Which type of firm typically expands abroad in response to domestic competition?

The type of firm that typically expands abroad in response to domestic competition is an international firm. An international firm engages in cross-border trade and establishes operations in foreign markets to tap into new customer bases and diversify its revenue streams. This strategic move is often driven by the motivation to enhance competitiveness in response to pressures or challenges faced in their home market.

International firms leverage their existing products or services and seek growth opportunities where competition may be less intense or where emerging markets offer higher potential for expansion. By entering foreign markets, these firms aim to mitigate risks linked to domestic competition, allowing them to stabilize and increase their overall market share.

Other firm types like domestic firms focus solely on their home market, while multinational and global firms typically have a more established presence and resource allocation in various international markets, often operating with a different strategic focus that may not be solely reactive to domestic competition.