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'skills, training and knowledge' commanded by its workforce, the key to success is the people of the nation. Reich argues that national industries don't exist in any meaningful sense, as it is global corporate networks rather than national industries that now dominate economic activity. Resources are placed in those nations offering the best production and marketing advantages. For example Reich (1991) points that US decline in productivity is due to the changes of the world competition structure as by 1980s more than 70% of the products consumed in US had to be competed with similar goods that were produced abroad with standardised production systems. Chandler (1977) stated that a globalised firm can allow other nations to learn and benefit from the same sources of their national competitive advantage. For example in the 1960s, America and other western countries were amazed by the rapid speed of Japan's growth and how it was able to manage its economy to become a successful competitor in the globe. America and other European nations started to learn from Japanese management structure and operation. However Porter (1990) makes a strong case of the importance of the home country in today's global economy. Porter argues that by providing a favourable environment for the successful organisations, home countries can play a vital role in wealth creation in the context of international competition.

Chandler (1992) looks at a different perspective to explain the economic performance in nations and the development of business systems. His theory argues that large managerial enterprise had a significant contribution on national competitive advantage through exploitation of economies of scale and scope. Chandler states that in order for large managerial enterprises to gain and keep competitive advantages, top managers must commit to the 'three-pronged investment'. This is because these large enterprises have a large market to sell their products to. These large enterprises can create a competitive advantage by producing more at a lower cost with the same outputs. The cost per product is decreased due to mass production and the diversification of the production line. Chandler (1992) explains how the US lost their competitive advantage to the Japanese companies in the semiconductor industry. Chandler (1992) states that many of the US companies in the semiconductor industry such as Intel and Silicon Valley failed to make 'long term investments in production, distribution and management' that was important for them to become the first movers in the industry. Chandler (1992) therefore explains how the Japanese companies were able to make the investment that was required from them to become a first mover in the semiconductor industry. This enabled the Japanese companies to develop their organisation ability to quickly demolish the 'American competitive advantage'.

Overall Porter's model (1990) of national competitive advantage to an extent does account for the variations in national business systems and comparative economic performance across different nations and industries. However the model doesn't consider and explain how culture, history, late industrialisation and globalisation can have an impact on the economic success of a nation and the variations of business systems.