The hasty pace of globalization depicted by fundamental changes in the production technologies is utterly altering international trade. Furthermore, the rapid technological transformation requires organizations to refer to quality improvement while introducing innovative services and products. The following study scrutinizes the role of quality improvement in the innovation within the SMEs operating throughout Latvia. The nature of the study is quantitative and the views of SMEs representatives were captured via an online survey. SMEs operating in the field of manufacturing and retail in Latvia were selected for the participation in the study. As the research results reveal, quality improvement is considered as an important factor upon which innovative activities are implemented. Besides, in the rapidly changing consumer needs, product quality improvement is seen as a process of modifying and redesigning the products and services to satisfy well swiftly fluctuating demands for SMEs. In addition, our research discloses that the major sectors in Latvia within which quality management systems certification was requested were: construction, transportation, communication, wholesale and retail trade. Furthermore, research findings show that financing of productive capacity is central to any development strategy, but access to finances still remains a major obstacle for SMEs.
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