The main purpose of this study is to develop an innovation model for hospital organisations. For this purpose, this study explores and examines the determinants, capabilities and performance in the hospital sector. First, this discusses three categories of determinants that affect hospitals' innovative capability studies: (1) knowledge stock; (2) social ties; and (3) institutional pressures. Then, this study examines the idea of innovative hospital capabilities, defined as the ability of the hospital organisation to innovate their knowledge. Finally, the hospital evaluation rating, which identifies performance in the hospital sector, was examined. This study empirically tested the theoretical model at the organisation level. The findings suggest that a hospital's innovative capabilities are influenced by its knowledge stock, social ties, institutional pressures and the impact of hospital performance. However, in attempts to keep hospitals aligned with their highly institutionalised environments, it may prove necessary for hospital administrators to pay more attention to both existing knowledge stock and the process of innovation if the institutions are to survive. Finally, implications for theory and practitioners complete this study. Copyright © 2014 John Wiley & Sons, Ltd.