The purpose of the research is to study the dynamics of innovative entrepreneurship, which is closely involved in ensuring economic development and the formation of a competitive system in a rapidly globalizing world, and to analyze the current state of innovative entrepreneurship in Azerbaijan, to identify contributions to the economy.

The methodology of the research - is based on comparative analysis, empirical approaches and logical generalization.

The practical importance of the research - the materials provided in the research and the results obtained can be used in the development of complex and systematic measures, conceptual approaches to solving problems in the formation of innovation-oriented entrepreneurial activity.

The results of the research - all studies emphasize that a number of factors, both individual and institutional, affect the innovative entrepreneurial activity at the same time.

The originality and scientific novelty of the research is that a conceptual framework for innovative entrepreneurship has been developed at the individual and institutional levels. To this end, the effects of an individual's past experience, social capital, fear of failure, self-confidence, and sense of opportunity have been identified at the individual level. At the institutional level, the impact of government support on emerging entrepreneurs, fiscal and bureaucratic measures, strengthening the property rights system, and the level of cultural support for entrepreneurship was examined.

Keywords: entrepreneurship, innovation, economic development, institutional factors.