Designing and Validating a Model for Measuring Innovation Capacity Construct

In today’s rapid changing and highly competitive business environment, innovation is broadly recognized as a powerful competitive weapon. Innovation is a dynamic process that needs continuous, evolving, and mastered management. Thus, companies need to monitor and measure their innovation capacity to manage the innovation process. Yet, there is lack of a psychometrically valid scale for innovation capacity construct in the current innovation literature. The purpose of this paper is to develop a reliable and valid scale of measurement for innovation capacity. To test its unidimensionality, reliability, and several components of validity, we used data collected from 175 smalland medium-sized enterprises (SMEs) in Iran and performed a series of analyses. The reliability measures, exploratory and confirmatory factor analyses, and several components of validity tests strongly support a four-dimensional scale for measuring innovation capacity. The dimensions are knowledge and technology management, idea management, project development, and commercialization capabilities.