INNOVATIONS IN SMALL AND MEDIUM ENTERPRISES-STATE AND CHALLENGES

Developing technologies, changing consumer demands, and increasing competitive pressure compel small and medium enterprises (SMEs) to innovate across all aspects of their operations continuously. Their innovation activity significantly influences the overall innovation performance of our country and, consequently, the pace of its development. Unfortunately, the innovation activity of SMEs remains unsatisfactory, with most of them failing to utilize the potential of modern, high-performance technologies fully. At their current stage of development, adopting innovations and new technologies remains their most critical challenge. This is also a challenge for Bulgaria as a whole, as the country significantly lags behind the European Union average in terms of implementing innovations and new technologies. The main reason for this lag is the underdeveloped innovation system in Bulgaria. Assessing the state and challenges of innovation activity in the SME sector is hindered by insufficient statistical data. At the same time, such an assessment is necessary for comparative purposes and for devising government policies and measures to stimulate it. In light of this, this publication aims to present summarized results regarding the innovation activity of SMEs and the key factors hindering it based on empirical research. These results can be useful in directing the efforts of governmental bodies and managers toward fostering the development of SMEs and promoting innovation within them.