The role of innovation in the development of the entrepreneurship of small andmedium-sized enterprises in Croatia, with an emphasis on the influence of EUfunds

Innovation is a key driver of competitiveness and sustainable development of small and medium-sized enterprises (SMEs) in Croatia. This paper aims to explore the role of innovation in the development of small and medium-sized enterprises (SMEs), with a particular empha-sis on the impact of European Union (EU) funds on innovative activities and business growth. Analysis of recent scientific literature, statisti-cal data, and practical examples has been used. The results show that European funds have made a significant contribution to increasing the innovation capacity of SMEs through funding for research, develop-ment, and digitalisation. However, challenges such as administrative obstacles and a lack of skilled staff continue to limit the full potential of innovation. It concludes that further strengthening of institutional support and education is key to increasing the efficiency of the use of EU funds and stimulating innovation in SMEs.