Porter’s Competitive Advantage of Nations: Time For The Final Judgement

Porter’s (1990) ‘Competitive Advantage of Nations ’ was heralded on publication as a book which could build a bridge between the theoretical literatures in strategic management and international economics, and provide the basis for improved national policies on competitiveness. This review of the papers published in the following six years suggests that the book was enormously rich in its range and scope but that there were too many conceptual flaws, particularly of elision, for the theory to amount to more than a useful taxonomy. The research methodology was also flawed and subsequent empirical studies have tended on balance to refute the theory’s major assertions. Sustained prosperity may be achieved without a nation becoming ‘innovation-driven’, strong ‘diamonds ’ are not in place in the home bases of many internationally successful industries and inward foreign direct investment does not indicate a lack of competitiveness. The claimed integration between international economics and strategic management rests upon a mistaken attempt to substitute ‘competitive advantage ’ for ‘comparative advantage’. Policy-makers are left with a list on which to base simple SWOT-type analyses of their economies ’ positions with respect to the competitiveness of different industrial sectors, but no reliable guide with respect to appropriate policies to pursue. Developing countries in particular are given considerable encouragement to pursue policies which may actually be harmful. Porter- The Final Judgment