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ABSTRACT The authors surveyed predominately mid-level managers regarding a series of scenarios which pose potentially unethical situations about competitive intelligence. Respondents were asked to rate the scenario in terms of [...]

Mystery shopping is the practice of gathering competitive intelligence by sending people posing as customers to gather price and sales data. It is argued that this practice does present ethical problems. Though the information given out is not usually considered confidential, it is still given under false pretences.

In recent years, we have experienced some revival of society's concerns with the ethics of business practices as a result of several scandals. However, severe competitive pressures seem to continue to force executives to resort to marginally ethical ways that would provide knowledge about competitors' operations. Therefore, an empirical study was conducted during Spring and Summer of 1991 about information gathering methods by businesses regarding operations of competitors. Respondents were employed in a variety of different industries. A convenience sample was administered in two adjoining states, with one group residing in an urban city and the other in smaller predominantly rural communities. Analysis of perceptions held by these two groups supports the hypothesis that rural residents tend to be more conservative and less approving of questionable methods of information gathering. Similarly, within each group and in the sample as a whole, differences in condoning or disapproving information gathering methods were discovered on the basis of demographic characteristics of respondents.

CEO's in the manufacturing industry was asked about their perception of the questionable intelligence gathering techniques employed by various business firms. Findings reveal that majority of the manufacturing companies resort to unethical tactics in obtaining information, although the incidence of the practice is less frequent than what press reports suggest. In general, CEOs believe that such practice is the norm rather than the deviant behavior in the industry. Evidently, there is a pressing need for private enterprises to promote higher ethical standards.

Competitor intelligence, information that helps managers understand their competitors, is highly valued in today's marketplace. Firms, large and small, are taking a more systematic approach to competitor intelligence collection. At the same time, information crimes and litigation over information disputes appear to be on the rise, and survey data show widespread approval of unethical and questionable intelligence-gathering methods. Despite these developments, few corporations address the ethics of intelligence gathering in their corporate codes of conduct. Neither managers nor management educators have paid sufficient attention to this topic. From a review of questionable intelligence-gathering practices reported in various literatures, the author identifies some important ethical principles to help managers draw the line between legitimate and illegitimate methods of information acquisition. The paper also discusses the costs of failure to heed these principles and suggests steps managers can take to provide ethical leadership in this area.