tapping and interception of wireless signals do not require computers (Jones, 2008).

Conclusion and recommendations Crane (2005) concludes that due to the progress in information and communication technologies, industrial espionage has become a bigger problem than it was before. Business have more opportunities regarding industrial espionage and are more willing to cross the fine line between intelligence gathering and industrial espionage, due to the ease of different techniques. Jones (2008) agrees with the conclusion that industrial espionage never was a bigger threat to businesses as it is today. He states that industrial espionage has become more easy due to businesses increasingly using technology. There is now so much personal and corporate information available in electronic form that the biggest problem facing the perpetrator conducting the espionage is where to start looking for the information that they need. (Jones, 2008, p. 13) Crane (2005) recommends that companies stop thinking of themselves and their competitors as opponents of each other, and start thinking they are each others allies and look for shared interests. Crane (2005) considers this will result in less industrial espionage. This helps the different industries, since a reputation for spying is a disadvantage for any business or industry.

Jones (2008) recommends that businesses should protect themselves and their data more to industrial spies, as he points out that that it has only become easier and more attractive to participate in the world of industrial espionage.

Analysis of the literature The article by Andrew Crane, member of the International Centre for Corporate Social Responsibility at University of Nottingham Business School, focuses on the ethical side of corporate espionage and investigates the thin line between regular gathering of competitive intelligence and the act of corporate espionage. This in contrast to the article by Dr Andrew Jones, head of Security Technology Research Centre at BT Security Research at Edith Cowan University, which mainly discusses the technological side of corporate espionage as well as measures organisations can take to decrease the probability of becoming a victim of corporate espionage. Even though both articles are written from two different perspectives, both authors agree that corporate espionage is a significant problem for businesses. While Andrew Crane used multiple sources for his article, with years of publication ranging from 1984 to 2002, it seems that Dr Andrew Jones has not used any articles as a source for his article, or at least failed to mention them.

Conclusion As economies and societies have integrated, more fully driven by new technologies, globalisation has become a fact that has resulted in numerous advantages and disadvantages. Globalisation has lead to economic growth, an increase of international trade and an increase of competition. It seems that globalisation has brought more advantages than disadvantages. Meanwhile, industrial espionage has grown to be a bigger problem that it ever was before. While the competition between companies has increased, businesses are spying more and more on their competitors to gain information that might help them strengthen their market advantage. More companies are willing to cross the fine line between intelligence gathering and industrial espionage. Due to new technologies, large volumes of information are stored electronically and it became harder to protect this information. New industrial espionage techniques have been created to take advantage of these new technologies. The biggest boost industrial espionage techniques had, was the invention and the usage of the computer within all sorts of businesses. If both globalisation and the increase of industrial espionage happened in the same period, does this mean that one lead to the other? In this case, it does. While both globalisation and industrial espionage profited from new technologies, it was globalisation that caused an increase in competition, which has lead to more businesses participating in the act of industrial espionage. Therefore it seems unfair to only blame these new technologies for the fact that industrial espionage has become a bigger threat than it ever was. So while globalisation has increased, bringing all kinds of good to the world like economic growth and an increase of international trade, corporate espionage has unnoticeably grown to be a bigger threat than it was ever was before.

References Crane, A. (2005). In the company of spies: When competitive intelligence gathering becomes industrial espionage. Business Horizons , pp. 233-340. Gunter, B., & van der Hoeven, R. (2004). The social dimension of globalization: A review of the literature. International Labour Review . Jones, A. (2008, January). Industrial espionage in a hi-tech world. Computer Fraud & Security, pp. 7-13. Preble, J. (2010). Toward a Framework for Achieving a Sustainable Globalization. Business and Society Review, 115:3, 331.