Organizational performance directly affecting supply chain management practices. A continuous innovation in supply chain is important for corporations to achieve sustainable competitive advantage, to differentiate from competitors. Contemporary supply chain management stresses coordinating supply chain stakeholders into seamless unit in meeting customers demand and enhancing competitive advantage. Although companies concentrate on innovating independently for developing capabilities, companies however demonstrate reliance on creating their supply chain innovation capability. As markets became global, competition intensified. This forced the companies to innovate to be competitive and carryout holistic, fully integrated approach to their supply chain designs. This can replace traditional thinking in pursuit of effective and responsiveness supply chain. The research addresses gap in the literature between supply chain innovation and organizational capabilities. The study explore how organizations expand their efforts in improving relationships for developing capabilities of supply chain and what capabilities do firms develop to create innovation capacity within a supply chain. Companies in Karnataka, India surveyed to examine the inter relationship beteen organizational capability and supply chain innovation. The results showed that supply chain innovation has positive relationship with organizational capabilities and supply chain integration mechanisms do impact supply chain innovation.