The relationships between outsourcing and innovation performance in the UK furniture manufacturing industry are investigated in this study. This study contributes to the discourse by showing that innovation performance is affected by outsourcing decisions. First, outsourcing peripheral activities has no impact on innovation. Second, performing core activities does have a positive influence on innovation performance. Furthermore, the findings support previous documented relationship found between capabilities and product and process innovation by revealing key enablers, which are particular to the furniture industry. There is a strong correlation between customer-focus strategies and innovation performance. Furniture manufacturers are attuned to customer design preferences through critical buyer channels. Other key findings highlight the association between firm size and innovation and the importance of innovation capabilities for medium size firms.