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BY M. PORTER

Key words:

basis of wealth, competitive advantage, innovation, upgrade,

the determinants of national advantage: factor conditions;

demand conditions; related and supporting industries;

firm strategy, structure and rivalry

Michael Eugene Porter (born May 23, 1947) is the Bishop William Lawrence University Professor at Harvard Business School. He is a leading authority on company strategy and the competitiveness of nations and regions. Michael Porter’s research work is widely recognized in governments, corporations, non-profits, and academic circles across the globe. Professor Porter's ideas are the foundation for courses on strategy and competitiveness, and his work is taught at virtually every business school in the world. Professor Porter chairs the Global Competitiveness Report, an annual ranking of the competitiveness and growth prospects of more than 120 countries published by the World Economic Forum.

Michael Porter’s Theory of National Competiive Advantage published in 1990 was based on a study of 100 firms in 10 developed nations. Porter questions how Switzerland and Japan could become success stories without assumed prerequisites.

In the book The Competitive Advantage of Nations Michael Porter developed a framework to

- explain why some nations are more competitive in certain industries and

- assess the competitiveness of regions, states and nations.

The book was the first theory of competitiveness based on the causes of the productivity with which companies compete instead of traditional comparative advantages. Classical theories of international trade propose that comparative advantage resides in the factor endowments that a country may be fortunate enough to inherit. Factor endowments include land, natural resources, labor, and the size of the local population.

National competitive advantage theory by M. Porterstates that a nation’s competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.

Framework of National Competitive Advantage by M. Porter

Porter's Diamond of National Advantage

Michael Porter offers a model that can help understand the competitive position of a nation in global competition. This model can also be used for other major geographic regions.

Porter used a diamond shaped diagram as the basis of a framework to illustrate the determinants of national advantage: factor conditions; demand conditions; related and supporting industries; firm strategy, structure and rivalry.