In this article innovative capability, i.e. the ability of new products and markets development, is analyzed and empirically tested. The results have proven that the companies with more developed innovative capabilities achieve higher performance levels, but that there is no difference in innovative capabilities between large and medium-sized companies. On the other hand, medium-sized companies have slightly higher levels of sales growth and increase in market share. Also, companies in foreign ownership are better at development of new products and new production methods, and they have higher levels of sales growth, market share and increase in market share.