This paper identifies several national characteristics that favor or discourage the use of three generic business-level strategies described by Porter (1980, 1985). Drawing on previous research and our own theoretical arguments, we generate specific hypotheses about the effects of the national characteristics - demographic heterogeneity, per capita income, and skill level of a nation's labor force - on the business- evel strategies. Suggestions are made for measuring the national characteristics and business strategies that form the components of our hypotheses. In addition, general guidelines for the design of empirical research on this topic are presented. Finally, the implications of this national-characteristics-based approach for theoretical development in international management are discussed.