The rising importance of international firms is demonstrated by two main aspects. First, firms are heterogeneous; they differ substantially in the margins of trade and in economic size. The extensive margin indicates if a firm is active in trade flows. The intensive margin indicates the intensity with which firms engage in trading activities. Trading firms tend to be bigger and more productive than non-trading firms. Second, trade flows are dominated by multinational firms operating in two or more countries, including related party trade between firm entities leading to intra-industry trade. Multinationals are concentrated in advanced countries, capital- and R&D intensive, display distance decay in their interactions, are larger and more productive than national firms and have a specific organisational structure. The rise of international firms is related to the changing structure and organisation of trade flows caused by the emergence of global value chains, under the guidance of lead firms.

Firm heterogeneity is nowadays at the center of trade analysis. There seems to be a link between firms' presence on foreign markets and productivity of individual companies. There is a premium for companies engaging in internationalization activities against those serving only the local market, and these premia seem to increase with the complexity of the internationalization activity. There is causality between firms' innovation and internationalization activities. This implies that innovation policies are a major driver of trade and economic growth. Few firms are able to export, and export is thus very concentrated in a few firms in virtually all countries. This fact means that policymakers might be able to analyse and forecast nearly all aggregate trade figures by predicting a few firms' export value. Responses to exchange rate movements are heterogeneous across firms: export elasticity to REER movements is inversely correlated with size and productivity, and therefore exports by larger and more productive companies are less sensitive to exchange rate movements.