This paper analyzes how a specific differentiation by governments throughout the world – whether a sectorwas deemed “essential” or “key” – affected firm performance. During the COVID-19 pandemic, governmentsdesignated specific services as “essential,” which allowed firms operating in those sectors to remain(partially) open as well as being granted other preferential treatment. This paper analyses the effects of thekey-status, by mapping the countries’ lists to the sectoral level, and matching these sectors with firm-levelCovid-19 survey data from 27 countries. The findings reveal that, controlling for a rich set of firm-level andsectoral characteristics, firms deemed key less often reported declining sales and demand for their goodsor services, and had a smaller number of furloughed workers. Nonetheless, non-key firms were more likelyto employ online business activities and to change the main product or service they offered, reflecting thenecessity to otherwise adjust to the economic downturn and changes in demand. About