New Methods for the Analysis of Links between International Firm Activities and Firm Performance: A Practitioner’s Guide

This paper is a non-technical introduction to the use of three micro-econometric tools that have only recently been applied in empirical investigations of the links between international firm activities and firm performance. It shows why it is important to use these methods, how to use them in practice and which new insights are found in empirical applications. Topics include the role of extremely different firms (or outliers) in the computation of performance premia of internationally active firms; different performance premia over the distribution of the performance variable when unobserved heterogeneity matters; and the analysis of causal effects of different intensities of international firm activity on firm performance.