Abstract: with the proportion of small and medium-sized enterprises(SMEs)in total enterprises rising, the innovation ability of SMEs has become an important driving force to improve China's innovation capacity. The innovation capability of SMEs is hardly effectively represented by the traditional research based on Schumpeter's hypothesis and the data from industry and mature enterprises. Therefore, the innovation capacity of SMEs was explored based on extended CDM model from the perspective of ownership types by using the sample of SMEs listed on small and medium enterprises board from 2009 to 2015. Unlike previous research conclusions, the study finds that innovation ability of state owned SMEs is significantly higher than that of non-state-owned SMEs, while the fact is that state-owned SMEs' innovation input is not turned into innovation output, leading to innovation efficiency loss of state-owned SMEs.