Porter (1990)

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Companies

Ultimately, it is companies which should voluntarily follow the above rules. There are some company policies which can support them:

1. Create pressures for innovation. Companies can take advantage of the “home nation” to stimulate innovation.
2. Seek out the most capable competitors as motivators. Strategies to unhinge any sense of stability in the company should be encouraged.
3. Establish early warning systems. More proactive work can help companies stay ahead of the competition, such as market research.
4. Improve the national diamond. Companies have a responsibility to help improve other related industries in the home country in order to increase their competitive advantage. This, in turn, will help upgrade the company’s own advantage.
5. Welcome domestic rivalry. In order to achieve economies of scale and critical mass, only facing direct competition will drive the company forward. It is better to grow internationally than dominate the home market.
6. Globalize to tap selective advantages in other nations. Companies should rely more on “innovating to offset local factor disadvantages” than outsourcing. The company should “tap selectively into sources of advantage in other nations’ diamonds”.
7. Use alliances only selectively. They are only useful in non-core capabilities, as one should not rely on another company to improve one’s competitive advantage.
8. Locate the home base to support competitive advantage. The circumstances of the home nation need to be suited to encourage and support stability and innovation.