PurposeThis article explains how business internships can be used to develop innovation skills in undergraduates.Design/methodology/approachUsing work-integrated learning and current literature on innovation, this article proposes a theoretical framework to design, implement, and measure outcomes of Innovation-Focused Internships (IFIs). The article also uses an illustrative case study from an Australian university to discuss practical use of this framework.FindingsThe theoretical framework illustrates that stakeholders (i.e., students, industry, and university) need a common goal. Factors associated with managing innovation and student placements are key features of the framework. The illustrative case study demonstrates ways in which students gather both professional work experience and innovative skills.Practical implicationsThe illustrative case study outlines practical strategies and challenges in IFI programs. Managing innovation-related challenges requires adjustments from all the stakeholders.Originality/valueThis article modifies the existing stakeholder interdependency model of work-integrated learning by combining it with innovation-related literature. The novel insights from the IFI program demonstrate how factors associated with students, industry, and university, and associations between these key stakeholders shape and determine IFI success.