How Convincing Is Porters Model of National Competitive Advantage in Essay - 6

How Convincing Is Porters Model of National Competitive Advantage in Explaining the Characteristics and Performance of the Business Systems of Major Economies - Essay Example This essay uses examples from Apple, CyberPower UK, Sennheiser, Sony and Lenovo to reach the conclusion that the framework is not a good assessor of business characteristics or performance in major economies, in an era of rapid globalization. Porter’s work focuses on home economies, leveraging home diamonds to create competitive advantages; he advocates entrepreneurship and innovation as drivers of advantage, rather than inherited endowments such as land, raw materials, and size of the labour pool, the lack of which he believes can be overcome. He further argues that factor creation is supported by the quality of consumer demand, rather than its size; the extent of relevant clustering and knowledge-sharing; and competition in the economy. Researchers have found cross-country evidence for all of these concepts. However, Porter’s concept of national competitiveness has also been criticized. Krugman argues that nations do not compete, like companies; and the idea of nation al competitiveness can be used to drive inefficient policies into play. Other researchers have criticized Porter’s methodology, arguing that global export shares are not a well-rounded measure of international competitiveness. Gray and Oz critique Porter’s narrow focus, which ignores macroeconomic environments and government policies, while Lazonic advocates that rivalry can lead to price-wars, decreasing the drive to innovate. In addition to this, Rugman & D’Cruz have created a Double Diamond Model, designed to fill in the gaps present in Porter’s model, which does not factor in the role of the multi-national enterprise. Perhaps the most case-based evidence in support of Porter’s Diamond framework emerges from his proposition on factor creation.