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Economic Espionage, Knowledge Flows, and Firm Performance

Author

Listed:
  • Albrecht Glitz
  • Adrian Lerche
  • Lukas Mergele

Abstract

Economic espionage is a pervasive global phenomenon. We study how knowledge acquired through this clandestine activity affects firms' economic performance. Exploiting historical data from East Germany that trace the flow of scientific-technical information from its sources in the West to its recipients in the East, we show that economic espionage increased firms' productivity and reshaped their production structure and input choices. We further find that the resulting technical change was labor-augmenting and that the associated productivity gains propagated through the production network via input-output linkages. In the long run, firms receiving larger inflows of espionage information were significantly more likely to survive the transition to a market economy following German reunification.

Suggested Citation

  • Albrecht Glitz & Adrian Lerche & Lukas Mergele, 2026. "Economic Espionage, Knowledge Flows, and Firm Performance," RFBerlin Discussion Paper Series 26255, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26255
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    Keywords

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    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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