The Innovative Capacity of Firms

Abstract

Abstract Innovation is widely accepted as a crucial competitive weapon in today's global market place. Yet the levels of innovation achieved by different firms, even within the same industry, can vary widely. The key question raised by this observation is why. Why are some firms more innovative than others? What are the factors that determine a firm's capacity to innovate and how can these be managed to enhance the firm's innovative potential? This paper sets out to address these and related issues. It reports the results of a study of competitiveness and innovation of firms in the East of England. In the paper it is argued that the innovative capacity of a firm is a function of the firm's culture, resources, competences and networks. Justification for this framework is provided by a review of the relevant literature and a series of case studies examining the capacity to innovate of a sample of firms in the East of England.