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Over the last decade, the competitiveness of enterprise has been dictated by the availability of knowledge and its application into successful innovations. Innovation capacity indicators in Latvia stay low and enterprises are considerably lagging in comparison with other European Union countries, data reflected at “European Innovation Scoreboard 2008”, where Latvia took 30th place among 32 countries. The purpose of this paper is the identification of knowledge innovation (KI) hindering factors at Latvian enterprises. The focus is to develop a KI management framework for Latvian enterprises.

The research objective is achieved by analysing available statistical data, national development documents, empirical research and two discussions with participants involved with innovation systems. The author's practical interpretation of specific KIs basic elements is provided. The design of the paper is the following: theoretical aspects of KI, practical description of the current innovation and knowledge management (KM) in Latvian enterprise, the role of education and science in KI field, identification of hindering aspects of KI development, and conclusions and suggestions.

The main findings show that only a few elements of innovation and KM are functioning at Latvian enterprises. The role of science and education play a key role. Main hindering factors affecting KI are identified. There is a contradiction between some of the knowledge and innovation management research data, which is a subject for more complicated research.

The paper compares analysis and comparison for time period 2004‐2009.

Identified problems of KI lagging can be successfully used as a base for KI management framework development. This paper reflects an original viewpoint of identification of the main hindering factors of KI as well as contradictory results of knowledge and innovation management research.