what is the porter diamond model 
the porter diamond theory of national advantage or the porter diamond model is a model that describes the competitive advantage that nations or groups possess based on factors available to them the theory explains how governments can act to improve a country s position in a globally competitive economic environment created by michael porter founder of the institute for strategy and competitiveness at the harvard business school the porter diamond model is considered a proactive economic theory 1understanding the porter diamond modelthe porter diamond model suggests that countries can create advantages for themselves such as a strong technology industry or a skilled labor force another application of the porter diamond model is used in corporate strategy as a framework to analyze the relative merits of investing and operating in national markets 2the porter diamond model is visually represented by a diagram that resembles the points of a diamond and includes the interrelated determinants that porter theorizes as the deciding factors of national comparative economic advantage harvard business school professor michael e porter created the porter diamond model and porter s five forces points on the porter diamond modelfirm strategy structure and rivalry define that competition leads to increased production and the development of technological innovations the concentration of market power degree of competition and ability of rival firms to enter a nation s market are influential 2related supporting industries consider the upstream and downstream industries that facilitate innovation through exchanging ideas these can spur innovation depending on the degree of transparency and knowledge transfer demand conditions refer to the size and nature of the customer base for products which also drives innovation and product improvement larger consumer markets will demand and stimulate a need to differentiate and innovate and increase market scale for businesses 2according to porter the most important of the five points is factor conditions factor conditions are those elements that porter believes a country s economy can create for itself such as a large pool of skilled labor technological innovation infrastructure and capital one way for the government to accomplish that goal is to stimulate competition between domestic companies by establishing and enforcing anti trust laws 2