Global Firm Behavior in an Uncertain World

The underlying thesis contributes to the international trade literature in several dimensions. Methodologically, a stochastic partial equilibrium model is developed merging concepts from international economics and finance theory. The theoretical model analyzes the first time market entry decision of a representative multinational enterprise (export or FDI) confronted with a stochastic productivity growth and sunk entry costs. Based on this basic model a more complex world is analyzed in which a representative firm can switch between different internationalization strategies back and forth. Due to the complexity of the equilibrium conditions the second model requires numerical simulations, as it negates closed form solutions. In the presence of uncertainty over time, multinational enterprises are not only confronted with a choice problem between exporting and FDI. Differently, besides uncertainty in productivity, a firm may also be confronted with a country specific risk, concerning applied tariff rates. Indeed, empirical data suggests that the overhang between applied and bound tariffs differ across countries and time. However, there is no theoretical trade model which explains the timing of entry into the export market in dependence on risk of the trade policy path in a firm's destination market, reduction in risk via tariff bindings, and firms' fixed entry costs. By extending the initially developed model it is possible to provide a theoretical explanation for the effects of tariff overhangs on multinational firms. Finally, a last type of uncertainty firms may be confronted with, is the performance of managers who govern a company. Do newly hired managers with export experience increase the likeliness that a domestic company starts to export? In how far is the talent of a manager influential for the internationalization process of a firm? This type of uncertainty is again both theoretically and empirically barely considered in international economics.Therefore, in a last step the previously developed dynamic model is modified in order to provide a motivation for an empirical analysis based on a newly composed Danish employer-employee dataset.Overall, in this thesis several new results are derived and some of these findings herein can easily be imagined as having potential implications for the prevailing economic literature but also for policy and corporate practices.