A Revielu of Ethics for Competitive Intelligence Activities

Allison Collins and Norm Schu l t z Colorado State University

EXECUTIVE SUMMAAY An examination of the professional literature reveals a wide a variety of competitive intelligence (CI) practices, including those which might be considered unethical. Some CI reference books label unconsented-to surveillance as a questionable activity. But others argue CI professionals should be able to engage in certain forms of misrepresentation in order to gain information about a competitor, as long as the misrepresentation does not harm others by forcing them to participate in activities that violate their ethical duty. Because of competing viewpoints, it is imperative that the profession develop its own sense of ethics. Moreover, CI professionals can find guidance in corporate codes of conduct-and make significant contributions to the ongoing development of corporate codes. 1 0 i w 6 John W ~ C Y & jonc. IIN

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In a recent survey of nienibers of the Society of Competi- tive Intelligence Professionals (SCIP), Prescott and Bhard- waj (1995) found that 35% of the respondents indicated that there were ethical problems in their industry, and another 20% were unsure of ethical problems in their industry. Ad- ditionally, the survey found that only 38% of the firms in the sample had a fornial code of ethcs governing their conipetitive intelligence (CI) activities. Paine (1991) voiced a concern that there is a “darker side” to the growth of the business intelhgence industry; questionable collection meth- ods have increased in use in the past decade.

The purpose of this article is to offer a review and dis- cussion of ethical issues confronting the CI profession. It is

Cornpctitive Intelligence Review, Vol. 7(2) 56-66 (1 996) 0 1996 John Wilcy K . Sons, Inc. CCC 1058-0217/96/0205~,-11

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important for CI professionals to continually question their activities and the effects of those activities on their firm, as well as the effect on individuals and groups outside the firm. Additionally, because corporations are only begin- ning to develop formal codes for CI activities, the profes- sion is in an ideal position to influence the development of these standards. We begin our discussion by presenting var- ious authors’ views on what constitutes ethical and unethi- cal CI data collection activity. We then examine the guid- ance, or lack thereof, offered by corporate codes for CI activities, followed by a discussion of risks associated with questionable CI activities. We also present several authors’ frameworks suggesting guidelines for ethical behavior.

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literature Review An examination of the literature reveals a wide variety of CI practices. Many CI activities are straightforward and aboveboard. However, some activities might be consid- ered less acceptable or even unethical.

Most CI reference books begin by occupying the high ground in this debate. Competitive information profes- sionals gather, analyze, and communicate “public” infor- mation. Such information typically does not include any of the following: trade secrets, information that a com- pany makes a diligent effort to protect, or information that has been gained by covert or intrusive methods such as wiretapping, electronic eavesdropping, or unauthorized overilights. Competitive intelligence is certainly not spy- ing; the emphasis of competitive intelligence efforts is on the ethical collection of information. According to Combs and Moorhead (1992: 59), “CI practitioners are on the right track if they keep in mind they are dealing with public information.”

through publicly accessible databases and publications. At this point, the search must rely on information gained from human interactions; such interactions in- evitably lead to questions of unethical behavior on the part of all concerned. In society’s search for a means of defining ethical behavior, critics have usually taken two approaches. The first approach is to compile lists of ac- ceptable or unacceptable actions, while the second is to propose standards that could then be used by a practi- tioner to determine the proper action in different circumstances.

An example of the first approach is the work by Flax (1984). He developed a list of a number of CI data col- lection activities, including many which might be con- sidered to push the boundaries of ethical behavior; this list is displayed in Table 1. Some of these activities would be considered by most individuals to be accept- able business practices (e.g., studying public docu- ments); other practices might be questionable to many (e.g., infiltrating customers’ operations to find out about competitors).

Flax (1984) to survey 223 employees in a variety of in- dustries regarding the ethics of various CI data collection strategies, The survey asked the respondents to indicate, o n a 5-point Likert scale (1 = very ethical to 5 = very unethical), their perception of each of the activities. We used the means of the responses to rank-order these ac- tivities (from most acceptable to least acceptable). The

However, some types of data are not readily available

Hallaq and Steinhorst (1994) used the list developed by

rank-ordered list is displayed in Table 2; the data collec- tion strategy with the lowest mean response was ranked as number 1 (indicating the activity that the respondents considered to be most ethical).

Most of the lower-ranked (most acceptable) activities deal with accessing publicly available material. However, many of the activities considered as problematic by the survey respondents deal with interactions between em- ployees and other individuals. We use this list, as displayed in Table 2, to evaluate the literature regarding the ethics of various CI data collection activities.

A review of the literature regarding CI activities reveals some general positions as to which actions should be pro- hibited and which should be allowed. In Table 2, we have added the viewpoints of different authors regarding these activities. It is interesting to note that some authors (Flax, 1984; Paine, 1991) are highly restrictive in their percep- tion of ethical CI data collection activities. Others (McGonagle and Vella, 1990; Schultz, Collins, and Mc- Culloch, 1994) have different viewpoints. The difference may lie in the authors’ perceptions of the business envi- ronment, and in the standards of behavior that business- people have a right to expect when dealing with others. We expand on each viewpoint below.

tivity with the first three representing broad ethical issues (pp. 425-426). Those involve:

Paine (1991) discusses four areas of questionable CI ac-

0 Deceit or some form o f misrepresentation;

0 Attempts to inziAence the judgment ofpersons entrusted with confidential information, particularly the oflering of inducements to reveal information; and

O Covert or unconsented-to surveillance.

The fourth area of questionable CI activity concerns the theft of documents and other tangible property. This category tends to carry legal sanctions greater than those of the other three categories. Paine argues that, if a com- pany wishes to prevent legal entanglements, all four cate- gories of questionable activities should be avoided when- ever possible.

Flax (1984: 29) offers a discussion of CI activities that purports to “sort the utterly sleazy from the merely hard- ball.” Flax discusses various views on specific activities, and offers this summary (p. 33):

Some of these practices seem unassailable. In fact, an executive whofiiis to take advantage of information that is publicly available rnay be neglecting hisfiduciary duty to

Collins and Schulh >

Table 1. Exunples o j CI n u f a Collection Activities

Soliciting information from competitors’ employees 0 Picking the brains of a competitor’s engneers or technicians at a trade show or conference. c-3 Interviewing competitors’ employees (including students) for a job that does not exist to indirectly gather

~3 Hiring key executives for what they know.

cy.1 Ikbriefing competitors’ former employees.

Soliciting information from people who do business with competitors (-:> Encouraging regular customers who may provide information to talk about your competitors. (-.) Asking loyal cListomers to put out phony bids that may provide technical details about your competitors’

CT) Questioning suppliers regarding their production to deduce your competitors’ activity level. C ~ I Infiltrating customers’ operation with missionary salespeople or engineers to learn about competitors’ new

C j Pumping new buyers about competitors’ sales by pretending to be ignorant of sales activity in the new

information.

Hiring the same design consultants as the competition.

products.

product designs.

territory.

Finding information in published material (1) Analyzing help-wanted ads to determine the type of projects competitors are contemplating. i_’ Obtaining negotiated contracts to find information on labor costs of competitors. C> Studying aerial photographs of competitors’ plants that have been filed by such agencies as EPA. C\ Obtaining information through Freedom of Information Act filings. ~13 Reading public documents on Uniform Commercial Code (UCC) filings to draw inferences about

-

competitors’ borrowing and financing practices.

Observation and analysis of physical evidence c:) Observing competitors’ loading areas to determine shipping levels. c r) Having executives, under assumed identities, take tours of competitors’ plants and facilities to observe

c? I3uying competitors’ products to study components and evaluate costs and manufacturing techniques. c-) I3uying competitors’ garbage from trash haulers.

manufacturing processes.

shareho1der.c. But many more questionable practices seem to-fit m e (rf t11m unsavory patterns. In the-first, the snooper deals directly with the competitou, its employees or its-former employees. H e often misleads the person he’s dealing with or at least trades on his or her credulity. I n the serond patterrz the snoopergoes to somebody else-a supplier, say, or a rusfonw-and deceives or pressures him. As part qf the b q a i n , usually this person in turn betrays the cor$idence of someone who trusted him, a betrayal the snooper has helped bring on. Is this kiwd o f behavior worth it? The answer to that separates honorable managers-from the other kind.

Flax’s point of view is similar to Paine’s in that he suggest: that such techniques as misrepresentation and deceit should not be used in conducting CI activities.

McGonagle and Vella (1990) offer comments on a number of CI collection scenarios that are very similar, and in some cases, identical to those found in Flax’s list. Although they offer general guidelines for evaluating eth- ical behavior (discussed later in this article), it is difficult to link their reactions to specific situations with the gen- era1 guidelines which they offer.

Schultz, Collins, and McCulloch (1994), hereafter SCM, discuss ethics as viewed through the moral duties

Table 2. Literature Review Of CI Data Collection Activities

Paine Flax Aanh” [I9911 [M MY SCM Consensus

1.

2.

3.

4.

5.

6.

7. 8.

9.

10.

11.

12.

13. 14.

15.

16. 17.

18.

19.

Analyzing help-wanted ads to determine the type of projects Competitors are contemplating. Buying competitors’ products to study compo- nents and evaluate costs and manufacturing techniques. Encouragmg regular customers who may provide information to talk about your competitors. Reading public documents on UCC filings to draw inferences about competitors’ borrowing and financing practices. Obtaining information through Freedom of Information Act filings. Picking the brains of a competitor’s engineers or technicians at a trade show or conference. Hiring key executives for what they know. Having executives, under assumed identities, take tours of competitors’ facilities to observe manu- facturing processes. Studying aerial photographs of competitors’ plants that have been filed by such agencies as the EPA. Observing competitors’ loading areas to deter- mine shipping levels. Obtaining negotiated contracts to find informa- tion on labor costs of competitors. Hiring the same design consultants as the com- petition. Debriefing competitors’ former employees. Questioning suppliers regarding their production to deduce your competitors’ activity level. Pumping new buyers about competitors’ sales by pretending to be ignorant of sales activity in the new territory. Buying competitors’ garbage from trash haulers. Infiltrating customers’ operation with missionary salespeople or engineers to learn about com- petitors’ new product designs. Asking loyal customers to put out phony bids that may provide technical details about your com- petitors’ products. Interviewing competitors’ employees (including students) for a job that does not exist to indirectly gather information.

A

N

P

A

A

P P

P

N

P

N

N P

P

I’ P

P

P

P

A

A

P

A

A

P P

P

A

A

A

P P

1’

P A

P

P

P

A

A

A

A

A

A N

N

A

A

A

N A

A

A P

N

N

P

A

A

A

A

A

A A

A

A

A

A

AP AP

AP

A I’ A

A

P

P

A

A

A

A

A

A

P

P

* Rankings (1 = lowest average mean response, 19 = highest average iiiean response) are based on survey results of Hallaq and Steinhorst (1994). where respondents were asked to rate each activity on a 5-point Likert scale (where 1 = vety ethical, 5 = very unethical)

MV, McGondgle and Vella (1990); SCM, Schultz, Collins, and McCulloch (1994); A, acceptable; N, not discussed; P, prohibited or problematic; AP,

situationally dependent (could he A or P, depending on thc tnoral duty of each individual).

C Collins and Schulh

of business intelligence gatherers. They argue that all CI professionals have the following duties:

7b riiairit~~iri the rcwets of eniployers a n d j m z e r c~mployers.

Not to e r g u p in illegal activities.

7;i supervirc~ C I ernployees and contractors arid accept resporisihilit y . for their actions.

Not to cvicciurage o r abet the betrayal by a third party qf his or her ethical duties.

TI avoid havrrriq third parties byforcing them to ergage in (:I activitirs.

With this framework in mind, SCM advocate that much of the responsibility for guarding trade secrets and sensitive information rests with thc company and its eni- ployees. Telling the truth in a business setting is not viewed as a n absolute duty. In fact, such tactics as bluff- ing, failing to provide all the known facts regarding a question, and even telling outright untruths are often ob- served in the business world. How many times has the overworked expression “this is niy last offer” proven to be a misstatement of fact?

Thus, according to SCM, firms and their employees should not always expect to be told the truth all the time, and should be on guard for such activities as deceit and misrepresentation in their business dealings. Correspond- ingly, C I professionals should be able to engage in certain forins of misrepresentation in order to try to gain infor- mation about a competitor. These actions are expected in business, and it is up to the company to guard against such actions.

SOME ARGUE MISILEPRESENTATION IS EXPECTED

IN BUSINESS, AND I T IS U P TO T H E COMPANY TO

C;UARI> AGAINST SUCH ACTIONS.

The framework of SCM may appear to be contrary to one of the provisions in the Code ofEthics of the Society of Competitive Intelligence Professionals (1987). Specifi- cally, the fifth provision is as follows (p. xxvii): “To accu- rately disclose all relevant information, including the identity of the professional and his or her organization, prior to all interviews.” This provision appears to prohibit the use of any sort of misrepresentation in the CI gather- ing process.

However, the SCM framework does prohibit individu- als from harming others by forcing others to participate in activities that violate their ethical standards, or by caus-

ing them to betray their ethical duty. If misrepresentation could have this consequence, it should not be under- taken. The coding of CI activities using thc SCM frame- work yields some situations which could be acceptable or problematic depending on the moral duty of each of the individuals involved. For example, if a company solicits and receives information from a competitor’s former em- ployee, such an action would be acceptable if the former employee had no sworn duty to the competitor to keep its secrets. This framework makes it imperative to exam- ine all the relationships in any such situation before de- ciding the ethics of the situation.

An analysis of the comparisons in Table 2 yields some interesting observations about CI data collection activi- ties. Table 2 indicates eight categories for which there is consensus. Two actions are considered problematic by all of the authors who evaluated them (rankings 18 and 19). Both of these actions include the involvement of individ- uals outside the company, either voluntarily or involun- tarily, in situations which include misrepresentation and deceit. Six activities are consistently evaluated as accept- able (rankings 1 , 2, 4, 5, 9, and 11). All of these activities involve the use of publicly available information.

IF A COMPANY ACCEPTS ‘THE PILIMARY DUTY

F O R PROTECTING ITS PROPRIETARY DATA,

ATTEMPTS BY OUTSIDERS TO COLLECT T H E DATA

ARE NOT AUTOMATICALLY CONSIIIEREL)

UNETHICAL.

The remaining activities indicate those areas for which there is no consensus. In reviewing each of these areas, a common thread emerges. If the company accepts the primary duty for protecting its proprietary data, attempts by outsiders to collect the data are not automatically considered to be unethical. However, if a moral duty to act in an “aboveboard” manner is assigned to those re- sponsible for collecting the data, many of the same ac- tions would be perceived as unethical. Because of these competing viewpoints, it is imperative that the profes- sion continues to develop its own sense of ethics sur- rounding these activities.

Development of CI Policies for Corporate Codes CI professionals should be able to find guidance for their actions in corporate codes of conduct. Recent studies (Pitt and Groskaufmanis, 1990) have shown that up to 90% of companies have corporate codes. However, Paine (1 991) notes that, of 480 codes on file at the Ethics Ke-

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source Center and Defense Initiative Clearing House, only five supplied any type of usefill information in intcl- ligence gathering.

Because of the wide range of viewpoints concerning the ethical issues surrounding CI activities, management can find it very challenging to develop policies for such activities. A recent case study by Harvard Business School (Paine, 1992) offers some insight into the problems asso- ciated with the development of competitive information policies. Managers involved in developing and niodi@ing corporate codes, particularly with respect to CI activities, will find the issues discussed in this case helpful in their own policy development processes.

Corporation (UTC) to develop a draft policy interpreting the Code’s provisions on competitive information. The Code provisions regarding CI activities were limited, and very general. They involved three aspects of dealing with competitors (Paine, 1992:16):

The case examines the efforts by Unitcd Technologies

A ~ i w i i r i s ~ LAWS. lJTC ernployws must never exchange ir$rmation with rnnzpetitors that could he in violation qf the LJ. S . Antitrust Lati) or comparable in tern at iorial laws. Th is ivo 14 Id inrlir de oh tairi itig irlforniatiori reXardirig the rnarketing and sale of

competitors’ products and services. C o h w i j u ~ w ~ I N F C I K M A ~ K I N . Irlf;,rnzation about competitors is a necessary elenient o f business, hut should he accepted only when there is a reasonable belief that both receipt and U S K qf the ir$irrnation is laivful. MAKKEYYNC;, SELLING, A N D AiwERris iNC; . h x a l and ethical ronsiderations dirtate that marketing activities be conductedsfairly and honestly.

The generalities of the code caused many employees to have questions about specific C I activities. Because of these questions, U T C undertook a project to develop a policy circular offering guidance to employees regarding the acquiring of competitor information. A number of is- sues arose during the development of this policy state- ment, including:

A lack of consensus at the management level regarding the level ofethicality that should be incorporated into the poliry statement regarding dealings with competitors. How restrictive should the poliry be? W h a t legal policies would still not be accepted as ethical?

A lack Ofronsensus among muna<qers regarding the levd of detail that should be incorporated into the policy statement. Would too many rules cause the CI

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inf0rtmtion t o “dry up”? Would employees l o o k j i r loopholes in acfivities that tc~ere not sper$rally prohibited in the poliry statement?

Diffirulty interpretirig ternis in the code. W t a t is laiuful receipt o f infirmation? W h a t conipetitor information is lqitiniatcly proprietary, and ther+re of liniits to UTC eniployws? m a t marketing activities are considered n ilfa i r?

WOULD TOO MANY RULES CAUSE CI INFORMATION TO “DRY UP”?

The case illustrates UTC’s efforts to resolve some of these issues, and includes a number of questions that arose from employees regarding the Code. The case also exam- ines competitive intelligence issues at two of UTC’s sub- sidiaries. As policies for CI activities are being incorpo- rated into corporate codes, managers may find this case helpful in the process of defining the issues.

limitations of Corporate Codes Although corporate codes of conduct are becoming nec- essary in today’s business environment, they are often ig- nored or forgotten in the everyday operations of the company. Benson (1 989) reviewed corporate codes of conduct and notes that the ethical usefulness of codes is limited. He suggests that codes may, however, serve a more instructive purpose if (1) management is active in developing and promoting the code, and (2) management sets an example by acting ethically in its dealings with company employees.

ethical, focus of most codes. Sanderson and Varner (1 984) analyzed the content of 39 corporate codes and found the discussion of ethics to be greatly lacking. In fact, they found about 75% of the content to be de- voted to legal compliance rather than to ethical stan- dards. Additionally, the penalties contained in the codes for violation of ethical standards were significantly less than the penalties associated with violation of legal standards. Mathews (1987) analyzed the content of 202 corporate codes and found that almost 91% of the codes emphasized legal responsibility as the basis of the code. Additionally, only 15% of the codes emphasized ethical responsibility.

In her review of studies of corporate codes, Stevens (1 994) supports the findings of other authors relating to the legal, rather than ethical, focus of most codes (p. 67):

Other authors have examined the legal, rather than

Collins and Schulh

First, it is apparent that-firms are strongly ronrervied With sdf-lrotertion; that is, ronfiict of interest is a romvnon

t h e w in nearly all the studies. Firvns seem primarily conrerneri with enzployee misconduct zuhirh m k h t dauna<qe the firnz. Serond, the rodes seem preorrupied with frdlouhig laws. While ethical rodes should promote 1611)- abidirg behavior; it appears that they are preoccupied with l a w etlftrrenzent and self-dejense and oftevi do not rise above this plateau to surres$idly artirulate the values, belicfi arid precepts . f a desirable corporate culture.

Selley (1 994) offers the observation that most corpo- rate cotles are forgotten in the day-to-day activities of a business. Even though there is a great deal of focus on corporate ethics, middle and upper managers are receiv- ing mixed iiiessages. “In many organizations that have well-established value statements and codes, ethical prin- ciples still do not find their way into job descriptions and reward systems. Even if they do, they take a back seat to performance measures such as profitability, cost control and sales targets” (p. 53).

ETHICS STILL TAKE A BACK SEAT TO

PERFORMANCE MEASURES SUCH AS

PIWOFITAHILITY, COST C O N T R O L , ANT) SALES

TARGETS.

In general, corporate codes are still in the early stages of development and currently offer little guidance for competitive intelligence activities. As companies continue to evaluate and niodi5 their codes, more consideration is likely to be given to the ethical issues that face CI profes- sionals. In this respect, the CI profession is ideally situated to make a significant contribution to the ongoing devel- opnient of corporate codes.

Management Rishs and CI Rctivitq As CI professionals consider actions that are questionable, they must also consider the risks these actions pose to the corporation. One type of risk involves the corporate image. Schultz, Collins, and McCulloch (3 994) cite ex- amples of intelligence collection activities which are nei- ther immoral nor unethical, but which iiuy cause a nega- tive public reaction if discovered. Some practices, like going through a competitor’s trash, may be unappealing, as well as cnibarrassing to the company, but would not be considered unethical by many.

Krikorian (I 994) argues that unethical behavior will iiltiniately came a loss of triist from customers, employ-

ees, and the general public; the resulting loss of trust will eventually affect the “bottom line.” Ironically, i t is the focus o n the “bottom line” that often motivates conipa- nies to cross the ethical threshold in the first place.

Singer (1993:6) notes that companies often signal a double standard when they encourage workers “to be ethical when it conies to protecting information, but not ethical when it comes to collecting information on a competitor.” This double standard can, in turn, lead to a breakdown of ethical behavior throughout the company.

SOME COMPANIES ENCOUKAC~E WORKERS 1 c) BE

ETHICAL W H E N I’ROTECTINC; INFORMATION,

BUT NOT W H E N COLLECTINC; INFCIRMATION O N

A COMPETITOR.

Conipanies must also consider legal risk when examin- ing their C I activities. Kaiborn and Payne (1990) cite the problems that plagued McDonnell Douglas Corp. when it was involved in a scandal while trying to improperly obtain bidding data and contracts. Even though thc con- pany’s corporate ethics policy required honest and trust- worthy actions in all relationships, such codes will not succeed when management does not adhere to the poli- cies it espouses. The cost of such a scandal, in terms of lost contracts and customers, as well as in terms of poten- tial legal liability, is likely to be substantial.

Paine (I 991) suggests that corporations may choosc to remain silent regarding the ethics of competitive intelli- gence gathering in order to benefit from questionable practices by their employees. If the company actively pro- motes ethical standards in its code and in employee train- ing, such knowledge may “hamstring” the employees i n their intelligence gathering activities. I’aine notes that the cost of this silence could, however, be severe; employees (and correspondingly their employer) may unwittingly find themselves in great legal difficulty.

Guidelines for Ethical Behavior Much of the literature reviewed offers both general and specific guidelines to be considered when making ethical decisions in business; some of these guidelines are suni- rriarized in Table 3 . The authors presented in this table have developed sets of principles or rules that might be used by a competitive intelligence professional to evaluate the implications and consequences of taking certain ac- tions in various circumstances. These principles range fi-on1 those that appeal to our intuitions to those that

< Ethics for CI ->

Table 3. Guides for Ethical Behavior

Singer (1993) 0 Am I in a place I shouldn’t be? 0 Have I misled anyone to gain access to those areas? 0 Are the methods used to gain information intrusive? 0 Have I misrepresented myself?

McGonagle and Vella (1990) 0 What kind of raw data are you trying to collect and eventually get? 0 How did you get those data (method)? 0 What will you be doing with those data?

Peale and Blanchard (1988)-Ethics Checklist 0 Is it legal? 0 Is it balanced? 0 How will it make me feel about myself?

Fuld (1995) -ten commandments: 0 Thou shalt not lie when representing thyself. 0 Thou shalt observe thy company’s legal guidelines as set forth by the Legal Department. 0 Thou shalt not tape record a conversation. 0 Thou shalt not bribe. 0 Thou shalt not plant eavesdropping devices. 0 Thou shalt not deliberately mislead anyone in an interview. 0 Thou shalt neither obtain nor give to thy competitor any price information. 0 Thou shalt not swap information. 0 Thou shalt not steal a trade secret (or steal employees away in the hopes of learning a trade secret). 0 Thou shalt not knowingly press someone for information if it may jeopardize that person’s job or reputation.

Laczniak and Murphy (1991)-sequence of questions to improve ethical reasoning 0 Does the contemplated action violate law? 0 Is the contemplated action contrary to widely accepted moral obligations? 0 Does the proposed action violate any other special obligations which stem from the type of organization at focus? 0 Is the intent of the contemplated action harmful? 0 Are there any major damages to people or organizations that are likely to result from the contemplated action? 0 Is there a satisfactory alternative action which produces equal or greater benefits to the parties affected than the proposed

0 Does the proposed action leave another person or group less well off?

Schultz, Collins, and McCulloch (1994)

action?

Acceptable internal activities: 0 Require employees to act as collectors of intelligence. 0 Require employees to safeguard company secrets. 0 Require former employees to safeguard company secrets. 0 Employ external intelligence contractors. 0 Collect business intelligence through surveillance. 0 Collect business intelligence through misrepresentation. Unacceptable internal activities 0 Engage in illegal activities such as trespass, theft, and bribery to collect information. 0 Employ external contractors to engage in illegal activities to collect information Acceptable external activities 0 Seek information from a third party who unknowingly divulges a secret. Unacceptable external activities 0 Cause third parties to violate their ethical duty to another party. 0 Cause third parties harm by using them or forcing them to engage in collection activities

Collins and Schulh 2

might elicit a more logical examination of the possible outcomes of a specific action.

tions offered by Singer (1993). Singer quotes the United Technologies approach as calling upon professions to evaluate a proposed action by considering four questions relating to each CI activity. If the answer to any of these questions is yes, then the action is probably prohibited by company standards.

McGonagle and Vella (1990) believe that the appropri- ateness ofany <:I action can be determined by examining three questions relating to the acquisition and use of data. In particular, the authors focus on the method used to acquire data and the way in which the data will be used. They state that “If you look a t any particular problem in these ternis, you should be able to identie the major legal and ethical considerations. How you handle the eth- ical questions depends upon your personal value system and the way you see your public and private obligations . . . You must ultimately come up with your own solu- tions” (p. 43).

An Ethics Checklist is proposed by Peale and Blan- chard (1988). They suggest questions to be considered when evaluating the ethics of a particular situation: Is it legal? (This is a niininium for most discussions of ethics.) Is it balanced (fair to all in the short term as well as in the long term)? How will it make me feel about myself? Will it make iiie feel proud? Would I feel good if my decision was published in the newspaper? Would I feel good if niy family knew about it? These last questions focus on the ethics of the individual.

Among those that appeal to our intuition are the ques-

WC)ULi> 1 FEEL GOOD IF MY FAMILY KNEW

ABOUT IT?

Fuld, a C I practitioner, provides us with Fuld and Company’s ten commandments of legal and ethical intel- ligence gathering (Fuld, 1995). However, such a list of proscribed activities often carries with it the implied mes- sage that, if a particular activity is not on the list, it must then be acceptable.

Laczniak and Murphy (1991) offer a list of questions that should be considered before a manager takes an ac- tion that might have ethical implications. One question in particular focuses on different types of moral obliga- tions or duties: “Is the contemplated action contrary to widely accepted moral obligations?” The authors discuss several types of moral duties: (1) duty of fidelity (to keep promises and tell the truth), (2) duty of gratitude (recog-

nition of special obligations between parties), (3) duty of justice (to distribute rewards based upon merit), (4) duty of nonmaleficence (to not harm others), and (5) duty of beneficence (to take actions to improve the situation of others). Laczniak and Murphy argue that these questions are a general checklist, and even if the answers indicate some possible conflicts, it does not necessarily mean that the action is unethical.

Schultz, Collins, and McCulloch (1994) also examine CI practices from the perspective of one’s moral duty. These authors take the position that there is no duty to tell the truth all of the time since it is not a universal cx- pectation in the business world and few businessmen or -women rely on or assume that this will always be the case. SCM state their belief that third parties have no moral duty to maintain a company’s secrets unless they have specifically and voluntarily agreed to do so. This framework of principles then leads to the list of acccpt- able and unacceptable CI activities, as shown in Table 3.

Many authors (McGonagle and Vella, 1990; Combs and Moorhead, 1992; Flax, 1984; Paluszek, 1991; Peale and Hlanchard, 1988) recommend consideration of the suggestion “don’t do anything you would not want to see mentioned in a newspaper headline, and you will be safe.” Reinemund (1991) offers the “Rose Bowl Test”: how would the strategy under consideration be viewed if it were displayed on the 50-yard line of the Rose Bowl before 100,000 people? Laczniak and Murphy (1991) mention the TV Test: would a manager feel conifortable explaining the action on TV to the general public?

SummarU and Conclusion This article offers a number of viewpoints for considera- tion by members of the CI profession. We have shown that there is consensus among most competitive intelli- gence practitioners and scholars as to certain prohibited activities in the data collection phase of a project. How- ever, we have also offered discussion which indicates that consensus on such issues is not necessarily the best way to establish ethical behavior. Ethical rules or guidelines fol- lowed by a professional can be the product of one’s own thoughts or might represent the policy of a professional association.

Although some authors hold a different view, we be- lieve that there is no duty to refrain from engaging in CI activities provided that the activity is done in an eth- ical manner consistent with our moral duties as individ- uals. Thus, it is ethical to require employees to partici- pate in CI activities, unless the activity forces an

< Ethicsfor CI

employee to violate his or her own principles of appro- priate moral behavior.

In this article, we have exposed the readers to a num- ber of different approaches that can be used to determine right from wrong. We also offer our own thoughts on one of the subjects explored in this article: should mis- representation by a data collector be allowed? In a busi- ness setting, there is no expectation on the part of anyone to always hear the truth. Regardless of whether the recip- ient of information is a shareholder, employee, customer, supplier, or competitor, he or she knows that communi- cations are always shaded in a certain way. The slant may be subtle (“we can make that deadline without any prob- lems”) or the lie may be blatant (such as the employee who masquerades as a potential customer to find out more about a product). We believe that, lacking any le- gitimate expectation on the part of the receiver of the message, there is no absolute duty or obligation on the part of the sender to be truthful. We also believe that the primary duty to keep a secret falls on the owner of the secret and not on the person who is attempting to gain that knowledge. Such is the nature of the business realm, and all who work within this sphere of activity should be constantly aware of these expectations.

THE PRIMARY DUTY TO KEEP A SECRET FALLS

O N THE OWNER O F THE SECRET AND NOT O N

THE PERSON WHO IS ATTEMPTING TO GAIN

THAT KNOWLEDGE.

Having established this fact regarding the nature of business, we would prefer that all individuals refrain from statements that are false or misleading. This, however, re- flects our personal values and should not be viewed as the basis for determining society’s minimal expectations of behavior. Such expectations of behavior should be estab- lished by each individual, considering his personal moral framework as well as the framework of his profession. The Society of Competitive Intelligence Professionals has adopted a view of ethical behavior on the part of its members that prohibits the use of misrepresentation. Members of the Society, having voluntarily entered into a social contract with the Society, should be bound to ob- serve such a prohibition in return for the many benefits provided by the association.

The CI professional is faced with a number of issues relating to corporate ethics. With limited guidelines from the corporate code of ethics or from management, pro- fessionals must act in the best interest of the company,

considering the legal, ethical, and profit-oriented aspects of their duties. Since many corporate codes are still in their infancy, and since managers may sometimes be more concerned with survival than with ethics, it is imperative that CI professionals establish their own ethical frame- work. We have offered a number of issues for considera- tion, and hope that this information will aid the profes- sion as it continues to develop its philosophy of ethical CI activities.

References and Further Reading Benson, G.C.S. (1989) “Codes of Ethics,”]ournal $Business Ethics, 8:305-319.

Combs, R.E., and Moorhead, J.D. (1992) The Competitive Intel- lkence Handbook. Metuchen, NJ: The Scarecrow Press.

Flax, S. (1984) “How to Snoop on Your Competitors,” Fortune, May 14: 28-33.

Fuld, L.M. (1995) The N e w Competitor Intelligence. New York: Wiley.

Hallaq, J.H., and Steinhorst, K. (1994) “Business Intelligence Methods-How Ethica1,”Journal of Business Ethics, 13:787-794.

Krikorian, R.V. (1994) “Ethical Conduct and the Bottom Line,” Executive Speeches, August/September: 48-50.

Laczniak, G.R., and Murphy, PE. (1991) “Fostering Ethical Marketing Decisions,”Journal of Business Ethics, 10:259-271.

Mathews, M.C. (1987) “Codes of Ethics: Organizational Be- havior and Misbehavior,” Research in Corporate Social Pevformance and Policy, 9: 107-1 30.

McGonagle, J.J., and Vella, C.M. (1990) Outsmarting the Cumpe- tition. Naperville, IL: Sourcebooks.

Paine, L.S. (199 1) “Corporate Policy and the Ethics of Competi- tor Intelligence Gathering,”Journal $Business Ethics, 10:423-436.

Paine, L.S. (1992) Competitive Information Policy at United Tech- nologies, Harvard Business School Case No. 9-392-091. Boston: HBS Publishing.

Paluszek, J. (1991) “Ethics in Public Affairs,” T. Brothers, ed., in Corporate Ethics: Developing N e w Standards qf Accountability. New York: The Conference Board.

Peale, N.V., and Blanchard, K. (1988) The Power (fEthical Man- agement. New York: Ballantine Books.

Pitt, H.L., and Groskaufinanis, K.A. (1990) “Minimizing Corpo- rate Civil and Criminal Liability: A Second Look at Corporate Codes of Conduct,” The Geozetown LawJournal, 78: 1559-1654.

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Prescott, J E , and EhardcvaJ, G. (1995) “Competitive Intehgence Practices. A Survey,” Conipetitive Intellgence Review, 6 4-1 4

Raiborn, C.A., and Payne, 1). (1990) “Corporate Codes of Conduct: A Collective Conscience and Continuum,”]ournal of

Business Ethics, 9:879-889.

Keineniund, S.S. (1 991) “Defining the Ethical Challenge-A View from Above,” T. Brothers, ed., in Corporate Ethics: Devel- opirg New Standards ofArcountability. New York: The Confer- ence Board: 9-10,

Sandenon, GK., arid Varner, 1.1. (1984) “What’s Wrong with Corporate Codes of Conduct?” Management Accounting, 66:28-35.

Schultz, N.O., Collins, A.B., And McCulloch, M. (1994) “The Ethics of Business Intelligence,”joocrrna/ of Business Ethics, 13:305-314.

Selley, 1) ( 1 994) “Time for an Ethics Balance Sheet,” CA Mag- c i n c , April 53-55

Singer, A (1 993) “Competitive Information Gathering Where to Draw the Line,” Ethrkos, July/August. 5-6

The Society of Competitive Intelligence Professionals (1987) Code qfEthics, Alexandria, VA: The Society of Competitive In- telligence Professionals (SCIP).

Stevens, €3. ( 1 994) “An Analysis of Corporate Ethical Code Studies: Where Do We Go from Here?” journal (rf Busine.ss Ethics, 13:63-69.

About the Authors Allison Collins is an Assistant Pro$essor in the Department of Accounting and Taxation at Colorado State tJniversity. She has published previously in such journals as Journal of Business Ethics and Accounting Educators’ Journal. Her research interests are in accounting and business ethics. She nzay be reached at 970-491-6420 or by e-mail at acollins@vines.colostate.edu.

Accounting and Taxation at Colorado State University. He has published previously in such journals as Journal of Business Ethics, EDP Auditor Journal and Internal Auditor. He may be reached at 970-491-5623.

Norm Schultz is an Associate Professor in the Department (rf