Extended Model (1)

Porter (1990) proposed the diamond model, and Rugman (1991) pointed out two problems with regard to multinational activity and government. Rugman and D'Cruz (1993) developed a double diamond model. Although this model fits well for Canada, it may not fit well for other nations. Moon, Rugman, and Verbeke (1995) extended it to a generalized double diamond that works well for all countries. This generalized model appropriately incorporates multinational activity and government.In considering multinational activity, Moon, Rugman, and Verbeke (1995) emphasized two elements. First, sustainable value added in a country results from both domestically owned and foreign owned firms. Second, sustainability requires a value added configuration spread over many countries. Thus, multinational activity, whether inbound or outbound, is important for a nation's competitiveness. Since multinational activity affects all the determinants of the diamond, it is not appropriate to treat this variable as one of the determinants. Instead, they incorporate this variable by doubling the diamond.To test the validity of these two models this chapter evaluates relevant duta for both domestic and international variables in the case of Korea and Singapore. The results generally support the generalized double diamond model. Korea has a "larger" domestic diamond than Singapore, but Singapore has a much "larger" international diamond than Korea. This result implies that Korea is more competitive than Singapore when only domestic determinants are considered, but less competitive than Singapore when both domestic and international determinants are considered. According to several parameters such as productivity and managers' perception, Korea is less competitive than Singapore. This leads to the conclusion that both domestic and international determinants are important to the competitiveness of Korea and Singapore.