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The influential Porter (1990) study on the determinants ofinternational competitiveness suggests that the home country "diamond" is the source of competitive advantage for domestic firms. The competitive advantage of a frrm depends upon one, or more, of the four key determinants of the nation's international competitiveness. The successful domestic firms build upon this home base and can then export or engage in outward foreign direct investment. In short, Porter's model states that a global firm needs to have a sustainable competitiveadvantage based on the successful utilization of components of its home country diamond.
The thesis of this article is that Porter's diamond framework explains the success ofU.S., Japanese and E.C.-based multinationals, i.e. the triad. However, Porter's model is not applicable to small, open, trading economies which are not parts of this triad. For example, Rugman and D'Cruz (1991) have demonstrated that Canada's international competitiveness is not explained by the Porter home country diamond. They show that substantial modifications of the Porter framework are required to analyze the nature of Canada's foreign-owned firms and institutional arrangements, such as the Canada-U.S. Free Trade Agreement. The latter arrangement suggest that the Canadian diamond need to be considered jointly with the U.S. diamond, i.e. that the Canadian managers needs to operate in this "double diamond" framework. Indeed, Rugman and D'Cruz propose that a "North American diamond" be used by Canadian managers and policy makers in searching for useful answers to the question of how to improve Canada's international competitiveness.
A similar insight emerges from the work of Cartwright (1991) in his assessment of the application of the Porter model in the New Zealand study. A team headed by Porter used the Porter single diamond theory as a benchmark for a study of the international competitiveness of New Zealand, see Crocombe, Enright and Porter (1991). In his critique, Cartwright demonstrates, using empirical judgemental impact scores, that a "double diamond" framework has much greater explanatory power in a New Zealand context than does Porter's home country diamond model Cartwright concludes that his results "cast serious doubt on the ability of the Porter diamond theory to account satisfactorily for the international competitiveness ofland-based industries that must export a high proportion of their production" (Cartwright 1881, p. 7).
In a related, but independent,...