This paper analyses country effects on firm performance. Empirical analysis was based on a sample of 83,641 observations and 10,927 firms in 37 countries and 224 industries, in a 10 year time span. A cross-classified 3-level hierarchical linear model allowed the estimation of country, industry and country-industry interaction effects, which had approximately the same relative importance. Altogether, these effects were nearly as important as firm effect. The influence of each specific country on the performance of its firms was also studied and a ranking of countries based on fi rm profitability was developed.
Strategy; performance; competitive advantage; country effect; multilevel models