This doctoral dissertation examines the essential topics of employment dynamics, firm performance and innovation persistence comprehensively. In particular, this doctoral dissertation provides an assessment of the differentiated role of innovation strategies in employment, firm performance and innovation persistence. Chapter 2 studies the dynamic relationship between technological innovation and employment using Luxembourgish firm level data pertaining to the non-financial corporate sector during the period 2003-2012. A simple theoretical model that distinguishes the employment effect of product innovation from that of process innovation is developed. The model is then estimated by two-step generalised method of moments using an unbalanced panel data stemming from the annual structural business survey merged with the biennial innovation survey. The results show that the semi-elasticity of employment with respect to product innovation lies between 0.2% and 0.5%. The differential in the employment effects between radical and incremental innovation is estimated to be 50%. Similarly, the employment level differential between product innovators and firms with unchanged products lies between 4% and 11%. Unlike product innovation, however, process innovation does not have any significant effect on the firm level of employment. Chapter 3 investigates the two-way relationship between technological innovation and firm performance at the firm level. In the framework of evolutionary economics, innovation is regarded as a highly cumulative process which exhibits positive feedback. This chapter aims at capturing the interdependent relationship and possible bidirectional causality between innovation and firm performance. Superior firm performance facilitates the emergence of innovations, innovation contributes to firm performance by gaining successful and sustainable competitive advantage, which forms a virtuous circle. A fully recursive simultaneous model is established where product and process innovation are explicitly ...