The role of domestic rivalry illustrates how the diamond operates as a self-reinforcing system. Vigorous domestic rivalry stimulates the development of unique pools of specialized factors, particularly if the rivals are all located in one city or region: the University of California at Davis has become the world's leading center of wine-making research, working closely with the California wine industry. Active local rivals also upgrade domestic demand in an industry. In furniture and shoes, for example, Italian consumers have learned to expect more and better products because of the rapid pace of new product development that is driven by intense domestic rivalry among hundreds of Italian companies. Domestic rivalry also promotes the formation of related and supporting industries. Japan's world-leading group of semiconductor producers, for instance, has spawned world-leading Japanese semiconductor equipment manufacturers.
The role of domestic rivalry illustrates how the diamond operates as a self-reinforcing system. Vigorous domestic rivalry stimulates the development of unique pools of specialized factors, particularly if the rivals are all located in one city or region: the University of California at Davis has become the world's leading center of wine-making research, working closely with the California wine industry. Active local rivals also upgrade domestic demand in an industry. In furniture and shoes, for example, Italian consumers have learned to expect more and better products because of the rapid pace of new product development that is driven by intense domestic rivalry among hundreds of Italian companies. Domestic rivalry also promotes the formation of related and supporting industries. Japan's world-leading group of semiconductor producers, for instance, has spawned world-leading Japanese semiconductor equipment manufacturers.
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