Porter's Diamond Model And Determinants Of National Competitiveness
Porter has written the Diamond model in 1990 and the Determinants of National Competitiveness was published in 2012. Therefore, one could say that the work of Delgado et al. is a more complex, quasi an upgraded form of Porter's (1990) work, looked from a broader perspective.
Porter links national competitiveness to productivity.
His model determines four different but still related factors, conditions that define a country's competitive advantage. Namely, factor conditions, demand conditions, related and supporting industries and finally the firm strategy, structure and rivalry. This system is self-reinforcing. Porter especially emphasises the importance of domestic rivalry, when he defines the diamond as a system. Domestic rivalry is important …show more content…
Too much interference from the government side is to be avoided, since it will only lead to a bigger dependence on the government from the company's side. No action, on the other hand, creates no environment for the companies, where they could have the possibility for gaining competitive advantage. But having the right middle way is difficult since the decisions are usually influenced by the politicians personal goals, namely getting again elected and having the people's trust, vote. This is in most cases not in accordance with the rules, which should be put in force, while they might cause in the short run some difficulties. The problem was defines by Porter very well: what in an economic history means short run, means in the political life cycle …show more content…
He, firstly, criticises and argues that thinking only about competitiveness will only lead to bad political decisions and it's a threat to the international economic system. He states that competitiveness of a corporation is quite easy to define, since if a company does not perform as it should, it will at one point go bankrupt. However, this is not the case for a country, they cannot go bankrupt and stop existing.
Second, he analysis different definitions of competitiveness. Exemplifying it with different countries, who have different economic systems (reliance on international economy or having own stable economy). Contrary to Porter and Delgado et al. papers, Krugman includes a narrower view for competitiveness. He defines competitive problem as a domestic problem, which does not depend on the international environment. Domestic factors are in his main focus and the fact that countries are not in a zero-sum game. Meaning, just because a nation is developing, does not unequivocally mean that another nation will have therefore problems. On the contrary, because if one improves, then the others can take advantage of it. So, countries should focus with their on problems, and not with comparing and competing with
Porter links national competitiveness to productivity.
His model determines four different but still related factors, conditions that define a country's competitive advantage. Namely, factor conditions, demand conditions, related and supporting industries and finally the firm strategy, structure and rivalry. This system is self-reinforcing. Porter especially emphasises the importance of domestic rivalry, when he defines the diamond as a system. Domestic rivalry is important …show more content…
Too much interference from the government side is to be avoided, since it will only lead to a bigger dependence on the government from the company's side. No action, on the other hand, creates no environment for the companies, where they could have the possibility for gaining competitive advantage. But having the right middle way is difficult since the decisions are usually influenced by the politicians personal goals, namely getting again elected and having the people's trust, vote. This is in most cases not in accordance with the rules, which should be put in force, while they might cause in the short run some difficulties. The problem was defines by Porter very well: what in an economic history means short run, means in the political life cycle …show more content…
He, firstly, criticises and argues that thinking only about competitiveness will only lead to bad political decisions and it's a threat to the international economic system. He states that competitiveness of a corporation is quite easy to define, since if a company does not perform as it should, it will at one point go bankrupt. However, this is not the case for a country, they cannot go bankrupt and stop existing.
Second, he analysis different definitions of competitiveness. Exemplifying it with different countries, who have different economic systems (reliance on international economy or having own stable economy). Contrary to Porter and Delgado et al. papers, Krugman includes a narrower view for competitiveness. He defines competitive problem as a domestic problem, which does not depend on the international environment. Domestic factors are in his main focus and the fact that countries are not in a zero-sum game. Meaning, just because a nation is developing, does not unequivocally mean that another nation will have therefore problems. On the contrary, because if one improves, then the others can take advantage of it. So, countries should focus with their on problems, and not with comparing and competing with