A generalized double diamond approach to the global competitiveness of Korea and Singapore H. Chang Moona,*, Alan M. Rugmanb, Alain Verbekec
Graduate Institute for International & Area Studies, Seoul National University, Seoul 151–742, South Korea b Templeton College, University of Oxford, Oxford OX1 5NY, UK c Solvay Business School, University of Brussels (V.U.B.), Brussels, Belgium
Abstract Globalization is very important for small economies such as Korea and Singapore. The single diamond model (Porter, 1990, The competitive advantage of nations) suggests some important determinants for a nation’s global competitiveness. However, this model is incomplete, mainly because it does not incorporate multinational activities. A new approach, the generalized double diamond model (Moon et al., 1995, in Research in global strategic management: Volume 5: Beyond the diamond) offers some important extensions to Porter’s original model. To test the validity of these two models this paper evaluates relevant data for both domestic and international variables in the case of Korea and Singapore. The results generally support the generalized double diamond model © 1998 Elsevier Science Ltd. All rights reserved. Keywords: International competitiveness; Double diamond; Porter’s single diamond; Korea; Singapore; Small open economies
1. Introduction In his famous book, The competitive advantage of nations, Porter (1990) studied eight developed countries and two newly industrialized countries (NICs). The latter two are Korea and Singapore. Porter is quite optimistic about the future of the Korean
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H. Chang Moon et al. / International Business Review 7 (1998) 135–150
economy. He argues that Korea may well reach true advanced status in the next decade (p. 383). In contrast, Porter is less optimistic about Singapore. In his view, Singapore will remain a factor-driven economy (p. 566) which reﬂects an early stage of economic development. Since the publication of Porter’s work, however, Singapore has been more successful than Korea, as will be discussed in this paper. This difference in performance raises important questions regarding the validity of Porter’s diamond model of a nation’s competitiveness. Porter has used the diamond model when consulting with the governments of Canada (Porter & the Monitor Company, 1991) and New Zealand (Crocombe, Enright & Porter, 1991). While the variables of Porter’s diamond model are useful terms of reference when analysing a nation’s competitiveness, a weakness of Porter’s work is his exclusive focus on the ‘home base’ concept. In the case of Canada, Porter did not adequately consider the nature of multinational activities (Rugman, 1991). In the case of New Zealand, the Porter model could not explain the success of export-dependent and resource-based industries (Cartwright, 1993). Therefore, applications of Porter’s home-based diamond require careful consideration and appropriate modiﬁcation. In Porter’s single home-based diamond approach, a ﬁrm’s capabilities to tap into the location advantages of other nations are viewed as very limited. Rugman (1992, p. 59) has demonstrated that a much more relevant concept prevails in small, open economies, namely the ‘double diamond’ model. For example, in the case of Canada, an integrated North American diamond (including both Canada and the United States), not just a Canadian one, is more relevant. The double diamond model, developed by Rugman and D’Cruz (1993), suggests that managers build upon both domestic and foreign diamonds to become globally competitive in terms of survival, proﬁtability, and growth. While the Rugman and D’Cruz North American diamond framework ﬁts well for Canada...