Aggregate productivity is a key determinant of the

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Aggregate productivity is a key determinant of the International Business: The New Realities 6-24
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Michael Porter’s Diamond Model: Sources of National Competitive Advantage 6-25
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Industrial Cluster A concentration of suppliers and supporting firms from the same industry located within the same geographic area. Similar to Porter’s Related and Supporting Industries . A strong cluster can serve as an export platform for the nation. International Business: The New Realities 6-26 Examples Silicon Valley; pharmaceutical cluster in Switzerland; footwear industry in Pusan, South Korea; IT industry in Bangalore, India; fashion cluster in northern Italy; and Silicon Valley North near Ottawa, Canada.
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National Industrial Policy A proactive economic development plan employed by the government to nurture or support promising industry sectors with potential for regional or global dominance. Initiatives can include: Tax incentives Monetary and fiscal policies Rigorous educational system Investment in national infrastructure Strong legal and regulatory systems International Business: The New Realities 6-27
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Examples of National Industrial Policy Vietnam ’s government in the 1990s privatized state enterprises and modernized the economy, emphasizing competitive, export-driven industries. Vietnam became one of the fastest-growing economies, averaging around 8 percent annual GDP growth. Singapore adopted probusiness, proinvestment, export-oriented policies, combined with state- directed investments in strategic corporations. The approach stimulated economic growth that averaged 8 percent annually from 1960 to 1999. International Business: The New Realities 6-28
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Examples of National Industrial Policy (cont’d) New Zealand ’s government, starting in 1984, transformed the country from an agrarian, protectionist, regulated economy to an industrialized, free-market economy that today competes globally. The Czech government in the 1990s created a business-friendly legal and regulatory environment. The country privatized state-owned companies. Government FDI incentives attracted numerous MNEs, such as Daewoo, ING, Siemens, and Toyota. International Business: The New Realities 6-29
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Stages in Company Internationalization International Business: The New Realities 6-30 Domestic Focus
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Stages in Company Internationalization International Business: The New Realities 6-31 Pre-export Stage Domestic Focus
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Stages in Company Internationalization International Business: The New Realities 6-32 Experimental Involvement Pre-export Stage Domestic Focus
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Stages in Company Internationalization International Business: The New Realities 6-33 Experimental Involvement Active Involvement Pre-export Stage Domestic Focus
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Stages in Company Internationalization 6-34 Experimental Involvement Committed Involvement Active Involvement Pre-export Stage Domestic Focus
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FDI Based Explanations: Monopolistic Advantage Theory Argues that MNEs prefer FDI because it provides the
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