Abstract: Existing research literature on product innovation is far more than that on process innovation, especially on its mechanism. Based on literature research, expert interviews and process practice of automobile companies, this paper constructs a theoretical model of process innovation, raises several hypothesis, and use structural equation model to test these hypotheses. This study finds that decision-making mechanism has positive effects on motive mechanism, organizational mechanism, and incentive mechanism of process innovation, but doesn’t show a direct influence on process innovation capacity both motive mechanism and organizational mechanism have a direct impact on process innovation capacity while the effect of motive mechanism is inferior to the other. The two hypotheses of positive effects of organizational mechanism to incentive mechanism and that of incentive mechanism to process innovation capacity has failed to be tested.. Not only does this paper help enrich technology innovation research, but also it draw enterprises’ and government’s much more attention to process innovation.

Key words: process innovation, innovation mechanism, automobile companies, structural equation model