Definition
Michael Porter’s National Diamond framework resulted from a study of patterns of comparative advantage among industrialized nations. It works to integrate much of Porter’s previous work in his competitive five forces theory, his value chain framework as well as his theory of competitive advantage into a consolidated framework that looks at the sources of competitive advantage sourcable from the national context. It can be used both to analyze a firm’s ability to function in a national market, as well as analyse a national markets ability to compete in an international market.
National Diamond
What is ‘National Diamond’
A theory of competitive advantage developed by HarvardBusinessSchool professor Michael E. Porter that is represented visually using a diamond-shaped graphic. The graphic can be used to show the factors that make up an industrialized country’s competitive advantage in the global marketplace or the factors that make up a company’s competitive advantage within a single country.
Explaining ‘National Diamond’
Porter, an expert on economic competitiveness, divides the factors of competitive advantage into four categories, placing one at each point of the diamond. The four categories are firm strategy, structure and rivalry; factor conditions; related and supporting industries; and demand conditions. His model also recognizes the impact of the institutional environment on competitiveness.
Further Reading
- Empirical Analysis of Diamond Model of National Economic Competitive Advantage and Upgrading Tactics Based on National Economic Security [J] – en.cnki.com.cn [PDF]
- Diamond Market: Control at the International and National Levels and Taxation – ideas.repec.org [PDF]
- The economics of pensions – academic.oup.com [PDF]
- Measuring international competitiveness of Romania by using porter's diamond and revealed comparative advantage – www.sciencedirect.com [PDF]
- The economics of social security reform – www.nber.org [PDF]
- The economics of diamond price movements – onlinelibrary.wiley.com [PDF]
- Evaluation and Analysis of International Competitive Ability National Diamond Model of Chinese Tea [J] – en.cnki.com.cn [PDF]
- Social Security, the government budget and national savings – books.google.com [PDF]
