Abstract
Small and medium-sized enterprises present the key factor of economic development of the state, because they employ the largest part of the working population and so significantly influence the generation of gross domestic product. Furthermore, they solve the problem of unemployment, raise living standards and strengthen the international competitive position of the country through export. However, SMEs in Serbia are currently at an unfavorable economic, technical and innovative level. One of the main pillars on wich recovery of the SME sector in Serbia should be based is the development of innovation. Innovative SMEs are the most effective and most flexible part of modern economy, as well as the key factor for strengthening competitiveness and overall economic development.
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