Research on the performance implications of innovation capabilities among firms, particularly inputs and outputs, is rapidly expanding. We meta-analyse evidence from 54 independent samples, covering 320,529 firms (N=2,448,455 observations) across 19 countries. Overall, on average, innovation capabilities are positively associated with firm performance (r ^= 0.12), though the effect is modest and highly dependent on context and theoretical framing. Testing new context-dependent hypotheses, we find that innovation capabilities are generally linked to improved firm performance and the strength of this relationship varies significantly based on methodological and theoretical factors. For example, the effect is stronger in smaller firms (r ^=0.18) and in service-focused industries (r ^=0.30). An unexpected finding from post-hoc analyses reveals that studies based on Dynamic Capabilities Theory show a weaker effect (r ^=0.09) compared to other theoretical frameworks (r ^=0.13). For practitioners, the message is clear: innovation pays off but it is not a guaranteed path to competitive advantage.
