Competitive Advantage of Nations
Michael E. Porter
Language: English
Pages: 896
ISBN: 0684841479
Format: PDF / Kindle (mobi) / ePub
Now beyond its eleventh printing and translated into twelve languages, Michael Porter’s The Competitive Advantage of Nations has changed completely our conception of how prosperity is created and sustained in the modern global economy. Porter’s groundbreaking study of international competitiveness has shaped national policy in countries around the world. It has also transformed thinking and action in states, cities, companies, and even entire regions such as Central America.
Based on research in ten leading trading nations, The Competitive Advantage of Nations offers the first theory of competitiveness based on the causes of the productivity with which companies compete. Porter shows how traditional comparative advantages such as natural resources and pools of labor have been superseded as sources of prosperity, and how broad macroeconomic accounts of competitiveness are insufficient. The book introduces Porter’s “diamond,” a whole new way to understand the competitive position of a nation (or other locations) in global competition that is now an integral part of international business thinking. Porter's concept of “clusters,” or groups of interconnected firms, suppliers, related industries, and institutions that arise in particular locations, has become a new way for companies and governments to think about economies, assess the competitive advantage of locations, and set public policy.
Even before publication of the book, Porter’s theory had guided national reassessments in New Zealand and elsewhere. His ideas and personal involvement have shaped strategy in countries as diverse as the Netherlands, Portugal, Taiwan, Costa Rica, and India, and regions such as Massachusetts, California, and the Basque country. Hundreds of cluster initiatives have flourished throughout the world. In an era of intensifying global competition, this pathbreaking book on the new wealth of nations has become the standard by which all future work must be measured.
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management, technology development, and infrastructure). The multi-unit firm gains greater leverage through group purchasing for all its units. It reaps economies of scale in recruiting, training, and motivation (such as by creating central training schools, developing standardized training materials, and providing a career progression for employees). The multi-unit firm can spread the cost of support activities such as real estate development and accounting over its many units. It also has the
after the Korean War, and learned from large projects involving U.S. military bases. Further work for the U.S. military in Vietnam was a stepping-stone to international markets. The point of entry of Korean and other developing country firms into international competition was basic factors: providing motivated but low-wage workers. Korean firms often worked as subcontractors to firms from developed nations. Gradually, some of them took over leadership roles on projects, though largely still on
cluster exports. To do so, a cluster chart including all industries was constructed for the world market economy. Industries were classified based on the end use most common in most countries. Each nation’s position in each broad cluster was compared with the world cluster in terms of its share of exports, change in position, and size. Occasionally, a nation’s cluster might contain industries not appearing on the world cluster chart because of the particular target markets of firms in that
Krugman, and Park (1989). 18. See Table 13–1. 19. Research by Jorgenson (1987) has shown that American economic growth in recent decades has been largely a function of growth in factors and not improving technology. This conclusion, in striking contrast to studies by Solow and Denison covering earlier periods, supports a declining rate of innovation and upgrading in American industry and is troubling indeed. 20. American consumers buy large quantities of imported goods, as do British
advantage or the advantage they provide for a nation’s firms is unsustainable. The importance of basic factors has been undermined by either their diminished necessity, their widening availability, or ready access to them by global firms through foreign activities or sourcing on international markets. These same considerations make the returns available to basic factors low, irrespective of their location. An unskilled worker is increasingly vulnerable to pressures on wages, even if the worker