Service Economy and Competitive Advantages of Nations:An Analysis Based on Porter's "Diamond Model"

With the development of the globalization of world economy and the arrival of New-economy,the service sector is gradually taking up a dominating position in the world economy.The so-called ″Service Economy″ has come forth.The paper conceives a new ″Diamond Model″ to point out the essentiality of Service Economy to Competitive Advantage of a nation.The Service Economy has been the primary source of the Competitive Advantage of Nations.The factors in ″Diamond Model″ of Competitive Advantage of Nations theory brought forward by Michael Porter have been renewed and supplemented by Service Economy.Factor conditions rooted in the service sector have been taking up a dominant status with the process that the connotations of traditional factor conditions,as labor force,capital,land,and entrepreneur ability are renovated by enterprise and society service,and the new factor conditions,as knowledge and networking are more and more important.Demand conditions promoting enlargement and upgrading of a country's economy,have been more satisfied by tertiary industry than by primary industry and second industry.With the development of world economy and community the dominating demands of human society are stepping up in the order of physiological demand,security demand,public relations demand,respect demand and self-realization demand in the pyramid of Demand Level theory proposed by Maslow.Nowadays,the basic physiological demand satisfied by first and second industries has been essential human rights and the lowest requirement social security.The high-level demands,the objectives modern people pursuing,can only be satisfied by intercommunion,system construction and development of service economy.Related and supporting industries which make up a country's industrial system with the functions of production,marketing,cooperation and innovation,have been taken up by the service industries with the progress of network technology,information technology and biological technology.RD service,modern distribution service and marketing service have been the most important supporting industries.Enterprises pay more attention to the service content in their strategy,structure and rivalry.Inner enterprises services include production management,human resources management,and financial control,etc.,and external enterprises services include market development,enterprise image designs,products value-added services,and finance services,etc.The service factors have already been reintegrated into the enterprise's value chain.