Intense competition in the marketplace is forcing businesses to examine different ways that could enhance or retain their competitive advantage. Forward looking organizations generate sustained competitive advantage through innovation. In today´s competitive and turbulent environment, the challenge for all businesses is not only to innovate in existing markets to remain competitive, but also to enter new markets. However, this is not the only strategy used by SMEs. What is the strategic approach for Czech companies and their competitiveness? The research aims to determine vital factors and specifics of the Czech SMEs in the field of innovations and international cooperation. The theoretical introduction is followed by formulation of two hypotheses, which are than investigated by processing data gained by questionnaire survey performed in the period 1st - 3rd quarter 2020. The data were analysed using the Cronbach alpha reliability test, the Pearson correlation coefficients were used for determination of variables linear dependency, and the analysis was concluded by regression model for dependent variable Innovation management. The results are pointing to the importance of the controlling and risk management systems as the most important factors, and to surprisingly low, but negative influence of the variable international cooperation on innovation potential development. Findings supported by the regression model could be managerially used for Czech SMEs' innovation potential development and are opening the new research questions for Czech SMEs development, which can support the problematic deeper understanding and to forming strategies needed for SME competitiveness development.