<mark>We evaluate frm performance using three metrics: labor productvity (sales per worker) and, separately, sales and employment. Labor productvity is used due to the unavailability of value-added data</mark> (Bartelsman et al., 2004) <mark>.</mark><sup>6</sup> <mark>We hypothesize that frms with a higher degree of exposure to energy price increases may experience a reducton in sales, are likely to downsize and cut jobs, and could experience a drop in productvity because frm costs may rise faster than revenues, and some supply chain disruptons may reduce frms’ ability to make proft-maximizing decisions. Additonally, we hypothesize that frms operatng in energy-intensive (CPRS) sectors will be disproportonately afected, with the efect of energy prices on their performance further amplifed.</mark> <mark>The baseline regression to assess the efect of energy prices on frm performance is described in equaton (1) where we focus on the energy price efect associated with fuctuatons in electricity prices that we observe at the country level and can beter identfy and use the global prices of oil only as a control variable:</mark> p (1) where pppii,jj,kk,tt = αα∙p is the performance of firm ppkk,tt + ββ∙ccp ccjj + γγ∙p _i_ in sector ppkk,tt ∙ccp _j_ in country ccjj + ρρ∙XX _k_ ii,tt at time + ππjj + θθ _t_ , pkk + μμ is the price of electricity kk,tt + ωωtt + εεii,jj,kk,tt that varies over time at the country level, is the sector-specific classification according to energy ii,jj,kk,tt pp pp usage intensity, is a vector of firm control characteristics, including age and size clusters (micro, small, ccp cc medium, large)<sup>7</sup> as well as the monthly global price of oil, are sector-specific dummies to account for ii,tt XX sector-specific characteristics other than energy usage intensity, are country-level fixed effects to jj μμ control for country characteristics that are invariant in the short term, such as institutions or market kk θθ structures, are country-time fixed effects to control for time-varying macroeconomic conditions common for all firms in a given country that vary over time, are the time-fixed effects to control for kk,tt μμ time-varying global factors that affect all countries, sectors, and firms. The equation is estimated by OLS tt ωω using robust standard errors. <mark>Weights are employed in the analysis to equalize the emphasis on smaller versus larger countries.</mark> <mark>Note that relevant frm characteristcs are carefully considered for each regression: t</mark> o reduce omitted variable concerns, <mark>size dummies are incorporated when assessing labor productvity o</mark> r sales <mark>as the dependent variable</mark> s, while sales quartiles are used when employment is the dependent variable <mark>. The age of frms is controlled for because older frms may utlize energy efciency practces and generate outcomes diferent from younger frms.</mark><sup>8</sup> <mark>The overall efect of electricity price fuctuatons on a frm in the energyintensive (CPRS) sector is then given by: α + γ .</mark>

> 6 Bartelsman et al. (2004) highlight its importance in developing economies, where sales data often provide the most accessible alternative for productivity analysis.

> 7 Micro (1 to 5 employees), small (6 to 19), medium (20 to 99), large (100 or more employees); the omitted category in the regressions is “small”. When the dependent variable is employment, size is determined based on the quartiles of sales, with the lowest quartile serving as the omitted category.

> 8 The age of a firm significantly influences its performance, reflecting variations in experience, resource accumulation, and adaptability. Young firms often exhibit higher growth rates but face greater financial constraints and survival risks, as noted by Haltiwanger et al. (2013). In contrast, older firms benefit from established customer bases and operational efficiencies but may encounter innovation inertia (Huergo & Jaumandreu, 2004). Coad et al. (2016) find that firm age interacts with industry dynamics, where mature firms in competitive sectors must innovate to sustain performance.

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