Background: Ongoing business transformations, labour shortages, and lack of resources are perceived as some of the business’s biggest challenges. Since innovation is a key driver for growth and profitability, it is indispensable for the long-term survival of a business. However, innovation remains a challenge for most businesses, including foundation-owned businesses. Despite the growing significance of this type of ownership, the literature on innovation in foundation-owned businesses is scarce. Existing literature primarily focuses on quantitative analyses of their economic performance without explaining how the foundation-owned business bodies influence innovation. Purpose: This study explores how foundation ownership influences innovation. The main goal is to understand the collaboration of the different foundation-owned business bodies and how this influences innovation in foundation-owned businesses. The study’s goal is to contribute to the sparse literature on foundation-owned businesses and aspire to provide insights and recommendations for FB and FoB practitioners, as well as for external parties. Method: This paper is based on a qualitative study following a grounded theory approach to derive new theories from empirical data. Hence, we conducted an exploratory multi-case study following the Eisenhardt Method. Our data sample consists of four foundation-owned businesses. In total, we conducted 18 interviews with foundations and their associated businesses, as well as practitioners and scholars in this research field. Conclusion: Based on our findings, we identified that innovation is influenced by five key factors namely governance bodies, foundation as a source of inspiration, foundation charter, the foundation supporting the business’s human resources, and the foundation’s capital procurement.Drawing on these factors, we determined three collaboration strategies of foundation-owned business bodies that influence innovation, namely distant, distant-close, and close collaboration which resulted in our theoretical model.Furthermore, we identified that foundation ownership fosters innovation on a larger scale by providing an innovation infrastructure.