Within the framework of the research, it was clarified that there is a trend in the service companies in Liepaja to rely more on the technological innovations. That differs from the dominating trend in this sector to introduce the non-technological innovations. Considering the common trend in Latvia that the number of innovative service companies is decreasing, the factors preventing the introduction specifically in the service companies in Liepaja were identified in the research. Aim of the research is to clarify the opinion of managers of service companies in Liepaja about the factors affecting introduction of innovation. Within the framework of the research, 31 highest-level managers of Liepaja City service sector and municipal companies were inquired. The results of the research showed that 90% of respondents have introduced at least one form of innovations since January 2014. It was established that the main forms of innovations by object in the service companies in Liepaja are product or process innovations. Only 35% of the managers could clearly answer about their plans to introduce innovations in the future. That demonstrates the lack of strategy and innovations in the management and short-term planning in the companies. The results of the research allowed concluding that the main factor delaying innovations in the service companies was the shortage of financial resources. The lack of qualified staff was mentioned by the managers as an insuperable problem to introduce innovations. Keywords: innovative business, service companies, forms and factors of innovations.