Despite the common belief that every firm should expand internationally, the actuality is that not every firm is prepared to tackle the challenges that come with it. Venturing overseas too early may be harmful to the firm's overall performance, especially when the margin for error is minimal, as is the case with smaller firms. Two underlying factors (2×2 framework) that lead some firms motivated to go abroad, while other firms are content to remain local:
The size of the firm
The size of the domestic market
Enthusiastic Internationalizer: These are large firms in a small domestic market. These firms are likely to exhaust opportunities in a small country quickly. Considering Nestlé of Switzerland, their food products' demand is somewhat limited given Switzerland's small population (seven million). As a result, most of Nestlé's sales and employees are outside of Switzerland (Peng, 2016).
Follower Internationalizer: These are small firms in a small domestic market. They often follow their larger counterparts, such as Nestlé, to go abroad as suppliers. Other small firms may similarly venture abroad, not to directly supply larger firms, but expand beyond the domestic market's inherently limited size. A considerable number of small firms from small countries such as Austria, Denmark, Finland, New Zealand, Singapore, Sweden, and Taiwan are active overseas (Peng, 2016).
Slow Internationalizer: These are large firms in a large domestic market. In comparison to enthusiastic internationalizers, these firms' overseas activities are usually slower. For example, Wal-Mart’s pace of internationalization is more gradual than its two global rivals based in relatively smaller countries, Carrefour of France, and Metro of Germany (Peng, 2016).
Occasional Internationalizer: These are small firms in a large domestic market confronted with a relatively weak resource base and a large domestic market. In the United States, many small firms are not compelled to go abroad but can be identified as “occasional internationalizers” if they have any international business.
According to the model, the ability of the firms in an industry whose origin is in a particular country (e.g., South Korean automakers or Italian shoemakers) to be successful in the international arena is shaped by four factors:
(1) their home country’s demand conditions
(2) their home country’s factor conditions
(3) related and supporting industries within their home country
(4) strategy, structure, and rivalry among their domestic competitors.