Which type of exporting involves contracting with an intermediary in the firm's home country?

The correct choice, which pertains to indirect exporting, involves a company engaging an intermediary located in its home country to handle the export process. This intermediary acts as a bridge between the exporter and the foreign market, allowing the exporting company to leverage the local expertise and existing networks of the intermediary.

In indirect exporting, the exporter outsources much of the export function, which can include market research, distribution, and sales activities carried out by the intermediary. This arrangement is often beneficial for companies that are new to international markets or that want to mitigate the risks and complexities associated with direct exporting. By using intermediaries, firms can also save on costs related to setting up their own export operations.

In contrast, direct exporting would involve the company handling all export processes themselves, thereby requiring a more significant investment of resources and a deeper understanding of the foreign market. Company-owned foreign subsidiary relates to a more involved strategy where the firm has established a wholly-owned operation in the foreign market, which also does not involve using an intermediary in the home country. Therefore, indirect exporting is the most suitable answer for the scenario presented.