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.

RELATED TERMS
  1. Economic Espionage

    Economic espionage is the unlawful targeting and theft of critical ...
  2. Denial Of Service Attack (DoS)

    A Denial Of Service Attack (DoS) is an intentional cyberattack ...
  3. Cybersecurity

    Cybersecurity refers to the measures taken to keep electronic ...
  4. Supply Chain Attack

    A supply chain attack is a cyberattack that attempts to inflict ...
  5. Offensive Competitive Strategy

    An offensive competitive strategy is a type of corporate strategy ...
  6. Emerging Industry

    An emerging industry is a group of companies in a line of business ...
Related Articles
  1. Tech

    Corporate Espionage: Fact And Fiction

    Delve into the world of the corporate spy.
  2. Investing

    What Cuba-US Relations Could Mean For U.S. Industry

    The restoration of diplomatic relations with Cuba could mean big profits for U.S. travel, agriculture, and financial services sectors.
  3. Tech

    Technology Stocks: The 6 Most Anticipated IPOs of 2016

    Find out which hot technology startups are among the most widely anticipated companies to file for initial public offerings (IPOs) in 2016.
  4. Insights

    Competitive Advantage Counts

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

    Broker or trader: Which career is right for you?

    A day in the life of a broker or Wall Street trader is an exciting and varied one. Learn more about these two financial professions.
  6. 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.
  7. Investing

    Cisco Ex-CEO Invests in New Anti-Drone Startup

    John Chambers led Dedrone's latest Series B. The company aims to guard against malicious drones.
  8. 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.
  9. Managing Wealth

    Morgan Stanley's New Identity Theft Protection (MS)

    Morgan Stanley now offers identity theft protection to high net worth clients, pursuant to a poll in which they cited this as a top fear.
  10. Personal Finance

    Standards and Ethics for Financial Professionals

    Scandals and fraud have hurt the reputation of financial professionals over the years. Learn how to avoid these ethical dilemmas while being in compliance.
RELATED FAQS
  1. What are some common methods of gathering CI (competitive intelligence)?

    Read about some common methods of acquiring competitive business intelligence, and discover what a good intelligence analysis ... Read Answer >>
  2. What is the difference between business intelligence and competitive intelligence?

    Understand the difference between business intelligence and competitive intelligence. Learn why both are important for the ... Read Answer >>
  3. What types of industries are the main consumers of the products of the chemicals ...

    Learn about industries that use products manufactured by chemical companies. Explore common materials used and produced by ... Read Answer >>
  4. Who are Apple's main competitors in tech?

    Explore Apple's competitive position in the many industries in which it operates. Learn about the different products and ... Read Answer >>
  5. 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 >>
  6. What are the benefits of R&D (research and development)?

    Learn about the many benefits of research and development (R&D) efforts for companies in competitive markets, including the ... Read Answer >>
Hot Definitions
  1. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  2. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  3. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  4. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  5. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  6. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
Trading Center