I don't believe that competition is the primary driver of innovation either. But competition is an inevitable consequence of comparability. If you cannot compare outcomes of different approaches to the same problem you cannot improve the solutions. I also think that competition mitigates some social developments that lead to stagnation, like cronyism and lazy establishments holding on to resources without delivering any results.

But at the end of the day I think you are right to dispute the popular notion that somehow a cut throat environment that pits everyone against everyone else is the most conducive environment for innovation. It just causes fear and fear makes stupid.