Porter (1990)

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Governments

What governments should do, according to Porter:

1. Do not intervene in factor and currency markets. When market forces causes changes, such as exchange rate fluctuations, companies should be left to deal with them, as it forces them to regain competitive advantage in other ways.
2. Enforce product, safety, and environmental standards. The more constraints on a company, the more innovative it has to be to overcome them.
3. Limit direct co-operation among industry rivals. Although some co-operation is good, competition is required to push companies further.
4. Promote goals that lead to sustained investment. Governments should encourage, through incentives, investment in human skill, innovation, and physical assets.
5. Deregulate competition. Allowing companies to compete encourages progression more than maintaining a state monopoly or having entry barriers into an industry.
6. Enforce strong antitrust policies. Mergers and alliances to occur in the name of globalization, they should be disallowed between industry leaders. Governments should favour internal entry over acquisitions, except if the acquisition is of a smaller company and will result in a transfer of skills and thus the gain of a competitive advantage.
7. Reject managed trade. Orderly market agreements, or those which aim to neatly share the market are harmful to competition and consumers. Governments should seek open markets in every foreign country and ban companies which make acquisitions of the production facilities in a foreign nation, thus preventing the host country from competing.

Companies