York prof co-authors report about competitive intelligence

Businesses need to be careful that they don’t violate good ethical practices when sleuthing for inside information about their competitors, says Andrew Crane, the George R. Gardiner Professor of Business Ethics at York’s Schulich School of Business.

The Internet has made business practices much more open to scrutiny. “It’s not that things are getting worse, there’s more transparency and more opportunity and a lot less direct or overt control by superiors in today’s economic climate,” says Crane.

Right: Andrew Crane

Crane is co-author, along with Laura J. Spence, director of the Centre for Research Into Sustainability at Royal Holloway, University of London, of the newly published report – “Competitive Intelligence: Ethical Challenges and Good Practice” – for the UK-based Institute of Business Ethics (IBE). The report highlights the ethical challenges and questions that confront organizations, such as when and how is it okay to get a hold of inside information, including what technologies their competitors are using, what products they are developing or what costs they are incurring.

The IBE, established in 1986, encourages high standards of business behaviour based on ethical values and aims to lead the dissemination of knowledge and good practice in business ethics.

Some of the questions tackled by the report include: Is it acceptable for employees to pass themselves off as customers to get information from competitors? Should companies use inside information that a new recruit has brought to them from a rival firm? The report also looks at codes of practice and what constitutes ethical relationships with competitors.

“In a knowledge-based economy, intelligence is king, so it is hardly surprising that from time to time firms will be tempted to test the boundaries and resort to what some would call industrial espionage or commercial spying,” says Crane.

There is a need to develop clear guidelines and integrate competitive intelligence into the corporate code of conduct, to extend guidelines to business partners and back up policies with targeted training for those most at risk, Crane says. It is also important to review competitive intelligence practices and guidelines for all departments where competitive intelligence is an issue on a regular basis, and to identify the unmanaged areas to make sure there is a code of practice or ethics being followed there as well.

The report is based on interviews with intelligence professionals. It identifies best practices for firms involved in providing, contracting and accessing competitive intelligence, as well as for those seeking to guard against competitive intelligence breaches.

Ethics and ethical behaviour are often not addressed in companies, especially smaller ones. They fly under the radar, and that holds true for companies in the UK and in Canada, says Crane.

“It may not seem like the most critical of issues in today’s economy,” he says. “But companies can’t afford to neglect issues of ethics.” It is often in the areas where trouble is least expected that issues of ethics can arise. Crane points to the US subprime crisis as an example of an area where people didn’t expect there to be a problem.

“It’s not like there are a whole bunch of people running around doing really unethical things,” says Crane. “The point is it’s very easy to get caught in a grey area. It’s a complex issue and it needs more attention.”

Crane, who teaches and researches ethics and social responsibility in management at York, has been at the forefront of efforts to integrate responsible management issues into business school research and curricula. He is the co-author of Europe’s leading market textbook on business ethics and is a co-editor of The Oxford Handbook of Corporate Social Responsibility.

Copies of “Competitive Intelligence: Ethical Challenges and Good Practice” are available from the Institute of Business Ethics Web site.