Research on Innovation Capability Based on System Dynamics Model

Innovation capability is the ability to obtain value-added through innovation activities and it depends on the weakest link of innovation value chain. Based on system thinking and system dynamics theory, the causal loop diagrams and flow maps were made, the relations among factors which influence the value-added were analyzed. Through the analysis, positive loops and negative loops which are composed of factors affecting innovation capability both are showed. Enterprises should co-ordinate the overall situation to make up for weaknesses in the organization, while measures to reduce the negative impact on other sectors, to promote the sound development of innovation system activities, to improve innovative capabilities, to ensure that companies gain continued innovation revenue and competitive advantage.