This is followed by two output variables scaled to labor inputs: first is the log of sales per worker (i.e. labor productivity), again in 2009 USD, followed by the ratio of total labor costs to total revenues. The latter three outcomes all are trimmed of outliers.<sup>40</sup> **_X_** is a vector of co-variates including the log of the age of the firm, the years of experience of the top manager, and dummy variables of whether the firm has at least 10% or more foreign ownership, exports 10% or more of its sales, and if it is part of a larger<sup>41</sup> These specifications are cross-sectional and surely endogenous. However, we have some reason to believe that some specific sources of endogeneity will be mitigated. Since our Political Influence index score is estimated as a latent construct, based on the combination of items and firm-level characteristics across all firms in our sample, the risk of a firm-level co-variate affecting both the measure of Political Influence and an outcome of interest is low. This is not the case, when, for example respondent-level reticence affects both left-hand side outcomes and the measurement of a key independent variable. Likewise, we expect the risk of co-determination or simultaneity to be low, as our key explanatory variable is the result of our estimated model.

The most present risk of endogeneity with our index, then, is error correlated with some or many omitted variables. We partially address this by using various levels of fixed effects in **_X_** : Cols. 1 and 2 include within-economy regional dummies<sup>42</sup> and 2-digit ISIC sector fixed effects. We think it is reasonable to assume that most exertion of Political Influence will, at a minimum, have implications in a firm’s industry and location, and so we choose to use these fixed effects as our baseline.<sup>43</sup> To allow for the possibility that the analytical level that matters is the _intersection_ of location and industry, we also include a series of interacted fixed effects in Cols. 3–5. To avoid sparsity concerns, Col. 3 interacts economy-level fixed effects with 2-digit sector effects; Cols. 4 and 5 interact more disaggregated location fixed effects with those sector effects. The most saturated estimation is presented in Col. 5, which interacts all co-variates—with the exception of fixed effects—in **_X_** with the Political Influence score, allowing for these adjustments to change based on the estimated index score. All specifications use survey weights, and these are normalized to give each economy equal weight, as we are concerned with the average relationship of political influence within economies. Standard errors use two-way clustering following Cameron et al. (2011), either at the economy-sector or the location-sector level, depending on the assumption of the included fixed effects, and thus our assumption of the application of where firmlevel influence is relevant.<sup>44</sup> As an additional robustness check, in the Results Appendix B.5, we explore how these relationships differ based on underlying governance by interacting the Political Influence score

> competitors in firms’ main market, when the option ‘too many to count’ is assigned the maximum value.

> 40See Data Appendix for details.

> 41Note that throughout we use the term ‘firm’ for simplicity, but that the ES surveys establishments, meaning that an establishment can be part of a larger firm.

> 42Specifically, these are the regional strata determined by each economy’s survey design, often corresponding to known geographical aggregates, such as the Nomenclature of Territorial Units for Statistics (NUTS) in main European countries, though the aggregation level may vary.

> 43Both levels of fixed effect are nested within more aggregate variables, for instance location within economy, or a 2-digit industry—such as food manufacturing—within a broader sector, e.g. manufacturing).

> 44Note that per Abadie et al. (2017), we also ran these specifications clustering S.E.s at the level of survey stratum; the two-way clustering generated larger S.E.s and thus is more conservative, and so we present those results here.

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