Impact analysis of human resources and leadership on innovation in small and medium enterprises

Small and medium enterprises (SMEs) are today considered a very important pillar of economic growth in many countries. These companies account for 80% of global economic growth, employ the largest percentage of the workforce and contribute to income generation. However, although they represent a very important factor in today's business these businesses face a number of challenges as they are constantly under pressure to maintain their own competitiveness both in the domestic and global markets. One of the key sources of survival of small and medium enterprises and building a sustainable competitive advantage are considered innovations. They usually start with innovative ideas and innovative activities that lead to improvement in the overall performance of the company. In addition to improving product quality and reducing costs, innovation also allows for increased efficiency and sales for the organization. Innovation is a process that must take place continuously. The implementation of innovative culture in companies must include all segments of the company and help to create good conditions for the development of creative individuals. Croatia is a country that belongs to the group of moderate innovators, however, as innovation is today a key factor in the success of all companies, this paper investigates the influence of human resources and leadership on innovation in small and medium-sized companies in Croatia.