There is consensus on the positive relationship between research and development, innovation and productivity, however there are other variables related to the topic that are important to identify. At the national level, studies on innovation are scarce, so it is necessary to go deeper into it. This research focused on identifying the factors that determine innovation in the productive sectors of Panama. An extensive bibliography on innovation in the productive sectors was reviewed at global and national levels. The food industry database of the Agro-industrial Production and Research Center was analyzed and case studies were carried out in national companies. The study found that the main factors that drive innovation in companies are: workforce skills, investment in R & D, market orientation, use of ICTs, links between public and private players, company size, networking, university-government-business interaction, and innovation subsidies. In the case studies conducted in Panama, the key factors that explain innovation in agro-industries are the following: investment in machinery and equipment links with supplier companies, customers and competitors, and demand or market orientation.Keywords: Innovation, research and development, productive sector