What is 'Industrial Espionage'

Industrial espionage is the illegal and unethical theft of business trade secrets for use by a competitor to achieve a competitive advantage. Industrial espionage is conducted by companies for commercial purposes rather than governments for national security purposes. Industrial espionage may also be referred to as "corporate spying or espionage," or "economic espionage."

Breaking Down 'Industrial Espionage'

Industrial espionage describes covert activities, such as the theft of trade secrets by the removal, copying or recording of confidential or valuable information in a company for use by a competitor. It may also involve bribery, blackmail and technological surveillance. Industrial espionage is most commonly associated with technology-heavy industries, particularly the computer, biotech, aerospace, chemical, energy, and auto sectors, in which a significant amount of money is spent on research and development (R&D).

Industrial espionage should be differentiated from competitive intelligence, which is the legal gathering of public information by examining corporate publications, websites, patent filings and the like, to determine a corporation's activities.

Industrial Espionage Types

Industrial espionage can be divided into two types. The first and most common is actively seeking to gather intelligence about a company or organization. It may include the theft of intellectual property, such as manufacturing processes, chemical formulas, recipes, techniques or ideas. Industrial espionage may also entail the concealment or denial of access of key information related to pricing, bidding, planning, research and more. Such a practice is meant to create a competitive advantage for the party who has the information.

Industrial espionage tends to involve "inside jobs," in which an employee steals secrets for financial gain or to hurt the company. It may also be conducted by governments as they pursue economic or financial goals. Less frequently, individuals may break into a company facility to steal documents, computer files or pick through trash for valuable information. More likely, an industrial spy will use the internet to hack into a company's network to gain access to trade secrets on work computers and servers. A relatively new area of industrial espionage involves denying a competitor the use of their information, services, or facilities by way of computer malware, spyware, or a distributed denial of service attack (DDoS). Such industrial espionage tools are helpful in exploiting vulnerable systems.

Industrial Espionage Trends

It stands to reason that the world's biggest practitioners of industrial espionage correspond to the countries with the biggest economies. Industrial espionage has the effect of saving companies or governments time as well as huge sums of research funding. In recent years industrial espionage has grown with the help of the internet and lax cybersecurity practices, though such espionage has become easier to detect. Social media is a new frontier for industrial espionage and its full impact and utility is still being measured. Penalties for industrial espionage can be significant, as seen in 1993 when Volkswagen stole trade secrets from General Motors which led to a $100 million fine.

  1. Economic Espionage

    Economic espionage is the unlawful targeting and theft of critical ...
  2. Trade Secret

    A trade secret is any practice or process of a company that is ...
  3. Identity Theft

    Identity theft is the crime of obtaining the personal or financial ...
  4. Denial Of Service Attack (DoS)

    A Denial Of Service Attack (DoS) is an intentional cyberattack ...
  5. Data Breach

    A data breach is an unauthorized access and retrieval of sensitive ...
  6. Broad Form Personal Theft Insurance

    Broad Form Personal Theft Insurance covers the theft or loss ...
Related Articles
  1. Insights

    Competitive Advantage Counts

    What's the best indicator of a company's future success? Its ability to succeed when others fail.
  2. Tech

    Whose Fault Is Identity Theft?

    You've been so careful, so how did they get your information? Who is really to blame for your identity being stolen?
  3. Insights

    5 Overlooked Places Where Your Identity Can Be Stolen

    Identity theft affects many Americans, and are often caught off guard. These are 5 places thieves target.
  4. Personal Finance

    Identity Theft: How to Avoid it

    Don't be a victim of this disturbing crime. Get insight into how perpetrators commit this form of fraud.
  5. Personal Finance

    Standards and Ethics for Financial Professionals

    Learn basic principles of financial standards, and unethical behavior of a financial professional's career and how these circumstances should be handled.
  6. Tech

    Avoid Becoming An Identity Thief's Next Victim

    Use these 7 techniques to keep yourself under the radar and out of the way of identity thieves.
  7. Small Business

    How To Protect Your Intellectual Property

    Intellectual property rights - patents, trademarks, trade secrets and copyrights - protect creators of everything from new products to new pop songs.
  8. Insights

    Identity Theft: How Much Should You Worry?

    Identity fraud cost $18 billion last year. But are enough Americans victimized – with big enough losses – that it's worth buying protection?
  9. Investing

    13 Ways to Invest in Cybersecurity

    Rarely a week goes by without a new media story about data breaches, hacking schemes or cyber attacks impacting individuals, companies and even governments. Four top investment experts who contribute ...
  1. What are some common methods of gathering competitive intelligence (CI)?

    Read about some common methods of acquiring competitive business intelligence, and discover what a good intelligence analysis ... Read Answer >>
  2. How does market share affect a company's stock performance?

    Discover how market share affects a company's performance. Market share is important in cyclical industries and not important ... Read Answer >>
  3. What is an economic moat?

    An economic moat refers to a company's ability to maintain competitive advantages to protect its long-term profits and market ... Read Answer >>
  4. Is intellectual property considered a form of capital asset?

    Although intellectual property is a fairly broad term and can take many different forms, some kinds of intellectual property ... Read Answer >>
  5. Why would someone change their Social Security number?

    Individuals may choose to change their Social Security Number for a variety of reasons, from identity theft to harassment ... Read Answer >>
Trading Center