Resumen
Small and medium-sized enterprises are the ?driving force? of modern economies because of the contribution which is reflected in employment, increased exports, dynamics of competition, etc. New and existing innovative SMEs increase overall productivity and competitiveness of the economy, squeezing out less efficient enterprises with lower productivity. By constructing an appropriate econometric model, this paper shows that the income of SMEs significantly depends only on the number of employees in a particular enterprise, not on innovation and the number of employees in research and development areas. The results obtained prove that innovative SMEs do not create more jobs and do not generate higher income compared to non-innovative SMEs in the Republic of Serbia.