We found that companies construct the usefulness of competitive intelligence, often due to the fear of abandoning it unilaterally, even though they can’t prove or even demonstrate its efficacy.
(PRWEB UK) 10 February 2015
“Competitive intelligence” risks stigma and has little proven evidence of advantage, yet the business practice persists because firms “construct usefulness” by leveraging arms race-type fears of unilateral abandonment, according to new research co-authored at Cambridge Judge Business School.
While there is an absence of “clearly demonstrable benefits” from competitive intelligence – as companies don’t talk publicly about it – firms persist in this risky practice in order to harm competition by “creating fear, uncertainty and doubt” among rivals, the study found.
The study says “competitive intelligence” (CI) refers to “legal practices of gathering market information that have sometimes been associated with legal infringements and espionage” – and the fact that this line can be blurred “makes CI a prominent exemplar of a stigmatised practice.” Still, “despite the risks, firms continue to engage in both legal and illegal forms of CI.”
The study – The Persistence of a Stigmatised Practice: A Study of Competitive Intelligence – has been accepted for publication by the British Journal of Management. The article was co-authored by Patrick Reinmoeller of Cranfield School of Management and by Shaz Ansari of Cambridge Judge Business School.
“We found that companies construct the usefulness of competitive intelligence, often due to the fear of abandoning it unilaterally, even though they can’t prove or even demonstrate its efficacy,” said Shaz Ansari, Reader in Strategy at Cambridge Judge Business School.
“There has been lots of research into why companies engage in controversial practices that can bring clear commercial gain, and these include legal practices such as tax avoidance and illegal practices such as price-fixing,” said Ansari. “This study looks at something different: how a stigmatised practice like competitive intelligence persists when its benefits can’t be publicly shown or acknowledged.”
The study focuses on large U.S. companies from the Fortune 500 and S&P 1,200 between 1985 and 2012, and constructs a detailed picture of CI through examination of thousands of articles and extensive interviews with CI practitioners including consultants. As the authors understatedly note: “Detailed information on CI is not included in … company publication such as annual reports, which include expenses on R&D and Marketing & Sales but not on CI costs.”
The study notes that “constructing usefulness” is often necessary to create legitimacy around many once-novel and controversial practices. For example, “trade in human organs that is seen to undermine human dignity is justified for saving lives,” and although some criticised life insurance for putting a “price” to human life, “it became legitimate once it was associated with concern for family wellbeing.”
In the case of a stigmatised practice like CI, however, “constructing usefulness is not simply about reframing the practice to justify use and promote adoption. Rather, usefulness is constructed to justify ongoing engagement even in the absence of clearly demonstrable benefits.”
The research found that despite the risks of tainting its adopters, CI persists owing to three factors: companies construct usefulness, keep the practice “opaque” and develop multiple versions of CI to encourage ambiguity and a “diversity of interpretations.” Keeping the practice “under the radar” shields organisations from the scrutiny of audiences and demands for accountability. Thus, while opaqueness is typically thought to impede the diffusion of practices, it can promote such diffusion in the case of a stigmatised practice.
The authors’ interviews with CI experts found a military-like mentality when it comes to the thought of abandoning competitive intelligence.
“Breaking with standard industry practice creates perceived risks arising from unilateral abandonment. Companies may persist with a practice, not just because of perceived benefits, but because of overestimation of the extent to which others hold this assumption. This dynamic is similar to what is seen in arms races,” the study said.
To watch Shaz’s comments on the research please follow the link: http://www.jbs.cam.ac.uk/media/2015/cloak-and-dagger/