What is a key strength of the national competitive advantage theory?

What is a key strength of the national competitive advantage theory?

• A. It is the oldest and simplest trade theory
• B. It connects firms, industries, and nations
• C. It focuses exclusively on local businesses
• D. It lacks complexity

Answer: (B)

The national competitive advantage theory, most notably articulated by Michael Porter, emphasizes the interconnectedness of firms, industries, and the broader national economy. This theory posits that national factors, such as resources, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry collectively contribute to a nation’s competitiveness in the global market. By highlighting how these elements interact, the theory illustrates that the success of companies in international markets is not solely determined by individual firm capabilities but is also influenced by the national context in which they operate. This integrative perspective allows for a comprehensive understanding of how competitive advantage is built and sustained at a national level, making it a significant and robust framework for analyzing global business dynamics. In contrast, other options such as focusing exclusively on local businesses or being overly simplistic do not capture the comprehensive nature of the theory or its applicability across various contexts and industries.

The national competitive advantage theory, most notably articulated by Michael Porter, emphasizes the interconnectedness of firms, industries, and the broader national economy. This theory posits that national factors, such as resources, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry collectively contribute to a nation’s competitiveness in the global market.

By highlighting how these elements interact, the theory illustrates that the success of companies in international markets is not solely determined by individual firm capabilities but is also influenced by the national context in which they operate. This integrative perspective allows for a comprehensive understanding of how competitive advantage is built and sustained at a national level, making it a significant and robust framework for analyzing global business dynamics.

In contrast, other options such as focusing exclusively on local businesses or being overly simplistic do not capture the comprehensive nature of the theory or its applicability across various contexts and industries.