In this study, we analyse seven waves of the Community Innovation Survey data to examine factors influencing innovation in firms, focusing on international markets, public funding, and market competition. Our investigation differentiates between product, process, organizational, and marketing innovation. Findings highlight the pivotal role of international market engagement and external funding in fostering innovation, particularly in new products and production methods. The influence of external funding varies across innovation types, diminishing in organizational and marketing innovations. The study reveals a nuanced relationship between market competition and product innovation, suggesting a nonlinear pattern up to a certain threshold. Policy recommendations include a comprehensive approach to innovation, leveraging international market engagement, monitoring market concentration, optimizing public funding, providing targeted support for SMEs, and implementing stability measures during economic downturns. These aim to foster innovation, enhance competitiveness, and support economic development and resilience.
