Purpose This paper aims to investigate the correlation between collaborative culture, knowledge sharing and innovation capabilities in Chinese firms. Design/methodology/approach This paper used structural equation modeling to examine the level of how collaborative culture and knowledge sharing impact on two types of innovation capabilities (product innovation and process innovation) based on using data collected from 77 Chinese firms. Findings The research findings show that knowledge sharing plays a mediating role between collaborative culture and two specific types of innovation, namely, product innovation and process innovation. The paper first confirms the moderating role of ownership form in the relationships between knowledge sharing and innovation capabilities. The results underline the necessity of building a collaborative culture to stimulate employees’ knowledge sharing behavior, which in turn positively promotes innovation capabilities in an organization. Research limitations/implications The paper has not evaluated the relationship between latent variables under the condition of moderating variables of individual characteristics (such as optimism and self-efficacy) or firm characteristics (such as industry type, firm size and firm age). Further research should examine the moderating effects of these variables to have clearer relationship between the constructs. Practical implications This paper offers leaders a deeper understanding of the effects of ownership forms and potential factors to promote innovation capabilities in their firms. Originality/value The paper has contributed to theoretical and practical initiatives on the theory of innovation management which enable firms to identify the necessary factors and mechanism to enhance firm capabilities for innovation.