According to Hervás-Oliver et al. (2021), for many years it has been identified that with the approach to innovations, the European Union has mostly developed: Business Economics Thesis, UOG, UK

According to Hervás-Oliver et al. (2021), for many years it has been identified that with the approach to innovations, the European Union has mostly developed R&D plans that have led them to focus on productivity and economic growth factors. Small and medium-sized enterprises are the backbone of the economy of Europe.

Nearly 99% of the business is generated through SMEs and a high rate of employment is generated through them adding up to the beneficial approach for GDP. The innovative strategy implemented by small-scale enterprises has made it possible to take the necessary steps to overcome the challenges of climate. The transition factor of meeting the sustainable approach of building the digital economy so that a competitive advantage can be created.

Based on the study of Garrido-Prada et al. (2021), however, some structural weaknesses in the economy have prevented the growth factor of the innovative approach implemented by SMEs.  Despite the challenging situation still, SMEs have made it a long way. It can be identified with the help of multi-dimensional activities related to the innovative approach and initiatives such as Smart specialization on the latest digital innovation hubs greater context of innovations can be measured.

The emphasis on research and development in the European country has made it possible to overcome all the challenging situations. The center of the commission has developed some strategies to develop a sustainable and digital Europe. The main aim of the commission is to identify the change in the number of SMEs who are engaging with sustainable business practices to grow. The main motive is to develop a single market that can help them to go beyond the level of accuracy. Over six hundred members of the Enterprise Europe  Network have been found to provide tailored services to SMEs and make them reach a new avenue of success.

The regulatory burden is required to be removed from small businesses by developing new strategies that can remove the obstacles to doing business. The support structure developed by the government has developed new legislation that provides equal opportunity to young and skillful people with the help of digital programs (Chalmer et al.,2020). The government has taken various other measures to fund small businesses which is one of the most pressing issues. The commissions have developed the EU financing scheme which deliberately supports the way of providing funds in the forms of loans, guarantees, and equity investment for SMEs.

To let the business, overcome the negative consequences of the global crisis situation, the loan guarantee facility has been provided by the government under various strategic investments that enable banks to bridge the gap. More than 100000 SMEs have received the help of € 9  million in financing through national promotion schemes (Bodlaj and Čater, 2019). In the current context of the changing dynamics of conducting the approaches of business innovation has been found to be one of the strongest factors. In terms of making small-scale businesses stay ahead of the competition, profitability factors, productivity level, and innovative approaches have been identified to play a fundamental role.

Despite the positive approach implemented to make the SMEs stay ahead of the competition, it has been found that the firms have a lower level of tendency and capacity as compared with the large-scale enterprises. The prominent level of dependency on external research and development schemes has made a challenging situation for running the business in a smooth manner (Dowling et al., 2019). Due to the substantial risk and costs involved in performing the activities of the business activities it has been identified that non-R&D activities can provide innovative options for the small-scale business. Consequently, it has been argued that the EU has developed a research-led policy framework to create a supporting system for SMEs.

The SMEs account for more than 60-70 percent of the jobs in most of the OECD countries particularly Italy, Germany, and other countries. The demand for reliable, relevant, and internationally comparable data has developed an analysis of various problems faced by SMEs in running businesses in a significant manner.

The greater variance of the profitability structure has created a challenging situation for small-scale businesses. The higher rate of interest associated with finance and the shortage of credit rationing due to the shortage of collateral securities have been a cause of concern. To meet this challenging situation, the government of the EU has been trying to introduce some innovative approaches to improving R&D.

The government has developed a stable and predictable approach to managing the interest of the business. As the firms mature and meet the rate of success, they create opportunities for growth and development in terms of employment and GDP growth structure

Entrepreneurship tends to vary based on the different regions and to increase the number of small-scale businesses many regional development policies have been introduced that have helped to spill the bin and assist the regions who lack behind in the innovative strategy. The prime targeted areas are Germany, France, Belgium, Luxembourg, Italy, Ireland,  and the Netherlands in terms of providing support for developing small-scale industries.

With the introduction of technology, it has been helpful to meet the challenges faced in running the business in a significant manner. Along with this financing support and the innovative business environment has been a helping hand for the SMEs to meet all the requirements in a significant manner.