Innovative Capacity of Firms: on why some firms are more innovative than others

In this paper we report a study into innovative capacity of UK SME firms. We argue that the ability of a firm to develop successful innovations is a function of their innovative capacity.We developed the concept in this paper and suggest it is largely determined by four sets of factors including culture, resources, competence and networks. The discussion first focuses on the background to the study.We then move on to characterise the factors influencing innovative capacity at the firm level. We formulate a model of innovative capacity and innovation performance. This allows us to draw a set of propositions regarding the drivers of innovation performance. Discussion then focuses on the research methodology where research design and methods of data collection are revealed. In the results section, we present the output of regression analyses conducted on our data set. This is followed by the discussion section and lastly the conclusion.