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Abstract
Porter's (1990) diamond framework explains the success of US, Japanese, and EC-based multinational corporations, but it is not applicable to small, open, trading economies that are not parts of this triad. Rugman and D'Cruz (1991) show that Canada's international competitiveness is not explained by the Porter home country diamond, and that substantial modifications of the Porter framework are required to analyze the nature of Canada's foreign-owned firms and institutional arrangements, such as the Canada-US Free Trade Agreement. A North American diamond is proposed for Canadian managers and policy makers in searching for answers to the question of how to improve Canada's international competitiveness. It is demonstrated that each country needs to set its own home-country diamond against the relevant triad diamond. In general, most Asia-Pacific nations will set theirs against Japan. Canada, Mexico, Latin America, and most Caribbean countries will consider theirs against the US diamond. European nations outside of the EC will set theirs against the EC.