The world today is richer than it has ever been, and technology is still constantly advancing. Globalization is an indisputable fact today; it cannot be removed from today's environment, nor can it be neglected. It needs to be accepted and well-directed and shaped with the help of innovativeness of enterprises. The Master thesis consists of identifying the level of impact of globalization and the degree of innovation on European SMEs, with the main focus on trends and changes affecting European countries. The thesis identifies key elements of entrepreneurship, globalization and innovation, analyzes entrepreneurship in the EU, with special emphasis on SMEs, defines key trends of globalization and innovation and identifies challenges and prospects for SMEs in terms of innovation and globalization. On the other hand, the purpose of the research is to identify the effects of globalization and innovation on SMEs in the EU. The aim of the research is to determine whether there is a positive connection between: entrepreneurial orientation and innovation and globalization and innovation. Equally, the aim was to establish a positive link between innovation and business success, the basic characteristics of companies and innovation, and a positive link between innovation and globalization. This thesis also defines the direct impact of innovation and globalization on enterprises and their impact on business performance as well as the direction and impact of innovation on business performance with the processes of globalization. The paper found that innovation and globalization strongly influence the development of SMEs in almost all determinants of SME development in the EU.