This paper examines the interdependency of European Policy and governance of innovation. The authors elaborate on the policy implementation context of Slovenia, a small and less advanced European member state in a transition process. The literature on innovation policy, governance and existing innovation concepts aiming to accelerate economic development, European integration and growth is reviewed and integrated. Within this framework, the authors then review the capability and capacity of the Slovenian national government to channel European funding and organize complex projects, such as the enabling, advancement and integration of regional innovation systems as a key concept of regional innovation strategy and smart specialization (RISS). They discuss the governance of innovation in the research tradition of neo-institutionalism and policy impact analysis related to problems of national and regional innovation systems. The paper outlines the importance of organizational readiness at the national level for the translation of high-level concepts, effective policies and efficient strategy implementation.