How to operationalize porter's diamond of international competitiveness

How to Operationalize Porter’s Diamond of International Competitiveness Alan M. Rugman and hlain Verlmke

Michael Porter’s “diamond” framework hc\s as its focus a sct of home country national determinants of international competitiveness. For applications to international business t.his presenh analytical difficulties because Dunning’R eclectic theory of the multinationcll enterprise demonstrates that i t is the interaction between national and international determinants that lend8 to the competitive success of global industries. This article suggests a method of extending Porter's frnmework to incorporate thc modern theory of the multincltional enterprise; in particular, a variant of SWOT analysis is used to operationalize the Porter diamond. 0 1993 ,John Wiley & Sona, Inc.

INTRODUCTION: THE PORTER DIAMOND

A recent contribution by Porter (1990) on the competitive advantage of nations has led to an extensive discussion among academics and practitioners on the sources of international competitiveness (Grant, 1991; Gray, 1991).

Porter’s focus is on the impact of national determinants on international competitiveness. The main question answered in his work is

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RUGMAN AND VERBEKE 2 8 4 - “Why does a nation become the home base for successful international competitors in a n industry?“ (Porter, 1990: 1) Porter measures international success as an industry’s ability to export and to engage in outbound foreign direct investment.

Two important problems arise in terms of managerial applicability of the Porter diamond framework. First. it is not clear why the national level would necessarily be the best geographic indicator for a n industry’s “proximate environment,,’ shaping its success over time (Dunning, 1990). Other geographic levels may be important, such as the local, regional, foreign, or global level, for particular determinants of international success. This problem is acknowledged by Por- ter (1990: 154-159,606-607) but did not lead to a n adaptation of his framework. Rugman f 1991, 1992) has explored this issue in the context of Porter’s application of his framework to Canada (Porter and the Monitor Company, 1991).

Second, six forces and their mutual interactions a re recognized as determining a n industry’s international competitiveness: factor conditions; demand conditions; related and supporting industries; firm strategy, structure, and rivalry; government; and chance. The two latter elements are not included in the four basic determinants of t he diamond but their role is important because either of them can influence the entire diamond. These six forces and their interactions were studied for 100 industry case studies (see Port.er, 1990: 26-27 for a complete list). However, Porter’s case studies lack a homogenous analytical tool to determine the importance and precise impact of each determinant, on the industries’ competitive position. In short, it. is extremely difficult to “operationalize” Porter‘s diamond. By operationalize we mean put the diamond theory into practice, a s a consul- tant or strategic planner would try to do.

The aim of this article is to correct these two weaknesses in Por- ter’s seminal contribution to improve the managerial relevance of the diamond framework. More specifically, this article will extend Por- te 1”s iiiodc I I. t i ro u g h ex p I ic i t 1 y i n trod u c i ng fo u r add i t io na 1 geogra p h i c levels relevant to the analysis of international competitiveness and linking this framework with the well-known and operationally simple SWOT-analysis (strengths, weaknesses, opportunities, and threats) in strategic management theory.

OPERATIONALIZING PORTER ACROSS MULTIPLE GEOGRAPHIC LEVELS

Porter (1990) focuses his attention on the international success of a national industry based on the analysis of determinants at the national level. T w o comments should be made here. First, from a mana-

285 POWER’S DIAMOND OF INTERNATIONAL COMPETITIVENES

geria] perspective it is not always evident that an analysis of a national industry is sought. (although this was of course explicitly the case in Porter’s work). A useful framework for the study of an industry’s competitiveness should explicitly allow for an analysis of the competitiveness of a regionally based industry (e.g., the computer software industry in Silicon Valley) or an industry that is located across a number of nations (e.g., the consumer electronics industry in the European Community. EC). For purposes of clarity, however, the remainder of this paper will also focus on the competitiveness of an industy at the national level.

Second, whatever the chosen geographic level for the definition of an industry, i t should be recognized that the six determinants could be important a t other levels than the national one. In some cases an industry may be influenced by particular determinants at the local level (e.g., the impact of transportation facilities on the petrochemi- cal industry in Rotterdam). Sometimes, some determinants in a region may be of major importance (e.g., factors of production in the French Champagne region for the sparkling wine industry). Finally, any of the determinants may influence an industry’s competitiveness from outside the geographic locus of a home nation. For example, a strong influence may be exerted by demand conditions in another country. This is especially the case for small, open economies such as Austria, Canada, or New Zealand, where firms take into account demand conditions prevailing in larger foreign trading partners from the outset even when designing new products or engaging in H & D. Rugman and D’Cruz (1991, 1993) have explored the reasons for a “double diamond” across the Canadian-US. economic space. In Some cases, such as the pharmaceutical indust.ry, even global trends in demand or in any other determinant may stimulate firms in a particular nation to engage in specific strategic behavior (Hamel and Prahalad, 1988).

A n industry’s international competitiveness may then result from responding effectively to, and building on, the determining factors at any of the various geographic levels, as suggested by White and Poynter (1990). Hence, it is the successful combination by a particular firm or industry of particular determinants at the relevant geographic levels, that leads to international competitiveness, not an exclusive or primary focus on national or local determinants (Dia- Rram l). In Diagram 1, the international competitive performance of a firm

or industry is determined by the six elements identified by Porter (19901, but potentially at five different geographic levels.

This leads to a possible impact of 30 influences on a particular firm or industry. In practice, it may not be feasible, nor desirable, to study each of these 30 influences. A more limited number of influ-

Diagram I . An extension of Porter’s international competitiveness framework.

ences considered as critical and their mutual interaction may be se- lected for in-depth investigation. In any case, the important conclu- sion of the above analysis is that a firm or industryk competitiveness may or may not result primarily from influences at the national or subnational level. Determinants in the international environment may be just as important for national competitiveness as elements inside a nation. International competitiveness depends on the ability of a firm or industry to adequately respond to these determining influences, at any of these geographic levels, to its own advantage.

Porter ( 1990: 606-607) recognizes the possibility of “tapping selective advantages in other nations,” for example, when developing a global strategy, but he does not believe tha t determinants in other nations can contribute as much to the competitiveness of an industry as determinants at the national level. This view is based on the assumption that a firm can only have one true home base for each distinct. business or segment. “If I the firm1 attempts to have several, it will divide strategic authority, fragment technology development, and forego the synergistic benefits of concentrating the critical skills. Most importantly, it will sacrifice the dynamics that arise from true integration in a national ‘diamond” (Porter, 1990: 606- 607).

Three comments should be made here. First, Porter’s statements above were not substantiated in his work with case data, nor with relevant examples. In fact, a report on New Zealand using the same

poICTERS OIAMOND OF INTERNATIONAL COMPETITIVENESS 287 --

methodology (Crocombe, Enright, and Porter, 19911, was severely criticized by Cartwright (1991 1. The latter author demonstrated the limited usefulness of focusing on national determinants of competitiveness for home-based industries that export a high proportion of their production.

Second, a firm or national industry may feel that particular determinants at the international level may be as crucial for its international competitiveness as determinants inside a so-called home base (Ohmae, 1987). These international determinants would include: serving large foreign customers; responding to global trends in con- sumption; respecting the toughest environmental standards in the world; using inexpensive factors of production in developing nations; using the best component suppliers at a global level; etc.

Third, a crucial distinction should be made between those determinants of competitiveness tha t are largely exogenous (outside the system) and those that can be potentially endogenous (inside the system). In the first case, the determinant of competitiveness is given to the firm or industry and cannot be altered. In the second case, attempts are made to use or transform the external factor into a propri- etary, internal, firm, or industry characteristic. Porter's ( 1990) view implies that the second case would primarily be observed inside a country, where a n industry could upgrade itself over time, whereas this would be much more difficult in the international context. In realitj, numerous examples of mu1 tinational strategic management behavior demonstrate how determinants of competitiveness ernanat- ing from foreign environments may be used and appropriated by firms from particular nations, thus boosting their international competitiveness as much as national determinants (Bartlett and Ghoshal, 1989; Douglas and Craig, 1989; Bartlett and Ghoshal, 1992; Jul ian and Keller, 1991).

In fact, it may be precisely a synergistic combination of determinants a t the national or subnational level and determinants at the foreign or global level tha t may generate international success. In this case, it would be sensible to attribute international competitiveness primarily to a mutual reinforcement among national and international factors leading to success, although a simultaneous re- sponse to critical factors at different geographic levels may obviously lead to tensions among competing influences (Westney, 1990).

We will need to know why international influences, whether at the level of one or more foreign nations or at the global level, would have a specific impact on a particular national industry. After all, rivals in other nations would be confronted with similar influences. The rea- son is that firms in a national industry may be characterized by sharing conceptual maps and ongoing interactions leading to conver-

RUGMAN A N D VERBEKE z 288 - -

gent responses to international influences. Such behavior was observed by Ghoshal (19881, in the context of environmental scanning by Korean firms.

In this context, leanings toward similar strategic behavior result from country-specific organizational structures (isomorphisms). (Sub)National determinants lead to isomorphic leanings toward specific managerial behavior in an industry, in terms of using foreign building blocks for improved competitiveness; but it may be the con- tent of these foreign elements that actually contributes to international competitiveness. For example, superior organizing principles in a national industry may lead to a comparatively more effective adoption of foreign innovations, but it is obviously the combination of the two influences, at different geographic levels, that leads to lower or higher international competitiveness. An example of a successful case is the adoption of quality management systems in Japan (Yoshida, 1989). A less successful case is the use of JIT-systems in the United States (Daniel and Reitsperger, 1991). In these cases, ( subhational and international determinants of competitiveness cannot be separated.

SWOT-ANALYSIS AND PORTERS DIAMOND

If the view is accepted, in principle, that six determinants can influence a firm or industry’s competitiveness through working at five geographic levels, then how should these 30 potentially relevant influences be studied? In Porter’s (1990) work, in-depth case studies analyzing the determinants at the national level were used for the ex post rat#ionalization of observed success in terms of exports and/or foreign direct investment. Firm managers and public policy makers, however, are primarily interested in a tool that would allow a systematic analysis of these different influences on international competitiveness, as well as their strategic implications for the firm or industry. The use of the well known SWOT-analysis allows both such a systematic analysis and a focus on strategic management implications. The conventional SWOT-analysis (Thompson and Strickland, 1989; Weihrich, 1990) provides a tool for the analysis of both the external and internal environments of firms.

The analysis of the external environment leads to the classifica- tion of critical exogenous influences on international competitiveness as opportunities and threats. In the context of the framework developed in this paper, each of the six determining factors, at any of the five geographic levels, can constitute the source of such opportunities or threats. The main characteristic of opportunities and

289 p0RTERS DIAMOND OF INTERNATIONAL COMPETITIVENESS -

threats is that they act as environmental constraints on business firms' operations and strategic decision making.

The study of the firm's or industry's internal environment allows the identification of strengths and weaknesses. Strengths refer to categories of skills or assets, where the firm or industry is better positioned than foreign rivals. Weaknesses imply a lack of such skills or assets, relative to foreign competition. In the context of the international competitiveness framework, each of the six determinants at any of the geographic levels may have been transformed into a firm or industry specific skill or asset, in a more or less effective way, as compared to foreign rivals.

For example, a firm or industry in a particular nation may have developed network linkages with related and supporting industries a t various geographic levels. Special government relations may have been established with a variety of public agencies both nationally and internationally. A chance event such as a scientific innovation, occurring anywhere in the world, may have been turned into a distinctive competence. Trends in local or global demand conditions may have led to the creation of unique marketing skills. The perceived availability of particular factors of production, again in any nation or region, may have led to a specific choice of production process.

The analysis above is visualized in Diagram 2. suggesting that a

Iliagram 2. A SWOT-analysis of international competitiveness determinants.

290 RUCMAN AND VERBEKE

SWOT-analysis could be performed for the six determinants a t five geographic levels, leading to 30 SWOT-assessments. In practice, a SWOT-analysis may only be performed for those factors considered critical. However, each determinant such as factors of production may itself be unbundled into several subdeterminants for which a SWOT-analysis may be required. In addition, the SWOT-results for some critical factors may be related to SWOT-outcomes for other determinants.

The use of a SWOT-analysis for each of the six influencing determinants a t five geographic levels does not imply that national or subnational influences are less important for competitiveness than suggested in Porter’s (1990) framework. It does imply, however, tha t the national determinants should be viewed as part of a broader spectrum of influences at a variety of geographic levels, including subnational and international ones. Hence, the competitive advantages of a firm o r industry originating in a particular nation a re undoubtedly largely influenced by (subhational determinants of competitiveness, but, depending upon firm and industry characteristics, international influences may be just as important.

Porter’s ( 1990) proposed hierarchy of influences, discriminating between primary “national diamond characteristics” and secondary determinants in other nations that can only be “tapped into selec- tively” should be dismissed a s a general rule. I t could even be argued, especially for small, open economies, that nationally and subna- tionally driven opportunities and strengths can often be exploited only when linked to opportunities prevailing, and strengths developed, at the international level.

The need for a n outward focus for strategy operationalization is exemplified by the attempts of business firms to become “insiders” into a t least one of the “triad” powers (see Burgenmeier and Muc- chielli, 1991 for a n analysis of outsiders’ motivations to become insiders in the EC. Porter is correct that in the past a sequential exploitation of opportunities and development of strengths a t the national level and international level needed to take place, whereby the latter was not possible without the former. The reality of today’s international business implies, however, that firms, obviously building on national or subnational determinants, onen also consider elements in the international environment such as opportunities and threats or sources of strengths and weaknesses of equal importance when engaging in strategic decision making as suggested by Reich (1991).

Firms in a national industry may be prevented from gaining a competitive advantage relative to foreign rivals. This occurs for several reasons: differences in technological and organizational capabilities and trajectories; institutional inertia; behavioral constraints

~oRTGRS DIAMOND OF INTERNATIONAL COMPETITIVENESS 29 1 w-

on the identification and adoption of superior organizing principles; the absence of isomorphic pulls to adopt the best practice in a global industry; etc. But here it is precisely the difference in responses among nations to determinants a t a foreign or global level t ha t deter- mines the ultimate competitiveness of these firms.

There is no scientifically grounded rationale to dismiss such international factors or classify them as less important than national determinants, although many case studies on the historical growth patterns of industries may suggest that national influences were indeed prevailing during their initial development (Dunning, 1983). Even if organizational and institutional capabilities of nations are different for long periods of time and diffuse relatively slowly to firms of another nation, specific international determinants of competitiveness may be crucial for the long-run survival and success of these firms, as suggested by the creation of the European single market (Emerson, 1998).

PRACTICAL VALUE OF SWOT-ANALYSIS FOR THE DIAMOND

We now discuss the practical use of the various SWOT-analyses performed for the influencing factors considered to be critical in the formulation and implementation of strategy. From a strategic management perspective, i t is important to position the main results of each of the SWOT-analyses in a comprehensive framework tha t could lead to corporate or industry-wide responses to those SWOT-results perceived a s most important.

Diagram 3 provides such as framework. In this matrix, the differ- en t critical influencing factors can be positioned in two ways. First, according to the extent to which they constitute an endogenized strength or weakness, vis-a-vis foreign rivals. Second, the extent to which this present internal capability could be challenged in the future as a result of environmental threats, or reinforced through capitalizing on external opportunities.

Diagram 3 is largely capability driven. To operationalize Porter requires first a positioning of the determinants on the horizontal axis as strengths or weaknesses, and second tha t these internal posi- tions are linked to external (exogenous) circumstances providing threats or opportunities.

Each cell of the matrix obviously leads to different strategy implications, We shall discuss the “core” cases of cells 1, 2, 4, and 5 first and then turn to the other cases. Determinants of competitiveness in cell 1 constitute both the major positive force for present internation-

RUGMAN AND VERBEKE 292

Environmnt

Opportunltles 1 4

Threnta 2 5

Neutral 3 6

1

7

8

9

a1 competitiveness and the source of new competencies in the future. In principle, a firm or industry would like to have as many critical competitiveness determinants as possible in this cell.

The second cell means that a company or industry built core competencies for this determinant of competitiveness but is now faced with environmental threats that may lead to a weakening of the existing strengths relative to rivals better positioned to respond to these new environmental factors. For example, the availability of government support in another nation may be a threat for an industry. The local industry may have endogenized this factor, whereas i t remains largely exogenous and unavailable to outsiders, even if good business-government relations traditionally constituted a strength for these outsiders. The case of the Canadian lumber industry ex- porting to the United States is a case in point. This industry traditionally benefited strongly from good business-government relations in the United States, but became seriously threatened in the early eighties by the capture of U.S. trade policy by U.S. lumber producers seeking shelter (Gold and Leyton Brown, 1988). Here, the main challenge is to improve and maintain existing strengths in the face of environmental threats. Examples of this strategy are dis- cussed, using the theory of shelter, by Rugman and Verbeke (1990).

The fourth cell refers to the case where a competitiveness determinant represents significant opportunities for improved competitiveness, but where the firm or industry has not been able to capitalize on past or present opportunities through the development and use of distinctive competencies relative to rivals. This occurs when a diver- gence exists between competitive opportunities with a particular geographic scope and a firm or industry’s ability to build competitive

pOR"ER'S DIAMOND OF INTERNATIONAL COMPETITIVENESS 293

advantages on the basis of critical influencing factors with the same geographic locus. For example, the world automobile industry undoubtedly is faced with a number of global opportunities, but firms from some nations may not be able to adequately respond to these opportunities as a result of their lack of internal strengths a t a global level (Casson, 1987). Then we need to know the firm's or industry's capability to develop the required strengths in order to be able to respond adequately to opportunities.

The fifth cell reflects the situation whereby a firm or industry is confronted with both external threats and internal weaknesses for particular competitiveness determinants. In the best case scenario, this quadrant may reflect selective factor disadvantages, pushing firms to improve their position for other critical determinants in other cells. In the worst case, if several critical determinants are positioned in this cell, this may be a n indication of declining international competitiveness, requiring actions such as mergers or even liquidation.

Cells 3 , 6 , 7 , and 8 are cases whereby either the exogenous factors or internal capabilities are thought to have a neutral effect. For example, in the area of production factors, cells 3 and 6 couid include firms with particular internal capabilities in international human resources systems, but where the environment would not lead to substantial opportunities or threats in the area of management- labor relations in the near future. Cells 7 and 8 could reflect firms with innovation strategies that constitute neither a strength nor a weakness, vis-8-vis foreign rivals, but where global technological changes may pose a threat or opportunity in terms of, for example, the required speed of innovation. Finally, cell 9 implies that the determinant in question is really not a critical factor because it con- stitutes neither the source of a weakness or strength, nor a n external opportunity or threat relative to rivals.

The case studies described in Porter (1990) do not allow managers to clearly analyze how particular determinants can lead to improved or deteriorated competitive advantage, nor do they allow a prediction of future competitiveness based upon strategic decision making. Through using Diagram 3 in a dynamic fashion, however, these two problenis can be solved.

First, a SWOT-positioning of competitiveness determinants can occur a t several points in time that allows managers to clearly visu- alize changes in Diagram 3. Second, an analysis of the present set of SWOT-studies may result in strategic decisions to shift certain critical factors from the weakness side to the strength side of Diagram 3 (or to maintain a number of factors on the strength side). This should lead to an improved internal compatibility between strength and

294 RUGMAN AND VERHEKE

strategy. New trends in opportunities and threats emanating from specific competitiveness determinants may also be identified or an- ticipated, thus stimulating external compatibility between the firms’ strategy and their environment. Hence, a set of sequential SWOT- positioning matrices may be developed, describing the dynamics of international advantage of a national industry over time.

DIAMOND SWOT-ANALYSIS AND THEORY OF MULTINATIONAL ENTERPRISE

In the case of multinational enterprises with several strategic business units (SBUs), the conceptual tools developed in this article can be applied for each SBU. If an SBU has its headquarters in a foreign nation, t ha t country becomes the unit of analysis for the study of national or subnational influences on competitiveness. The international environment will almost invariably be of major importance, for example, if the SBU operates with a world product mandate (but is still largely influenced by the corporate home base), or if it coordi- nates the activities of a number of globally rationalized businesses in various nations (Etemad and Seguin Dulude, 1986). Foreign subsidiaries with strong internal capabilities and the ability to capitalize on host country opportunities may take strategic initiatives that are as important to a firm or industry as home country determinants (Morrison and Crookell, 1991).

In a more general sense, the framework described in the previous sections can he linked to the eclectic paradigm developed by Dunning ( 1988). According to Dunning, the international competitiveness and patterns of international production of a particular national industry are seen as the result of three elements: ownership advantages; location advantages; and internalization advantages. The ownership advantages a re strengths that may derive from unique corporate attributes. They may also result from the endogenization, by a particular national industry, of environmental characteristics related to any of the six determinants recognized by Porter (1990), but not only a t the national level. In fact, ownership advantages derive from ac- quiring or developing strategically relevant skills or assets, both tangible and intangible, at various geographic levels.

Dunning ( 1988) also makes a distinction between asset and trans- action advantages of multinational enterprises. Whereas the former may be largely dependent on (subhational determinants, the latter can obviously he reaped only as a result of international influences. Transactional advantages reflect the capacity of multinational enterprises to capture transactional benefits (or economize on the transac-

p)RTERS IMAMON[) OF INTERNKI’IONAL COMPETITIVENESS 295

tional costs) arising from the common governance of a network of assets, located in various countries. Although a national industry’s administrative heritage may he an important input for realizing transactional advantages, as suggested by Bartlett ( 1986), i t cannot be dissociated from internationally driven opportunities and strengths built up in foreign subsidiaries to realize such advantages. Porter’s ( 1990: 60-61) view that home-based advantages are intrin- sicalIy more valuable than systemic advantages does not seem to be compatible with the Dunning framework.

Location advantages refer to external opportunities or potential sources of internal strengths, again at various geographic levels. They lead to strategic decisions on the configuration of an industry’s asset base. The determinants of‘ internal capabilities, and external attractiveness prevailing in the home country, are linked to possi- bilities for developing complementary capabilities and building on the attractiveness of host nations. Dunning (1988) recognized that home country and host country elements cannot be separated. For example, the formation of customs unions and regional trading blocs and the reduction of transportation costs on particular international routes have led to a strengthening of ownership advantages of multinational enterprises.

In contrast, Porter’s view of foreign direct investment is out of date. In Porter, horizontal foreign direct investment would be viewed primarily as an international transfer of organizing capabilities developed in the home country. Vertical foreign direct investment would merely imply “tapping into’’ host nations for sourcing inputs, producing intermediate outputs, or marketing final outputs, without substantial learning. In contrast to Porter’s view, the endogenization of foreign location advantages and international learning among subsidiaries have become core sources for the development of new ownership advantages or improvement of initial ones (Bartlett and Ghoshal, 1989; Johanson and Mattsson, 1988).

Finally, Porter’s (1990) analysis suggests that internalization through FDI takes place to exploit tangible and intangible skills, and assets developed in the home base as the result of (sublnational determinants. This assumes the nonlocation bound nature of these skills and assets can be best exploited internationally through their w e within the MNE rather than through their sale. Three important comments should be made here.

First, a large literature on the requirements for both national responsiveness and integration (Roth and Morrison, 1990) suggests that knowIedge developed in a home nation cannot always be trans- ferred abroad easily without substantial adaptation. This demon-

296 RUGMAN A N D VERBEKE --

strates the need for taking into account international determinants of competitiveness as much as national determinants.

Second, the formation of global networks and the rise in international cooperation strategies (Contractor and Lorange, 1988) suggests t ha t determinants of competitiveness emanating from foreign environments are jus t as important, if not more important, as domes- tic ones. International cooperation may be crucial for a n effective and rapid acquisition and diffusion of knowledge.

Third, the choice of entry mode in foreign markets is critical to the likely success of a foreign operation. Even at the stage of initial entry, the exploitation of home-based ownership advantages cannot be dissociated from foreign location advantages and internalization advantages. The latter may depend as much on global technological factors and perceived opportunities in foreign markets as on domes- tically driven internalization capabilities.

To summarize, the operational framework developed in this paper is entirely consistent with Dunning’s (1988) eclectic paradigm of international production, whereas Porter’s ( 1990) diamond cannot fully deal with the complexity of interactions among ownership advantages, location advantages, and internalization advantages in multinational strategic management.

CONCLUSIONS

Many factors may influence the competitiveness of a national industry. National determinants and their mutual interactions undoubtedly play a major role in this respect. The relative stability of international success (or lack of success) of a particular industry over a long period of time and the observation that firms from a particular nation often adopt similar competitive strategies, demonstrates the importance of Porter’s national “diamond.” However, the role of international determinants cannot be reduced to secondary status, as compared to the role of fsubhational ones. From Dunning’s (1988) eclectic theory of the multinational enterprise we know that it is precisely the interaction among (subhational and international determinants that leads to competitive success in global industries. The framework presented in this article can operationalize the study of the complex nature of international competitiveness by analyzing Porter’s six influencing factors at five geographic levels. I t also suggests t ha t all the factors considered as critical by Porter can be opera- tionalized through a SWOT-analysis, thus allowing a consistent and homogeneous managerial approach to each determinant.

Porter’s exclusive focus on national determinants of global compet-

PORTERS DIAMOND OF INTERNATIONAI, COMPETITIVENESS 297 ---

itive success may turn the attention of managers and public policy makers away from the need to monitor international threats and opportunities, as well as the requirement to build up strengths and reduce weaknesses in foreign nations. Such an inward diversion of focus in the long run would serve neither the affected firms or industries nor the home nations involved.

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How to operationalize porter's diamond of international competitiveness

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