Diamond Model (Porter, 1990): National Competitive Advantage

Overview

Porter's Diamond Model explains why certain nations become home bases for globally competitive industries. Four interconnected determinants — factor conditions, demand conditions, related and supporting industries, and firm strategy/structure/rivalry — form a self-reinforcing system. Government and chance act as external variables that influence the diamond but are not determinants themselves. Crucially, national advantage is industry-specific, not economy-wide.

When to Use

Trigger conditions:

• User asks why a country dominates a specific industry (e.g., Swiss watches, Korean semiconductors)
• User needs to evaluate a country as a base for a specific industry
• User is comparing national environments for investment or relocation decisions
• User mentions "national competitiveness", "diamond model", "Porter's diamond", or "country advantage"

When NOT to use:

• For firm-level competitive strategy -> use Porter's Five Forces
• For firm-level FDI decisions -> use grad-oli
• For gradual market entry -> use grad-uppsala