Research background and purpose:
The objective of this article is to analyse and compare the impact of the Horizon Europe programme and EU structural funds on the competitiveness and innovative capacity of small and mediumsized enterprises (SMEs) in the European Union. The study pays particular attention to regional diversity and the absorptive capacity of institutions, which determine the extent to which different regions benefit from EU innovation and cohesion policies.

Design/methodology/approach:
The discussion is based on a comparative analysis of secondary data, policy documents, and previous empirical studies on SME participation in EU innovation programmes. The study identifies the main channels of influence through which Horizon Europe and EU structural funds affect research and development (R&D) investment, productivity growth, and innovation performance. Furthermore, the analysis examines moderating factors such as regional absorptive capacity and institutional quality, which condition the effectiveness of policy implementation.

Findings:
The results indicate that Horizon Europe exerts a stronger impact on R&D activities and product innovation, while EU structural funds have a more pronounced effect on productivity growth, digitalisation, and technological modernisation. The interaction between the two instruments generates complementary effects, particularly in regions with high absorptive capacity. In less developed regions, however, the effects tend to be gradual, focusing primarily on technology adoption and capacity building rather than on breakthrough innovation.

Value added and limitations:
This article contributes to a deeper understanding of how different EU policy instruments jointly influence SME innovation and competitiveness. It highlights the importance of institutional quality and absorptive capacity as key determinants of policy effectiveness and provides policy-relevant insights for the design of integrated innovation support systems across EU regions.