In addition, Porter emphasizes the role of domestic rivalry as one of the most
important factors for a nation’s competitiveness.29 It creates pressure on firms to improve
and innovate. Local competitions, for example, push each other to lower costs, improve
quality of products and services as well as creating new products and processes, which
therefore upgrade the competitive advantage of a nation’s firms,30 especially, an intense
competition which creates visible pressures on each other to improve and attract a new
entrant to the industry. Additionally, a strong local competition would pressure the
domestic firms to sell abroad in order to grow; for instances, seeking the economies of scale
and higher profitability.31 The vigorous domestic rivalry would also strengthen the ability of
a nation’s firms when competing abroad.32 However, this would only happen if the
industries have the sufficient high profitability and high expected return otherwise the
vigorous competition would drive down the price and profits and unattractive for a new
entrant to begin their business. That is, the industries that have a vibrant domestic rivalry
would perform better in contributing for a nation’s competitiveness than the industries that
have dull competition; there is always an improvement, upgrading and new businesses for
the former than the latter which highly influence the nation’s competitive advantage over
other nations.