Michael Porter’s theory on National Competitive Advantage, is the best theory to utilize when an internationalising firm wants to select one country over another for new entry
The globalization has become a ubiquitous and potent symbol of the age since the early 1980s. The term globalization was used to describe strengthening interactions of people from various countries, which resulted from the emergency of numerous new technologies (Daniel, Radenbaugh & Sullivan, 2002). As the popularization of globalization, more firms prefer to enter the emerging …show more content…
Sledge (2005) also states that the Diamond is one of the few models in international business research that illustrates what comprises national competitiveness within a given industry. It helps the managers to make a more prudent comparison among countries advantage. Finally, compared to other theories, Porter combines both inductive and deductive analysis in developing this theory. Beginning with established theories of competitive strategy and international economics, Porter's analytical framework was developed through studying competitive performance among 10 countries (United States, West Germany, Italy, United Kingdom, Sweden, Switzerland, Denmark, Japan, Korea, and Singapore), each involving between 5 and 19 industry cases (Grant,1991). Thus, Porter’s theory could be closer to the real investment situation and more instructive for the international corporate foreign investment.
So far, the essay has revealed several positive instances to prop up the Porter’s theory, but this theory is not without its limits. The New Zealand and Canada applications of the theory highlight, the Porter’s empirical focus is solely on exports, although he writes about both exports and overseas investment, and therefore the highly emphasizes goods sectors and ignores countries like New Zealand and Canada which have major firms in less traded goods ( Spring, 1992; Rugman,1992).