Cross-National Ethical Dilemmas in Competitive Intelligence

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Cross-National EthicalDilemmas in CompetitiveIntelligenceJames Douglas OrtonPublished online: 10 Nov 2010.

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COMMENTARY

JAMES DOUGLAS ORTON

Cross-National Ethical Dilemmas inCompetitive Intelligence

I am in the Competitive Intelligence version of a Witness ProtectionProgram. After six years as a spy to the French eye, and as a traitor to theAmerican eye, I am becoming comfortable blending back into therelatively monocultural population of unquestioning Americans. Noaccents, no suspicions, no guarded words, no misinformation, no handlers,no faux pas, no culture shock. I have come in from the competitiveintelligence cold. Although I can feel myself being reabsorbed into thewarm American Emersonian oversoul, I am haunted by the guilt of thedouble agent. What damage did I do in those six years?

Dr. James Douglas Orton is with the Strategy Group in the MarketingDepartment of the College of Business at the University of Nevada, LasVegas (Nevada), focusing on strategy formation and implementationprocesses in intelligence communities and high-technology ®rms. He iscurrently studying the application of these methods in the creation of 3Gphone networks, mobile internet, and m-commerce in Asia, Europe, and theUnited States. Dr. Orton has taught at Brigham Young University, theUniversity of Texas at Austin, University of Michigan, Boston College, andthe MIT Sloan School of Management, among others.

This article, in different form, was previously published in Social Responsibility in the

Information Age: Issues and Controversies, edited by Gurpreet Dhillon (Hershey, PA: Idea

Group Publishing, 2001). It is being printed here with permission from Idea GroupPublishing. The content has been signi®cantly revised for use in IJIC.

International Journal of Intelligence and CounterIntelligence, 15: 440±456, 2002

Copyright # 2002 Taylor & Francis

0885-0607 /02 $12.00 + .00

DOI: 10.1080/0885060029010170 3

440 INTERNATIONAL JOURNAL OF INTELLIGENCE

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The Americans believe I sold out the secrets of the American-dominatedFortune 500 for thirty pieces of Parisian silver. Why, they wonder, woulda young business school professor (trained in the American heartlands ofUtah, Texas, and Michigan) abandon the U.S. economy to go work foranother country? When I showed French MBAs, through HarvardBusiness School cases, that Harley Davidson, Corning Glass, andCaterpillar Tractor had weaknesses that could be skillfully exploited fromoutside the United States, wasn’t I being a traitor to my country’seconomy? When I taught French doctoral students the arcane arts ofpublishing articles in U.S. business±academic journals, wasn’t I takingjournal space away from American doctoral students? When I taughtFrench executives how Americans built corporate strategies fromthousands of small wins, wasn’t I aiding and abetting the enemies ofAmerica’s economic security? Finally, though, when I agreed to teach anelective course to my elite international students on strategic intelligence,didn’t I commit the unforgiveable sin of raising up a generation of spieswho might torment my country for years to come?

The French believe I was always under the control of Central IntelligenceAgency (CIA) handlers. When, every year, I would ask for a raise, theresponse from senior colleagues would be that I didn’t need one, since Ialready had two salaries: one from the CIA and one from the Frenchbusiness school. The French foreign minister started referring to theUnited States as a hyperpower. Gra� ti started springing up around Parissaying America dehors l’Europe (Get America out of Europe). In thatcontext, when I was caught in their libraries, studying their internshipreports, and using their Reuters subscription, it was clear to the Frenchthat I was an economic intelligence agent for the U.S. government,tunneling for information on Total, Danone, Schneider, Aerospatiale, AirFrance, and Carrefour.

One case study that captures my six years as a competitive intelligenceagent involved a meeting of French competitive intelligence o� cers fromforty large corporations. My French business school employers dipped intotheir training budget to send me to a seminar in downtown Paris oneconomic intelligence. For two days, sixty of us listened to ten presentersexplain the state of the art of economic intelligence. A pharmaceutical ®rmtold us how they had transformed their sales network into a businessintelligence system by developing electronic contact reports.

1An aerospace

company explained how the ir small in te ll igence unit was usingWeb-clipping software to send information to relevant sections of theirorganization.

2A big-picture thinker formerly with L’OreÂ al used ReneÂ

Magritte paintings to expand our minds toward the creative use ofinformation. Hubert Lesca presented academic research he has conductedwith his doctoral students at the University of Grenoble on removing

441CROSS-NATIONAL ETHICAL DILEMMAS IN COMPETITIVE INTELLIGENCE

AND COUNTERINTELLIGENCE VOLUME 15, NUMBER 3

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blockages in the intelligence cycle. Yves-Michel Marti described the elaborateintelligence cycle his consulting ®rm uses to generate economic intelligencefor its clients.

3Bernard Besson explained, from his police background,

how to conduct counterintelligence operations.4

Frederic Jakobiak knit thepresentations together as a host and commentator.

Early in the two-day conference, one of the presentations came from apart-time instructor at Admiral Pierre Lacoste’s DESS ingeÂnierie del’intelligence eÂconomique. The professor explained that a large part of theoperation at Marne-la-ValleÂ e involved Internet sur®ng on the Web sites ofU.S. multinationals. They found, though, that some of the American siteswere location sensitive, so that a search conducted from a U.S. addresswould yield di � erent screens than a search conducted from a Frenchaddress. Furthermore, the young professor was horri®ed to discover thatsome of the American multinational Web sites used ``sni � ers’’ and``cookies’’ to try to identify the location and identity of the remoteeconomic intelligence surfers at Marne-la-ValleÂ e. He explained how tocreate a bu� er or ®rewall by searching through a chain of addresses. Heimplied that the National Security Agency (NSA), the CIA, and IBM wereworking together to plant viruses, false data, and identi®cation ¯ags on thecomputers of French economic intelligence agents, and that the Frenchwould ®ght back through viruses of their own, in a spirit of cocorico, aFrench word associated with their national symbol of the rooster, implying``We got you.’’

In this climate, I found myself at the traditional business meal of eightpeople sitting around a round table eating a salad. All seven of my newcolleagues were competitive intelligence o� cers at French multinationals.After we all introduced ourselves to each other, the woman two seats tomy left asked why the National Security Agency had interfered with acontract between the Brazilian government and the French defensecompany, Thomson Electronics. She worked for Thomson and felt thatthe U.S. government had interfered in the negotiations by passingNSA-procured eavesdropping data to the Brazilian government tosteer the contract toward the U.S. ®rm Raytheon. I told her that Ihad heard that the NSA had picked up a br ibe o � er to theBrazilian Defense Minister, communicated that information to theBrazilian President, who then overruled the Thomson contract in favorof the Raytheon contract. There was silence around the table for a fewawkward moments.

The intersection between information technology and social responsibilitytakes on new shapes when considered in the context of competitiveintelligence. Using the (probably) apocryphal Thomson±Raytheon storyas a launching point, the emergence of Social Responsibility benchmarksin the Competitive Intelligence Age can be explored. This analysis is

442 JAMES DOUGLAS ORTON

INTERNATIONAL JOURNAL OF INTELLIGENCE

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heavily ¯avored by my own experiences trying to understand the Frenchapproach to competitive intelligence. Attempts by competitive intelligenceagents in the U.S. and France to manufacture Social Responsibilitybenchmarks in the contexts of covert operations, competitive strategy,corporate intelligence, economic security, economic intelligence, andeconomic warfare are reviewed here. The construction of SocialResponsibility is arguably a local-level human accomplishment, not aglobal-level rational standard. Furthermore, the burden of SocialResponsibility lies more heavily on the successful economic oppressorthan the unsuccessful economic resistance.

COVERT OPERATIONS

Loch K. Johnson, a political science professor at the University of Georgia,proposed a ``Partial Ladder of Escalation for Intelligence Operations,’’ inreverse order from `èxtreme options,’’ through ``high-risk options,’’through ``modest intrusions,’’ to ``routine operations’’:

Threshold Four: Extreme Options38. Use of chemical-biological and other deadly agents37. Major secret wars36. Assassination plots35. Small-scale coups d’etat34. Major economic dislocations: crop, livestock destruction33. Environmental alterations32. Pinpointed retaliation against noncombatants31. Torture30. Hostage taking29. Major hostage-rescue attempts28. Theft of sophisticated weapons or arms-making materials27. Sophisticated arms supplies

Threshold Three: High-Risk Options26. Massive increases of funding in democracies25. Small-scale hostage-rescue attempt24. Training of foreign military forces for war23. Limited arms supplies for o� ensive purposes22. Limited arms supplies for balancing purposes21. Economic disruption without loss of life20. Large increases of funding in democracies19. Massive increases of funding in autocracies18. Large increases of funding in autocracies17. Sharing of sensitive intelligence16. Embassy break-ins15. High-level intrusive political surveillance14. High-level recruitment and penetrations



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13. Disinformation against democratic regimes

12. Disinformation against autocratic regimes

11. Truthful but contentious information in democracies

10. Truthful but contentious information in autocracies

Threshold Two: Modest Intrusions

9. Low-level funding of friendly groups

8. Truthful, benign information in democracies

7. Truthful, benign information in autocracies

6. Stand-o� TECHINT against target nation

5. `Àway’’ targeting of foreign intelligence o� cer

4. `Àway’’ targeting of other personnel

Threshold One: Routine Operations

3. Sharing of low-level intelligence

2. Ordinary embassy-based observing and conversing

1. Passive security measures; protection of allied leaders5

In general, these options have been used primarily by governments, notcorporations. But, there have been reported cases of corporationsattempting small-scale hostage rescue attempts (EDS in Iran), largeincreases of funding in autocracies (ITT in Chile), and sharing of sensitiveintelligence (German engineering ®rms in Iraq). The list of covertoperations provides a starting point for the study of the manufacturing ofethics in an age of competitive intelligence. How far up this list willcorpora tions go as they seek to understand and in¯uence theirenvironments? Presumably, corporations are more tightly constrained intheir actions than governments, leading to an expansion of types of actionsin the ®rst threshold, such as misrepresentation of facts, bribery ofcompetitors’ employees, and theft of information. The events of 11September 2001, and the anthrax outbreak of October 2001, have,however, moved the private sector toward participation and partnership insome of the more aggressive categories.

COMPETITIVE STRATEGY

An understanding of competitive intelligence requires an understanding ofthe history of competitive strategy. The era of ®rms lasted from 1500±1865.Firms are small, family-owned, entrepreneur-led businesses with twenty orfewer employees: family farms, small mills, bakeries, grocery stores, shoecobblers, and blacksmith shops. Firms compete in large, ``pure’’ marketscomposed of similar ®rms. The era of bureaucracies lasted from 1865±1944.Bureaucracies are composed of large conglomerations of ®rms: e.g.,General Mills, General Foods, and General Motors. The railroad,telegraph, automobile, and telephone made it economically feasible to



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coordinate large bureaucracies over long distances. The era of networks lastedfrom 1944±2001. Networks relied on improved mobility and informationtechnology to create alliances among numerous ®rms in loosely coupled,organic, international networks composed of autonomous, empowered,intelligent actors. Not until the era of networks did business operationsbecome complex enough to require the emergence of ``competive strategies.’’

Herbert Simon shifted the attention away from bureaucratic structurestoward network strategies in the 1950s.

6He laid the foundation for later

discussions of organizations as organized anarchies7

and loosely coupledsystems.

8The case study that made Simon’s theories tangible to

researchers was the Cuban Missile Crisis of 1962, deftly analyzed byGraham Allison through three lenses: Rational Actor, BureaucraticPolitics, and Organizational Processes. During a crisis, a ®rm moves fromthe chaotic Organizational Process model, to the factional BureaucraticPolitics model, to the ordered Rational Actor model.

9At about the same

time as the Cuban Missile Crisis, President John F. Kennedy’s Harvardrowing team colleague, Alfred D. Chandler, published an account ofbureaucratic changes in the 1920s, Strategy and Structure. Chandler usedthe military strategy metaphor from his teaching at the Naval War Collegeto make sense of the business structural changes at General Motors,DuPont Chemicals, Sears & Roebuck, and Standard Oil.

10The Harvard

Business School combined the Allison case with the Chandler cases tocreate the ®eld of business strategy.

In 1980, Michael Porter crystallized an industrial=organizational economicsview of business strategy in his book, Competitive Strategy. Generations ofbusiness students have memorized the ®ve forces model outlined in Chapter1 of the book, but few students or their professors remember that it isdata-hungry and requires a great deal of competitive intelligence research,as described in Chapter 3 and Appendix B: Answering these questionsabout competitors creates enormous needs for data. Intelligence data oncompetitors can come from many sources: reports ®led publicly, speechesby a competitor’s management to security analysts, the business press, thesales force, a ®rm’s customers or suppliers that are common to competitors,inspection of a competitor’s products, estimates by the ®rm’s engineeringsta� , knowledge gleaned from managers or other personnel who haveleft the competitor’s employment, and so on.

11Strategy content analysis has

been the public, popular side of Porter’s work but its hidden, dark sidedeals with competitive intelligence collection and analysis.

CORPORATE INTELLIGENCE

After Porter, researchers at other schools started to focus on howcorporations gather political, technological, cultural, and ``violence’’



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intelligence.12

Columbia professor Richard Eells and UCLA professor PeterNehemkis described large business organizations as ``private governments,’’and asserted that these ``polycorporations’’ needed intelligence units:` `Without question, in our judgment, the large multinational (orpolycorporation, as we call it) should establish well-conceived, e� ective,professionally-sta� ed intelligence units within its management structures. Itgoes without saying that close and e � ective supervision by the chiefexecutive o� cer of [the] company’s intelligence unit is a sine qua non for itse� ective and useful operationsÐoperations that are bene®cial to the thecorporation’s own policies and the chief executive’s own decision-making.’’

13

Eells and Nehemkis found that studies of corporate intelligence quicklylead to questions of social responsibility: `Às the research for this bookcame to an end it became clear that further studies should be undertaken,speci®cally of the implications for public policy of the private intelligencecommunity’s growth, especially in the matters of privacy, morality andethics.’’

14Eells and Nehemkis tried to patch up this missing discussion in

their book by listing twelve questions from Professor L. L. Nash aboutethical business decisions:

1. Have you de®ned the problem accurately?

2. How would you de®ne the problem if you stood on the other side of the fence?

3. How did this situation occur in the ®rst place?

4. To whom and to what do you give your loyalty as a member of the corporation?

5. What is your intention in making this decision?

6. How does this intention compare with the probable results?

7. Who could your decision or action injure?8. Can you discuss the problem with the a� ected parties before you make your

decision?

9. Are you con®dent that your position will be as valid over a long period of time asit seems now?

10. Could you disclose without qualm your decision or action to your boss, yourCEO, the board of directors, your family, society as a whole?

11. What is the symbolic potential of your action if understood? If misunderstood?

12. Under what conditions would you allow exceptions to your stand?15

If Loch Johnson’s list of covert operations is too focused on governmentsin general, the Nash listing is too focused on business decisions in general.

ECONOMIC SECURITY

Depending upon party a� liations, Presidents George H. W. Bush and BillClinton share credit for launching the boom in international economicintelligence. Loch Johnson gives a nod to Bush: `À 1991 review ofintelligence priorities, initiated by President Bush, led to a dramaticallocation of resources away from old Cold War concerns toward neweconomic targets, as the world marketplace became an ever more important



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battle®eld for America.’’16

As part of those discussions, retired Director ofCentral Intelligence (DCI) Admiral Stans®eld Turner launched a provocativeproposal in Foreign A� airs in the Fall of 1991: ``The preeminent threat toU.S. national security now lies in the economic sphere . . .. We must, then,rede®ne `national security’ by assigning economic strength greaterprominence . . .. If economic strength should now be recognized as a vitalcomponent of national security, parallel with military power, why shouldAmerica be concerned about stealing and employing economic secrets.’’

17

The larger share of the credit, though, according to Johnson, should go toClinton:

The question of economic competitiveness served as a centerpiece in the1992 presidential campaign of Bill Clinton. On the eve of assuming thepresidency, he vowed to ``make the economic security of our nation aprimary goal of our foreign policy.’’ Coupled with his abidingattention to domestic economic issues, foreign economic policy becameone of the president’s foremost concerns during the ®rst years of hisadministration. Early in o� ce he created a National Economic Council(NEC), touted as equal in status to the National Security Council.Long a maid in waiting to defense issues, matters of trade and aid hadrisen high on the national security agenda. `Ìt’s the economy, stupid!’’had been the mantra among Clinton’s campaign strategists in 1992;now, within the government’s community of national security planners,the slogan seemed to be, `Ìt’s the economy, stupid!’’

18

The collective wisdom of intelligence community thinktanks quicklych ime d in wi th a co l l e c t i v e op in ion : th e invo lv eme n t of th eU.S. government in microeconomic intelligence was a really bad idea. Ina paper presented on 8 April 1993, Randall M. Fort listed twentyreasons why it would be a bad idea. These reasons can be summarized asfollows:

1. The `èconomic threats’’ have always existed, are often caused by ourselves, andare probably better labeled `èconomic challenges.’’

2. Economic bene®ts are not black and white, but intertwined between countries,such as in the case of a Honda plant in the United States providing jobs forAmericans; this idea is coded after the title of a Robert Reich article, ``Who IsÙs’?’’

3. How would we decide which industries and which ®rms received economicintelligence?

4. Competition for economic intelligence would become a subsidy allocated on thebasis of ``political clout.’’

5. American ®rms are involved in alliances with non-American ®rms.6. It would be di� cult to protect sources and methods.7. Productivity of intelligence assets might decline, be harmed, or dry up if the

sources feel their data is being used for economic purposes.



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8. Recipients of economic intelligence could leave a U.S. ®rm to work for a foreign®rm.

9. Retooling to provide intelligence to the private sector would be expensive.10. Uncertain information could lead to con¯icts between the U.S. ®rms and the

U.S. government.11. Economic competition with foreign governments would reduce the U.S.’s

capacity to create military and diplomatic alliances.12. U.S. ®rms do not want to be associated with the U.S. intelligence community in

suppliers’ and consumers’ minds.13. U.S. ®rms do not consider the U.S. intelligence community a reliable source of

information.14. Supplying intelligence to U.S. ®rms would require legal changes in the enabling

statutes and executive orders, in the Trade Secrets Act, in the wire fraud statutes,and in the Communication Act and Foreign Intelligence Surveillance Act.

15. Supplying economic intelligence to ®rms could subject the U.S. government tocivil litigation by harmed constituents.

16. Just because the French, the Israelis, the Germans, the Japanese, and the SouthKoreans are involved in nationally sponsored economic intelligence, that doesnot make it morally acceptable.

17. U.S. sponsorship of economic intelligence would unleash more dangers for U.S.businesspeople abroad.

18. U.S. economic intelligence might invite economic intelligence from nations thatare better at it.

19. Intelligence agencies would be exposed to corruption from U.S. ®rms who mightbene®t from preferential intelligence analyses.

20. Finally, in one of the most frequently cited arguments, U.S. intelligence o� cerswould not be motivated by the economic intelligence task.

As former DCI Robert M. Gates told the Economic Club of Detroit on 13April 1992: ``Some years ago, one of our clandestine o� cers overseas said tome: `You know, I’m prepared to give my life for my country, but not for acompany.’ That case o� cer was absolutely right’’

19(Fort, p. 196, citing

Robert M. Gates, Speech to the Economic Club of Detroit, 13 April 1992).Fort summarized his arguments against U.S. government involvement in

economic intelligence by tracking the di� erences between DCI R. JamesWoolsey’s statements in his con®rmation hearings with his statements oneyear later:

Woolsey raised eyebrows and expectat ions during his Senatecon®rmation hearing when he described economic espionage as ``thehottest current topic in intelligence policy.’’ Subsequent news storiesindicate that he has reached some unenthusiastic conclusions aboutsuch an e� ort. One year later, he was quoted as stating that such aprogram would be ``fraught with legal and foreign policy di� culties.’’Woolsey’s disapproving tone is not surprising. Anyone who gets pastthe rhetoric about economic competitiveness and closely examines the



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nuts and bolts of how an economic espionage program is supposed towork cannot fail to reach the same negative conclusions.

20

Despite Fort’s explanation of why U.S. microeconomic intelligence is abad idea, the genie was already out of the bottle in 1992. The U.S. sent asignal that competitive microeconomic intelligence was on the agenda, thusgiving other governments the motivation to ramp up their own competitiveintelligence activities.

ECONOMIC INTELLIGENCE

The French, for example, asked PreÂfet Henri Martre to preside over a 1994study titled `Ìntelligence economique et strateÂgie des enterprises’’ (EconomicIntelligence and Business Strategy). The report identi®ed ®ve trends. Itheld that economic intelligence (1) is increasingly recognized internationallyas a criterion for competitiveness; (2) is the raw material for the creationof a new industry of competitive intelligence ®rms; (3) should be retainedby the organization as a form of knowledge capital; (4) needs to besupported by governmental units at the levels of regions, countries, andterritories; and (5) is being de®ned by the Americans and others as anational security issue.

21To respond to these ®ve trends, the Martre

Report encouraged French ®rms, regions, and the State to improve theireconomic intelligence capabilities.

The Martre Report argued that ®rms such as Exxon, General Electric, andBoeing had used economic intelligence units as early as 1972. It additionallyasserted that generalized consulting ®rms such as McKinsey have economicintelligence capabilities, and that specialized consulting ®rms sta� ed byformer intelligence o� cers are emerging to create a larger system of ®rmsworking together for the bene®t of the U.S. economy.

22

The Martre Report also argued that national cultures provide signi®cantbackdrops for the creation of intelligence systems: It is not BritishPetroleum’s economic intelligence tools that create their excellence in thisdomain, but its culture and history, which are intimately linked to theintelligence culture that the British Empire developed during its history.Economic intelligence systems created in China, Japan, the Middle East,the United States, Great Britain, and Germany all have cultural roots [mytranslation].

23

The Martre Report also argued that nations create and support economicintelligence units at two levels, defensive and o� ensive:

It is important to distinguish two levels of analysis. The ®rst level is thepreservation of employment and national sovereignty, and no industrialcountry hides the fact that it is operating this type of economic



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counterintelligence or industrial counterintelligence, when these types ofeconomic intelligence attacks pass legal norms. The second level ofanalysis is the protection of a threatened industry. In this context, theencouragement of exports and the maintenance of economiccompetitiveness is as important as the protection of the nationalinheritance. Because of ``national conscience’’ and `èconomicpatriotism,’’ economic intelligence and industrial intelligence becomepart of the domain of activities handles by countries’ IndustryMinistries, External Commerce Ministries, and economic institutes [mytranslation].

24

The Martre Report became the foundation in France for an enthusiasticproject of state-sponsored competitive intelligence programs. AdmiralLacoste (of Rainbow Warrior fame) started a DESS d’ingeÂnierie del’intelligence eÂconomique (a masters program in the engineering ofeconomic intelligence) at UniversiteÂ de Marne-la-ValleÂ e, east of Paris. TheUniversiteÂ de Poitiers launched a DESS d’information et culture strateÂgique(a masters program in strategic information and culture). The UniversiteÂd’Aix-Marseille launched a DEA de veille technologique (a pre-doctoraldegree in the surveillance of emerging technologies). The CERAM-ESCNice business school launched a specialized masters degree in economicintelligence. A variety of regional economic intelligence initiatives werecreated throughout France to sensitize French executives to the importanceof creating a national competitive intelligence culture.

COMPETITIVE INTELLIGENCE

In the United States, a new career path was developing around the area ofCompetitive Intelligence. One of the best statements of the developing ®eldis Larry Kahaner’s 1996 book, Competitive Intelligence: How to Gather,Analyze, and Use Information to Move Your Business to the Top. Kahaner’scase studies (which are rare in competitive intelligence studies) includedAvon and the Marriott Corporation. Avon hired a consulting company toanalyze the garbage left in trash bins on public property by Mary KayCosmetics, in order to ®nd out what Mary Kay’s strategic plans were. Thecollection method was legal, but Kahaner asks the question, ``Yes, but is itethical?’’ The two ®rms came to the conclusion that Avon couldreassemble the shredded garbage as long as a Mary Kay Cosmeticsemployee was there to see what they reassembled. In the Marriott case,Marriott hired an executive recruiting ®rm to interview executives in theeconomy hotel business. The search ®rm then fed its ®ndings back toMarriott, helping it craft a strategy for entering this new market. AlthoughMarriott did hire some of the executives interviewed, the primary rationalefor the operation seems to have been intelligence collection, rather than



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personnel hiring. Here again, Kahaner questions whether the operation wasethical or not.

25

Another book that helped shape competitive intelligence as a career path isLeonard M. Fuld’s, The New Competitor Intelligence: The Complete Resource

for Finding, Analyzing, and Using Information about Your Competitors. Fromyears of experience trying to conduct competitive intelligence, Fuld &Company created ``The Ten Commandments of Legal and EthicalIntelligence Gathering’’:

(1) Thou shalt not lie when representing thyself.(2) Thou shalt observe thy company’s legal guidelines as set forth by the Legal

Department.(3) Thou shalt not tape-record a conversation.(4) Thou shalt not bribe.(5) Thou shalt not plant eavesdropping devices.(6) Thou shalt not deliberately mislead anyone in an interview.(7) Thou shalt neither obtain from nor give to thy competitor any price

information.(8) Thou shalt not swap misinformation.(9) Thou shalt not steal a trade secret (or steal employees away in hopes of learning

a trade secret).(10) Thou shalt not knowingly press someone for information if it may jeopardize

that person’s job or reputation.26

These recommendations provide a more helpful set of beginning benchmarksfor the construction of social responsibility than the two previous lists:Johnson’s ladder of intrusion in covert operations, and Nash’s questionsfor general business decisions.

In a preemptive move intended to protect their industry againstgovernment intervention, the Society of Competitive IntelligenceProfessionals (SCIP) with an estimated 5,000 members drafted its ownCode of Ethics:

(1) To continually strive to increase respect and recognition for the profession onlocal, state and national levels.

(2) To pursue his or her duties with zeal and diligence while maintaining the highestdegree of professionalism and avoiding all unethical practices.

(3) To faithfully adhere to and abide by his or her company’s policies, objectives,and guidelines.

(4) To comply with all applicable laws.(5) To accurately disclose all relevant information, including the identity of the

professional and his or her organization, prior to all interviews.(6) To fully respect all requests for con®dentiality of information.(7) To promote and encourage full compliance with these ethical standards within

his or her company, with third-party contractors, and within the entireprofession.

27



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This preemptive move by the Competitive Intelligence industry did nothold, and President Clinton signed the Economic Espionage Act on 11October 1996. The Act de®nes trade secrets broadly to include `àll formsand types of information including ®nancial, business, scienti®c, technical,economic, and engineering. It includes plans, formulas, designs, prototypes,methods, techniques, processes, procedures, computer codes, and so on.’’

28

Penalties for stealing a trade secret include up to ten years in prison,individual-level ®nes of up to $500,000, and corporate-level ®nes of up to$5 million. If the theft bene®ts a foreign entity, the penalties can rise to®fteen years imprisonment and a corporate-level ®ne of up to $10 million.

The benchmarks that the competi tive intelligence industry isgenerating for itselfÐKahaner’s case studies, Fuld & Company’s tencommandments, SCIP’s guidelines, and the Economic Espionage Act’ssanctions Ðare helpful within the U.S. context. More work needs tobe done, though, on competitive intelligence activities among countries.

ECONOMIC WARFARE

One of my favorite French colleagues, Patrick Lemattre, cursed with animpish sense of humor, invited me to attend one of his courses. He washosting Christian Harbulot, who had a hand in the Martre Report, thenbecame operational director at French military intelligence economicspino� s DCI and Intelco, and had become the ``tete pensant’’ or guru ofthe EÂ cole de Guerre EÂ conomique (the School of Economic Warfare). Theschool opened in October 1997 under the auspices of the EÂ cole SuperieureLibre des Sciences Commerciales AppliqueÂ es, under the leadership ofGeneral Jean Pichot-Duclos.

29

Due to another course responsibility, I was not able to introduce myself toHarbulot before the presentation began, so he assumed he was speaking to aroom of French students and faculty members. He used transparenciesshowing that the United States controlled the United Nations, theOrganization for Economic Cooperation and Development, the Church ofthe Reverend Moon, and the Republic of Germany. He alleged that the ®rstassault on France would be through Coca-Cola, McDonalds, and Disney,all designed to weaken the attachment of citizens to their national cultures.The second assault, he alleged, would be through music, movies, andtelevision, which would be used to propagate American values around theworld. The third assault, he explained, would come from General Motors,IBM, Hewlett-Packard, Microsoft, and other American multinationals,which would then subjugate the world’s populations as captive employees.

How then, he asked, can France defend itself against this organized,controlled, centrally planned o� ensive? The explicit tactic was to boycottAmerican intrusions into France: `Às a Frenchman,’’ Harbulot said, `Ì no



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longer drink Coca-Cola.’’ The implicit script was more subtle and can besummarized in the phrase, ``Tous les coups sont permis contre lesameÂ ricains’’ (`Àgainst Americans, there are no rulesÐanything goes.’’) IfFrance and other cultures around the world feel that they are under anorganized attack from an American economy, discussions of fairness,ethics, and social responsibility become irrelevant. Groupthink and a siegementality set in,

30and Americans are painted as the immoral aggressors,

while the French resistance can be painted only as moral and heroic.

MANUFACTURING SOCIAL RESPONSIBILITY BENCHMARKS

This discussion of covert operations, competitive strategy, corporateintelligence, economic security, economic intelligence, competitiveintelligence, and economic warfare returns to the case study of the NSA’seavesdropping on Thomson Electronics to shift a Brazilian defensecontrac t away from Thomson to Raytheon. Where does socia lresponsibility lie in this case?

At that lunch table in Paris, I said that the coordination between theeconomic and governmental sectors in the U.S. was not as tight as it wasin France. My French colleagues were projecting coordinated action ontoa situation where there was none. Instead, each U.S. ®rm was acting in itsown economic self-interest; the French were misinterpreting the cumulativee� ect of pro®t-seeking at the company level as a grand conspiracy at thenational level. I maintained that most Americans don’t even know whereFrance is, except vaguely `ìn Europe,’’ so why would they spendconsiderable time trying to overrun it economically? I asserted that French®rms should respond to American ®rms, not engineer a French societalresponse to a presumedly coordinated American societal attack. I alsoargued that it seemed that French consultants were fueling an intelligencearms race by misrepresenting the U.S. intelligence threat. Each protest onmy part that there was no conspiracy led to new questions from themabout how the conspiracy was structured, until thankfully, other topicsemerged for discussion.

Now, though, I would not be so eager to defend the U.S. point of view.Instead, I see both sides of the con¯ict as ¯awed, self-serving ethicalframeworks.

To the French, the Americans have moved from being an ally in a con¯ictbetween two blocs, the Soviet Union and the United States, to an often-destructive singular ``hyperpower.’’ The French Ðas they did with theGermans in World War IIÐhave constructed, enacted, and manufacturedan ethical code that allows them enormous ¯exibility in defendingthemselves against an invasion by a hyperpower. They consider their useof a variety of means to steer the contract toward Thomson Electronics



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and away from Raytheon, including the time-honored tradition of o� ering asecret ``pot de vin’’ fair, especially given the enormous advantages of theAmerican ``cultural barbarians.’’

To U.S. companies, France is just another market to conquer in a ®rm-by-®rm quest for increased market share, sales, and pro®ts. The stubbornFrench resistance frustrates the Americans, who complain that the Frenchare exploiting a home-®eld advantage to skew the outcome of thecompetition. Utilizing National Security Agency assets to correct an unfairin¯uence from France, and to steer the contract toward Raytheon, isÐtoU.S. eyesÐa justi®able use of national intelligence resources.

How can such an intractable case be solved? Research on sense-makingprocesses indicates that human beings interpret ongoing streams of eventsin ways that reinforce the signi®cance of their own identitiesÐthroughintensive social discussions with people they work with, and eventhrough ¯awed, outdated, retrospective models.

31Is there any reason to

believe that ethics-making is any more rational, objective, or precise thansense-making?

No matter how many times the chaos of the ethics of competitiveintelligence is ruled out, it will always come down to whether or notindividuals can construct an ethical framework for themselves. And, in anexample of how easy it is for people to feel good when they look in themirror, 75 percent of American males think they are in the top 25 percentof athletic ability.

32Though French friends of Thomson and American

friends of Raytheon look good in their respective mirrors, they are both¯awedÐone bribes and one eavesdrops. The battle is merely about whichis the least unethical course of action.

My conclusion is thus rather skeptical. Competitive intelligenceprofessionals are well on the road to constructing social responsibilitybenchmarks within homogenous cultures. But the larger problem ofinternational social responsibility benchmarks is going to take a great dealof work, given the enormous forces that encourages the construction oflocal rather than global rational benchmarks. The greater burden for doingso should lie with the economic `àggressors’’ who are having the mostsuccess, rather than the companies and countries constructing an economic``resistance.’’ An appropriate balance between nations and corporationsmust be found in order to help develop social responsibility benchmarksfor this age of competitive intelligence.

ACKNOWLEDGMENTS

This article was ®nanced by grants from the HEC Foundation (1994±2000).The students (from 93 di� erent countries) in my courses on CompetitiveIntelligence helped develop the ideas in this analysis.



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REFERENCES1

Raymond-Alain Thietart and R. Vivas, ``Strategic Intelligence Activity: TheManagement of the Sales Force as a Source of Strategic Information,’’American Management Journal, Vol. 2, No. 1, 1981, pp. 15±25.

2Patrick T. Gibbons and John E. Prescott, ``Parallel Competitive IntelligenceProcesses in Organizations,’ ’ International Journal of Technology Management,Vol. 11, No. 1±2, 1996, pp. 162±178.

3Bruno Martinet and Yves-Michel Marti, L’intelligence eÂconomique: Les yeux etles oreilles de l’entreprise (Paris: Les EÂ ditions d’Organisation, 1995).

4Bernard Besson and Jean-Claude Possin, Du renseignement aÁ l’intelligencestrateÂgique: DeÂtecter les menaces et les opportuniteÂs pour l’entreprise (Paris:Dunod, 1997).

5Loch K. Johnson, Secret Agencies: U.S. Intelligence in a Hostile World (NewHaven, CT: Yale University Press, 1996).

6Herbert A Simon, Administrative Behavior: A Study of Decision-Making Processesin Administrative Organizations (New York: The Free Press, 1976, 3rd ed.).

7Michael D. Cohen, James G. March, and Johan P. Olsen, `À Garbage CanModel of Organizational Choice,’’ Administrative Science Quarterly, No. 17,1972, pp. 1±25; and James G. March and Johan P. Olsen, Ambiguity andChoice in Organizations (Bergen, Norway: Universitetsforlaget , 1976).

8Karl E. Weick, `Èducational Organizations as Loosely Coupled Systems,’’Administrative Science Quarterly, No. 21, 1976, pp. 1±19.

9Graham T. Allison and Philip D. Zelikow, Essence of Decision: Explaining theCuban Missile Crisis, 2nd ed. (New York: Addison Wesley Longman, 1999);Graham T. Allison, ``Conceptual Models and the Cuban Missile Crisis,’’ TheAmerican Political Science Review, No. 63, 1969, pp. 689±718; and Graham T.Allison, Essence of Decision: Explaining the Cuban Missile Crisis (Boston:Little, Brown, 1971).

10Alfred D. Chandler, Jr., Strategy and Structure: Chapters in the History of theIndustrial Empire (Cambridge, Mass.: MIT Press, 1962), pp. xi±xiv and 1±17.

11Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries andCompetitors (New York: The Free Press, 1980).

12Richard Eells and Peter Nehemkis, Corporate Intelligence and Espionage: ABlueprint for Executive Decision Making (New York: Macmillan Publishing,1984).

13Ibid., p. 221.

14Ibid., p. xii.

15L. L. Nash, `Èthics Without the Sermon,’’ Harvard Business Review, November±December 1981.

16Loch K. Johnson, op. cit., p. 147.

17Stans®eld Turner, `Ìntelligence for a New World Order,’’ Foreign A� airs, Vol. 70,No. 4, Fall 1991, pp. 151±152.

18Loch K. Johnson, op. cit., pp. 146±147



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19Randall M. Fort, `Èconomic Espionage,’’ in Roy Godson, Ernest R. May, andGary Schmitt, eds., U.S. Intelligence at the Crossroads (Washington, DC:Brassey’s, 1995), pp. 181±196. The Gates quote is on p. 196.

20Ibid.

21The Martre Report, Commissariat GeÂ neÂ ral du Plan Documentation FrancË aise,`Ìntelligence eÂ conomic et strateÂ gie des entreprises,’’ 1994.

22Ibid., p. 63.

23Ibid., pp. 64±65.

24Ibid., p. 68.

25Larry Kahaner, Competitive Intelligence: How to Gather, Analyze, and UseInformation to Move Your Business to the Top (New York: Simon & Schuster,1996).

26Leonard M. Fuld, The New Competitor Intelligence: The Complete Resource forFinding, Analyzing, and Using Information About Your Competitors (New York:John Wiley & Sons, 1995).

27Larry Kahaner, op. cit., pp. 248±249.

28Ibid., p. 244.

29Jean-Dominique Merchet, ``La guerre eÂ conomique, un art qui s’enseigne,’’Liberation, Paris, 1997.

30Irving L. Janis, Victims of Groupthink: A Psychological Study of Foreign-PolicyDecisions and Fiascoes (Boston: Houghton-Mi‚in, 1972).

31Karl E. Weick, Sensemaking in Organizations (Newbury Park, CA: SagePublications, 1995).

32Thomas J. Peters and Robert H. Waterman, In Search of Excellence: LessonsFrom America’s Best-Run Companies (New York: Harper & Row, 1982).



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Documents

Cross-National Ethical Dilemmas in Competitive Intelligence