HBR: How did you measure the success of corporate espionage?
East Germany’s state-led spying venture placed thousands of informants around West Germany and helped them progress in their careers at Siemens, AEG/Telefunken, IBM, and other companies. We measured the flow of information from industrial espionage activities in West Germany and in other European countries to the Stasi, East Germany’s main intelligence agency. We ended up with a lot of metadata from informants’ reports that turned out to be extremely useful. Our paper’s empirical foundation is the fact that we could link informants’ key words to specific industrial sectors.
HBR: Are you recommending that companies invest more in spying than in R&D?
No, no. I have to be very careful. I don’t recommend it, given what happened later in East Germany. Though it had the strongest economy in the Communist bloc, companies there had a hard time competing after German reunification.
HBR: Did its success at spying contribute to that?
One result was quite important: Industrial espionage, perhaps because it was so successful, crowded out standard forms of R&D. All these industries there relinquished so much R&D capacity. Had the Cold War continued, it would have been very difficult for East Germany to become a leader of any kind of sector, precisely because it was so focused on industrial espionage
Interview with one author: