Drivers and barriers to innovation performance: evidence from an interpretative literature review

Background Innovation is a fundamental driver of economic growth and competitiveness, particularly for small and medium-sized enterprises. Although extensive literature exists on the drivers and barriers of innovation outcomes in firms, there is still no consensus regarding the interplay between internal and external factors, such as human capital, financial investment, cooperation networks, and national innovation systems. This is particularly true when these factors are examined alongside emerging dynamics, such as digital transformation and artificial intelligence adoption, within the classical framework. This study aims to advance the understanding of innovation outcomes through an interpretative review of relevant literature. It focuses on the diverse factors influencing innovation, emphasizing the roles of labor, investment, and the broader innovation ecosystem. Additionally, it examines the effects of quality management systems, internationalization, and innovation protection mechanisms on firms' innovation capacities. Methods An interpretative literature review was employed as a rigorous method for collecting, analyzing, and synthesizing previous academic contributions. The study follows the three key stages of planning, execution, and synthesis to ensure a balanced and objective selection and evaluation of research on the drivers and barriers to innovation outcomes. The Web of Science Core Collection was selected as the primary database due to its comprehensive coverage of peer-reviewed journals in the social sciences. A two-phase search strategy was implemented, using inclusion criteria based on document type, language, period (2001–2023), and journal quality. The final sample comprised 122 articles, following a systematic audit of journal quartile status. Findings The review highlights the significance of human capital, including skills, competencies, and motivation, and collaboration with external partners such as universities in driving innovation. Continuous investment in research and development and digital infrastructure enhances firms' absorptive capacity, resilience, and competitiveness. Nevertheless, financial and regulatory barriers, particularly for small and medium enterprises, constrain innovation potential. To enhance innovation, firms should prioritize workforce development, cultivate an environment conducive to creativity, and establish strategic partnerships. Policymakers, in turn, can support innovation by investing in robust innovation ecosystems, facilitating digital transformation and sustainability-oriented practices in low-capacity firms, and helping firms overcome structural barriers heightened during systemic disruptions, thereby improving their competitiveness.