In The Competitive Advantage of Nations, which was published in 1990, Michael Porter – who has dedicated most of his career to studying businesses and how they can develop a competitive advantage (Competitive Strategy, 1985) –
the author offers a theoretical framework, which outlines the underlining factors that contribute to national competitiveness. Michael Porter’s work was met with contrasted views. While some academics praised the model for its wealth of information and the convenient framework it generated (Greenway, 1993), many other academics in international business criticized the model for its theoretical flaws and lack of empirical evidence.
After offering a brief overview of Porter’s Diamond concept, this essay will examine the academic criticism that this model has attracted since its publication in 1990.
Porter’s Diamond Model Theory furthers foundational work laid out much earlier by Adam Smith (1776) and Ricardo (1817), which sought to explain the success of certain Nations based on these countries’ factors of production. Although these theories functioned well at the time they were published, they failed to accurately reflect the radically different economic landscape of the 20th century, one characterized by relentlessly evolving technologies and deeply interconnected nations.
At the core of Porter’s theory is the idea that in order to be successful in the global marketplace, firms must first have a strong ‘home base’ to start launch from. Once this condition is established the firm will be able to engage in exports and FDIs ...
... middle of paper ...
Lécuyer C. (2006) Making Silicon Valley: Innovation and the Growth of High Tech, 1930–1970 MIT Press
Ohmae, K., & Le Seac'h, M. (1996). De l'État-nation aux États-régions. Dunod, 1996.
Porter, M. (1990) The Competitive Advantage of Nations. Palgrave. New York
Reich, R (1990). ‘Who is us?’. Harvard Business Review, 68, 1, Jan/Feb, 53-64
Reich, R. (1991). "The work of nations: Preparing ourselves for twenty-first century capitalism." New York: Alfred Knopf
Rugman, A. M. and D’Cruz, J. R. (1993). The ‘double diamond’ model of international competitiveness: the Canadian experience’. Management International Review, 2, 17-39.
Volkswagen AG. (2012). VW Key & Figures. Available: http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/2013/03/leaflet_2012.bin.html/binarystorageitem/file/2013_Y_Leporello_4_2012_engl_WEB.pdf. Last accessed 20/3/14.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Introduction Since its publication in 1990, Michael Porter's book The Competitive Advantage of Nations has attracted much consideration. The main analytical tool of the book is the diamond of competitive advantage (figure 1). This model is based on four country specific "determinants" and two external variables. Porter's four determinants and two outside forces interact in a "diamond" of competitive advantage, with the nature of a country's international competitiveness depending upon the type and quality of these interactions.... [tags: Business Economics]
1584 words (4.5 pages)
- Michael Porter developed Porter’s Diamond, also known as The Diamond Model, in 1990 in his book ‘The Competitive Advantage of Nations’. The four determinants of Porter’s diamond must operate as a system rather than individually. It provides the answers to ‘Why does nation achieve international success in a particular industry?’ (Porter, 1998:71). Despite the universal application of Porter’s diamond framework, many critics argued that the model is flawed. This essay aims to discuss the different critiques drawn to the diamond network.... [tags: porter's diamond, competitive advantage]
1123 words (3.2 pages)
- What is Porter Diamond Model. It was known as a Diamond Model by anyone or public. The diamond model is one of the economic model developed by Porter's in 1990 in his own entitled. 'The Competitive Advantage' of Nation's, where he published herself on his theory. The theory was founded by Michael Porter's that has been used by certain industries only, where it will be more competitive in some specific location. The theory by Michael Porter is why the particular industries become a more competitive in some particular locations.... [tags: competitive advantage of nations]
1605 words (4.6 pages)
- This study focuses on discussing the criticism of Porter’s model of national competitive advantage. In order to fully discuss the limitations of Porter’s model of national competitive advantage, the determinants in Porter’s diamond model should be explained. Therefore Porter’s diamond model and its elements are analyzed in the first part of the study while rest of the study is explaining the limitations of the Porter’s diamond model that are late development theory, the role of the state, multinational enterprises, foreign direct investment, national competitiveness and history.... [tags: conditions, economy, policy]
1266 words (3.6 pages)
- Diamond Concept as a Tool for Measuring Competitive Advantage for Nations ( Porter’s five forces were formulated by Michael E. Porter as a framework to analyze industry and business strategy. He posits that countries, just like companies, compete in the international markets for their fair share. According to Davis and Ellis (2000), the focus on competition is diversion from traditional economic thinking. Unlike the previous theories that only work on one or two dimensions, Porter’s theory connects firms, industries and nations.... [tags: Economics]
2532 words (7.2 pages)
- Analyse the case study with reference to Michael Porter’s Theory of Competitive Advantage and answer the following question: Does America have competitive advantage in the textile and garment industry. Analyse the case study with reference to Michael Porter’s Theory of Competitive Advantage and answer the following question: Does America have competitive advantage in the textile and garment industry. You answer must include the following elements: 1. A clear outline of Porter’s theory with supporting references.... [tags: Business and Management Studies]
2553 words (7.3 pages)
- In today’s world virtually all businesses are born into competition. There are situations in which multiple organizations offer similar products, a limited number of firms seek the same consumers, and other organizations offer the exact same product just at a different price or in a different variation. So how do firms attempt to outperform their competitors and sustain profits. They create a competitive advantage. A competitive advantage is a business concept that allows firms to outperform their competition by generating greater sales margins/profits or retaining a larger number of consumers.... [tags: Porter generic strategies, Strategic management]
1119 words (3.2 pages)
- Innovation has become widely recognized as a key to competitive success (Francis & Bessant, 2005). Scholars are mainly concerned with innovation because of the life requirements and the persistent desire for continuous change to be in accordance with individuals' needs and desires (Badawy, 1993). Developments in all aspects of life are attributed to innovation. Peter Ducker, one of the administration scholars, says that innovation is one of the main forces in economic and social development and a basic tool in the growing, resistance and adaptability of the contemporary organizations with the changing environmental conditions as those organizations with no innovation will shortly remove (Dru... [tags: Business, Sustainable Competitive Advantage]
2601 words (7.4 pages)
- Competencies and Competitive Advantage In today’s technologically advanced environment, computers are everywhere. Electronic devices are in incorporated into our lives from the mirrors in our bathroom to the smart phones in our pockets and everything in between. The vision of Andrews, Inc is “To be the manufacturer’s choice for sensors, powering the things of everyday life.” Our goal is to build sensors which are adequate, affordable and accessible to the business customers building the products of today.... [tags: sensors, computers, environment]
1108 words (3.2 pages)
- Corporate Strategy "Sources of competitive advantage rarely yield added value that can be sustained over time." The following essay is going to attempt to assess the above proposition and try to find if it is possible to add value continually over a period of time. I will first discuss what competitive advantage is and what it means to a firm. Then I will explain the sources of competitive advantage and how the distinctive capabilities of a firm allow it to sustain added value. The discussion is based on a number of viewpoints from different authors who will be clearly indicated and acknowledged.... [tags: essays research papers fc]
2183 words (6.2 pages)