One result was quite important: Industrial espionage, perhaps because it was so successful, crowded out standard forms of R&D. Though it had the strongest economy in the Communist bloc, companies there had a hard time competing after German reunification.ĭid its success at spying contribute to that? I don’t recommend it, given what happened later in East Germany. Our paper’s empirical foundation is the fact that we could link informants’ key words to specific industrial sectors.Īre you recommending that companies invest more in spying than in R&D? We ended up with a lot of metadata from informants’ reports that turned out to be extremely useful. 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. HBR: How did you measure the success of corporate espionage?Įast 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. And espionage was especially effective in sectors where Western countries had economic containment policies against the Eastern bloc to try to prevent technology transfers. Each standard deviation in increased spying activity narrowed the so-called total factor productivity gap by 8.5 percentage points. The information from it reduced the technology and productivity gap between East and West Germany. Meyersson: Industrial espionage had quite a substantial effect in East Germany. The challenge: Is corporate spying more effective than innovating? Does it really pay off more than legitimate R&D programs do? Professor Meyersson, defend your research. The spying narrowed the technology gaps between the two countries and was so successful that it drove down R&D efforts in the East. Their research paper found that East Germany enjoyed significant economic returns from its state-run industrial espionage operation. The two researchers analyzed 189,725 informant reports and cross-referenced them to industrial sector economic data for East and West Germany from 1969 to 1989. The research: Erik Meyersson, an assistant professor at Stockholm School of Economics, teamed up with Albrecht Glitz, an associate professor at Pompeu Fabra University, to study the archives of the East German Ministry for State Security (known as the Stasi).
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