Critique: Porter ignores globalization Even though Porters national diamond is the best-known foundation in the field of nationalcompetitivene

ss, the scope of his theory is too narrow to be applied globally. Despite usingvarious countries as case studies, his point of view

is very American and does not suit well forsmall countries.Dunning (1993) argues that Porters view underestimates the significance of the globalization of production and markets for the competitive advantage. He presents some distinguishing featuresof

the global economy of the 1990s, which point out that almost all the points on Portersdomestic diamond have to be reconsidered. These are listed below.

The value generating assets of most industrial countries in a global economy areincreasingly taking the form of

creating assets rather than having natural assets. Many of these created assets are intangible and belong to commercial enterprises, not to countries orgovernments.

Multinational enterprises (MNEs) play an increasing role in the global economy. Instead of focusing on traditional

foreign direct investments (FDI), these MNEs are becoming morepluralistic in their ways of global involvement. An increasing proportion of the assets of firms of a particular country are acquired from or located in another country.

The role of government needs to be re-evaluated as a result of the

globalization. Like thestrategy of firms of one nationality has to take account of their foreign rivals behavior, alsogovernments need to take account of the strategies of other governments.

The main problem in Porters diamond is that rather than considering the domestic influences onthe diamond as a

special case of the global influences, he prefers to consider the latter as an add-on to the former. The principle of the diamond may still be good, but its geographicalconstituenc y has to be established on another criteria than national political borders. In short,Porter has underestimated the role

of the modern MNE as an integrating force in the globaleconomy. (Dunning 1993) The diamond model complemented with international business activity(IBA), presented by Dunning (1990), is shown in figure
Rugman & DCruz (1993) criticize Porters narrow view on FDI.

Porter defines only outwardFDI as being valuable in creating competitive advantage and does not fully understand the natureof two-way FDI. Moreover, Rugman & DCruz (1993) believe that multinational activity cannotbe included as third exogenous variable in the diamond, as

proposed by Dunning (1990), noradded into any of the four determinants. Instead, they present a double diamond model basedon their experience of North American trade, as illustrated in figure 3 This double diamond model treats the United

States and Canada as a single market. As a result,a strategy for a company in North American diamond would include: (1) developing innovativenew products and services that simultaneously meet the needs of U.S. and Canadian customers,(2) drawing on the support industries and

infrastructure of both U.S. and Canadian diamonds,and (3) making free and full use of the physical and human resources in both countries. The mainconclusion is that a mechanical application of Porters methodology to Canadian situation would