So normally I see dummy variables used when there are 2 options (e.g. a female dummy = 1 when the person is female, 0 if male).
However, what if I want to use a dummy variable to represent e.g. company size (i.e. small, medium and large)?
Would I need 3 dummies, i.e. small, medium and large, which each equal one if the company in the dataset is that size and 0 if not?
If so, how would I interpret the coefficient after a regression has been estimated? Because if e.g. small is a dummy and it equals 0, it doesn't mean that the company is e.g. medium-sized, since it could be large-sized.