Purpose – The purpose of the paper is to extend the understanding of innovation research and its contextual boundaries.

Design/methodology/approach – The paper opts for a systematic review of literature on innovation. Differences between innovation research that is conducted in a competitive context where there is great rivalry is compared with research in a context characterized by strong buyer power are analysed. In particular, the review compares type of innovation under investigation and level of which the innovation occurs.

Findings – It was found that competitive context significantly separate the type of innovation under investigation and innovation at different levels. Thus, the findings provide insights on the importance of competitive context to innovation research.

Research limitations/implications – The findings have implications for the understanding of the sources and directions of innovation, and the formation of innovation at the level of the firm and the industry. Also, the review provides a relevant foundation for further research.

Practical implications – The review provides a ground for managerial decision-making regarding innovation. A manager wishing to innovate is advised to evaluate the competitive context. The evaluation is crucial, as the context facilitates different types and levels of innovation.

Originality/value – The review is unique in its emphasis that reviewing studies of innovation requires the consideration of competitive context.