The effects of product market competition on a firm’s financial policy and business strategy are evident in extant literature. As a firm’s internationalization is a function of financial policy and business strategy, the firm’s decision is impacted by product market competition. However, prior studies lack empirical evidence supporting the relationship between product market competition and firm internationalization. We tested our hypotheses using a panel data set (n = 64,147 firm-year observations) of publicly traded U.S. firms from 1990 to 2021 employing a panel data econometric model [i.e., partial least squared-ordinary least squares (OLS), fixed effect model]. The study results supported our hypothesis that product market competition reduces the likelihood of a firm’s internationalization. The study results enhance managerial understanding of internationalization decisions and suggest that businesses should consider the product market’s competitive position while making internationalization decisions. Policymakers should support those firms in overcoming the negative impact of product market threats to support internationalization.
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