This study provides an initial analysis of foreign‐controlled enterprises in the German service sector
based on new micro data of official statistics. Various performance measures were examined by
comparing unconditional and conditional means as well as distributions along quantiles. A
breakdown by country of origin and several domestic reference groups is performed. Results reveal
persistently superior performance for foreign‐controlled affiliates. Only labor productivity becomes
insignificant when German affiliates with a high degree of internationalization serve as reference
group. In contrast, profitability exhibits an inverse relationship. European affiliates are characterized
by lower wage payments and export activity compared to other foreign affiliates. Furthermore, there
is no evidence for a general exporter premium within the group of foreign‐controlled affiliates.