Subscribe

Methods of industrial espionage collection

What is the rationale behind the sovereign and corporate industrial espionage strategic intent, and how it is done?

Seth Mukwevho
By Seth Mukwevho, analyst.
Johannesburg, 30 Jan 2015

As stated in my previous Industry Insight, the history of industrial espionage in the global arena has shown two major perpetrators of industrial espionage: state-sponsored and private-sponsored actors.

State-sponsored espionage activities refer to government investment in the set-up of spying agencies and espionage rings. This is the oldest form of intelligence gathering and analysis, and was originally associated with military intelligence. In recent times, government intelligence structures are mainly intended to increase state security capacity, and their objectives include both economic and political intelligence collection.

The fundamental reason many governments establish industrial espionage networks is to acquire technology and expertise from sovereign competitors through clandestine means. Technological innovations and expertise are crucial for economic development and domestic competitiveness.

Cold competition

The current scramble for competitiveness is in part attributable to the end of the Cold War that shifted emphasis from military and political contests to economic competition. This contest underscores the realism of international relations; nation states are preoccupied with their own well-being relative to others. International relations and diplomacy is a theatre of increasing national gain. It follows that state-sponsored industrial espionage is intended to realise the national interest, which in this context is an increase in national economic competitiveness.

In addition, countries create industrial espionage infrastructure for national security concerns through counter-intelligence. Counter-intelligence is the employment of intelligence security resources to protect national assets and neutralise threats from hostile forces.

In the context of security, all threats to national assets, such as those that target national creations, technologies, proprietary information and innovations, constitute threats to national security, and require state protection. In view of this, the government industrial espionage imperative is grounded in counter-intelligence, intended to provide security to national resources by detecting threats, collecting information on potential threats, and by prosecuting offenders.

For certain corporate players, industrial espionage is seen as an easier method of acquiring information or expertise that can positively impact on business success. Consequently, many private companies are involved in industrial espionage to illicitly gather completed business trade secrets, and in the process, evade the steep cost of research and development, as well as intellectual property registration.

Driven by vested interests, corporate espionage can be considered an improper corporate governance practice as it is based on cheating, lack of business morals and ethics. However, it may contribute to ensuring solvency, and has potential to decimate competitors, and reduce production costs. The lesson for the study is that the drive to acquire business-relevant information for easier profit is a key factor in the proliferation of industrial espionage in the private sector.

Both states and companies employ human intelligence (humint) and technical intelligence (techint) as methods for conducting industrial espionage. Methods of intelligence collection are ways used to collect intelligence. Often, these methods are learned.

Traditional intelligence craft mentions covert and overt intelligence methods of collecting information. Similarly, industrial espionage also uses covert and overt methods of collections. The similarity of collection methods is attributable to the fact that essential personalities driving business espionage operations are often former members of traditional intelligence agencies.

Humint

The fundamental instrument for collecting industrial espionage is a human agent. The term 'human agent' refers to a person who gathers business secrets. Human intelligence sources are the most dangerous to business security, and they come in various forms, including unauthorised employees, former employees, hackers, terrorists and competitors.

The fundamental instrument for collecting industrial espionage is a human agent.

The most desirable items that people dealing in trade secrets look for are customer and contact databases, plans and proposals, product information, and access/password codes. Human intelligence agents use surveillance, surreptitious entry, theft, technical intelligence instruments, and elicitation to gain access to information.

Most agents steal information to alleviate financial pressures (economic reasons). Human agents are aided by electronic equipment (technical intelligence) in the collection of commercial secrets.

Techint

Techint uses electronic equipment to collect, store and transmit information. As technology grows in sophistication and reach, technical intelligence is in the ascendance in terms of popularity stakes.

Technological equipment is most favoured for its ability for easy concealment, and to safely store information. Hence, the most widely used technical intelligence means are hacking and interceptions.

Both humint and techint have advantages and disadvantages, and therefore are limited. Industrial espionage is therefore best collected by combining humint and techint. It is indeed due to specialisation of skills, availability of former trained spies willing to engage in corporate espionage, and weak corporate security that industrial espionage is widespread. The inference is that industrial espionage is one of the major risks faced by business operations today, and it is expedited by both human and technical intelligence instruments.

* Seth Mukwevho is an analyst who is currently completing a PhD at the Wits Business School.

Share