National Diamond

DEFINITION of 'National Diamond'

A theory of competitive advantage developed by HarvardBusinessSchool professor Michael E. Porter that is represented visually using a diamond-shaped graphic. The graphic can be used to show the factors that make up an industrialized country's competitive advantage in the global marketplace or the factors that make up a company's competitive advantage within a single country.

BREAKING DOWN 'National Diamond'

Porter, an expert on economic competitiveness, divides the factors of competitive advantage into four categories, placing one at each point of the diamond. The four categories are firm strategy, structure and rivalry; factor conditions; related and supporting industries; and demand conditions. His model also recognizes the impact of the institutional environment on competitiveness.