What defines a domestic firm?

A domestic firm is primarily characterized by its focus on conducting business activities within its home country. This means that the firm's operations, services, and customer base are primarily localized, and the majority of its revenue is generated from domestic transactions.

The definition is centered around the geographic scope of the firm's business activities, distinguishing it from firms that engage significantly in international trade or expand their operations into foreign markets.

In contrast, firms that operate exclusively internationally or have a strong emphasis on global expansion and a global mindset typically do not fit the definition of a domestic firm, as they engage in activities that extend beyond their home country. Therefore, the key feature of a domestic firm is its primary reliance on its home market for business operations and growth.