Due to increasing globalization and technological change, the importance of the capability to develop new products and bring them successfully onto the market -in the following referred to as innovation capability -increases not only for large enterprises but also for SMEs (Small and Medium Enterprises). In this paper, we firstly develop a model of SMEs' innovation capability, divided into the five dimensions: innovation structure, innovation strategy, innovation resources, innovation

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... , and innovation culture. Secondly, we explore if SMEs want external support to enhance their innovation capability and if yes, how this support could be provided. Thirdly, findings of the pilot study and the innovation capability model are implemented into an evaluation tool as a first step of external supporting activities. With the help of this tool, a database of the innovation capability of SMEs will be created to allow benchmarking and studies of innovation management in SMEs. INTRODUCTION: INNOVATION CAPABILITY AS A COMPETITIVE ADVANTAGE The capability to develop new products and bring them successfully onto the market is generally accepted as a source for competitive advantage. Due to increasing globalization and technological change, the importance of innovation increases not only for large enterprises but also for SMEs (Small and Medium Enterprises) as well. Nevertheless, partially due to limited resources, success factors, methods, or good practices in innovation management which are routinely used by large enterprises are mostly unknown to SMEs. In addition, some SMEs are not even aware of deficiencies and the potential to improve their innovation capability.