How does the diamond of national competitive advantage in the home economy work, and what are therefore the national competitive advantages or leading industries?

This paper sets out to explore how Porter’s diamond model describes the differences in not just the national business structures and relative fiscal performance but also the scale presented by other approaches. The diamond concept was introduced by Porter in 1990 to clarify why certain countries have a competitive advantage over others and why certain companies in a particular nation are more competitive. The concept supposes that the country of origin of any business is crucial when it comes to realizing a competitive edge with a global scope.

Diamond of national competitive advantage in the home economy

The home country underwrites some critical variables that will underpin the firm in crafting advantages that required for global competition. Japanese automakers and United States semiconductor industries are synonymous for developing exceptional business systems while gaining a competitive advantage over other business. These companies have been successful at what they do because of embracing Porter’s diamond concept.

Diamond of national competitive advantage in the home economy

According to Porter (1990), four variables are responsible for the national competitive strength of companies located there. Porter (1990) contends that competitive companies embrace specialised constellations of home based companies. These constellations are interconnected through vertical relationships like customers linking-up with suppliers or by way of horizontal linkages through clients, technology, skills, distribution networks and so forth (Johnson & Turner 2015). Such specialised groups will enable the country to create business structure that brings about a competitive edge and economic success.

Diamond of national competitive advantage in the home economy

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Diamond of national competitive advantage in the home economy