The paper aims to contribute to the discussion on the catalytic role of SMEs in generating innovation as a basis for a competitive economy. It focuses on six European countries, representing both established and transitional settings (United Kingdom, Cyprus, Spain, Italy, Greece and Lithuania). The statistical methods used included ANCOVA, multiple regression analysis and chi-square tests. The factors explaining the innovation levels were provided. Innovation and corporate culture indices were created and found to be correlated. Four variables were shown to explain innovation management in the six countries: corporate culture, formal processes/innovation department, company size and review of products. The respective SME perceptions, key factors and levels of innovation management were thus differentiated for the six countries. This comprehensive differentiated approach is an innovative contribution to the field.