We do not believe that our findings on the difference in the impact of process as opposed to product innovation warrants strong conclusions about the effectiveness of process innovation and concomitantly the ineffectiveness of product innovation in Canada. [...] Most of the plants in the sample belong to larger firms and are therefore more likely to be engaging in the type of innovation (process) that leads to productivity improvements. [...] The weakness of previous studies on the link between R&D and productivity growth relates to the inadequacy of using R&D or patents to measure the incidence of innovation. [...] A set of previous studies for Canada have reported that the innovative capabilities of individual firms are related to measures of performance.1 The first set investigated the difference in the competencies found in growing and declining small- and medium-sized firms. [...] A growing number of studies in other countries have also used innovation surveys to examine the relationship between innovation and productivity performance at the plant and firm level.2 These studies focus both on the determinants of innovation and on the connection between innovation and performance.