I have a small sample of 50 cross-sectional firms and 3 or 4 distinct explanatory variables -- all on the individual level. No time dimension. So far, I could employ OLS (I am using Stata:
reg x y, robust).
However, my 50 individual observations come from 20 countries. I would like to include country-specific variables. Is it possible (in general) to just add these country-specific characteristics to the OLS regression on the individual level? Consequently, there would not be any variation in these small country-groups for the variable in question. Also I'd like to add dummy variables, that imply that the 50 firms belong to one of two distinct groups.
Do I need to use a multilevel model for nested data in this case? I don't want to see the effects of the countries explicitly, but only for the variable in question (imagine, e.g., GDP_GROWTH).