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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. Itdoi:10.2478/nybj-2014-0007 fatcat:3xjmr4xc75ffpnuuxrgsxkea6q