This thesis addresses employment, competition and firm performance with a focus on Sub-Saharan Africa. The thesis consists of three individual papers and an introductory chapter. The purpose of each paper is to analyze firm performance. The main region of interest is Sub-Saharan Africa where countries in this part of the world are at lower levels of economic development and have experienced economic transition and strong firm investments. The papers contribute to existing industrial organization research by studying the effects of competition on R&D, effects of firm performance on innovation, and the determinants of informal employment and monthly wage earnings.

The first paper focuses on firm performance which is found to affect firm innovation positively. This suggests that a firm’s decision regarding the scope of its total sales impacts its innovation capabilities. The second paper investigates the relationship between competition, R&D expenditure and innovation. It is found that a firm’s research efforts increase with an increase in levels of competition but at a diminishing rate confirming a non-linear, inverted-U relationship between competition and research expenditures. The third paper analyzes what determines informal employment and monthly wage earnings in formal firms. The results show that marginal benefit of higher education is lower for informal employees and that returns on education are much higher for workers with higher education.