There is an overall understanding that in a business environment that is serious, the performance of the company will extraordinarily rely upon its capacity to innovate. To shed light on how, when, and to what extent innovation has an effect on the market as well as the financial performance of the companies. The paper deploys regression equation models that seemingly look unrelated to examining different Portuguese firms. The results of this paper confirm that there is a positive effect of innovation on a firm’s development as well as its performance. However, the results also suggest that the opposite is also true. The innovation process is very complex and depends on the environment in which it is used.