The Porter Diamond Theory of National Advantage, or the Porter Diamond Model, is a model that describes the competitive advantage that nations or groups possess based on factors available to them. The theory explains how governments can act to improve a country’s position in a globally competitive economic environment.
Created by Michael Porter, founder of the Institute for Strategy and Competitiveness at the Harvard Business School, the Porter Diamond Model is considered a proactive economic theory
Understanding the Porter Diamond Model
The Porter Diamond Model suggests that countries can create advantages for themselves, such as a strong technology industry or a skilled labor force. Another application of the Porter Diamond Model is used in corporate strategy as a framework to analyze the relative merits of investing and operating in national markets.
The Porter Diamond Model is visually represented by a diagram that resembles the points of a diamond and includes the interrelated determinants that Porter theorizes as the deciding factors of national comparative economic advantage:
- Firm strategy, structure, and rivalry
- Related supporting industries
- Demand conditions
- Factor conditions.
