1) Introduction Competitive Advantage of Nations is a largely reputable yet often criticised work by Michael Porter (1990). The framework of competitiveness by Porter explained the achievements of industries and their contributions to the success of nations worldwide. Firstly, the concept of National Competitiveness and the Diamond Model will be briefly explained. Secondly, the varying criticisms of Porter’s theory by other academics will be discussed. Thirdly, the crucial missing dimensions in his framework will be identified. Lastly, it will be concluded if Porter’s theory is effective in comparison with other academics’ arguments.
2) Concept of National Competitiveness The constant public debate surrounding National Competitiveness…show more content… These factors will be analysed in the below section. a) Factor Conditions Factors can vary in terms of generic or specialised, simple or sophisticated. For instance, one of the factors that contribute to the sustainable competitive advantage for an industry is the creation of specialised technology in that industry. On the other hand, simple and generic factors such as low cost raw materials are normally inherited and duplicated easily. Therefore, firms may be pushed to innovate and improve when there is lack of basic resources while excessive resources may lead to a firm’s complacency and unproductivity. b) Demand Conditions Home Demand conditions, which are key to global achievements, are not determined by the size of demand but by the appeal that creates the resulting difference. Complex and tough home consumers enable the company to identify consumer needs and satisfying those needs increases the company competitiveness worldwide. Low domestic demand results in companies venturing overseas markets and implementing a worldwide strategy to compensate the shortage in home demand…show more content… Cluster drives the movement of innovation and competitiveness by influencing it in different means. Opportunities for innovation are highly visible within clusters and hence geographically clustered companies provide more access to specialized suppliers, knowledge and labor (Snowdon and Stonehouse, 2006). Cluster represents a medium that permits negotiations that are more realistic, targeting exact issues firms face in a certain clusters that policymakers can then tackle more