Academy of Economic Studies, Bucharest

Abstract. The purpose of this paper is to present a critical evaluation of the implementation and development of innovation and knowledge management in the Romanian economy. As a former socialist country, Romania faced some specific difficulties in its transition from centrally controlled economy toward the free market economy, and from state ownership toward private ownership. A centrally controlled economy is very rigid, and it is based on inertial and linear thinking patterns. Switching toward a free market economy means also switching toward a dynamic and nonlinear thinking patterns, a more adequate perspective for the complex and turbulent changing business environment. Our research identified and evaluated the main barriers in implementing innovation and knowledge management in the Romanian economy, and based on these findings we developed a series of possible solutions