Innovation is a key component of a firm's strategy to improve market competitiveness and operational efficiency as well as to respond effectively to changing consumer preferences and regulations. A firm has the choice of undertaking different types of innovations that differ in the extent to which they involve changes in products, processes or practices and lead to gains in efficiency or brand image. We postulate that the extent and nature of innovation undertaken by a firm depends on its management system which not only influences its organizational structure, but also the incentives for making continual improvement in its technical capabilities, the extent of employee involvement in decision making and the internal communication channels for information sharing. We develop an empirical framework to examine the extent to which a management system promotes innovation and how its effect differs across different types of innovations.