Recent developments in world economy have shown that small and medium-sized enterprises (SMEs) can import their own dynamics into the economic progress. Recognizing the importance of SMEs, most of the countries, especially the developed ones, have started implementing those regulations that will aid the promotion, development, and protection of the SMEs. Turkey, as a candidate member state of the European Union (EU), can use the advantages of SMEs to gain competitiveness in the EU markets and in the global markets as well. Today, the most effective method to reach this aim is to promote innovation, while investing in research and development (R&D). In this chapter, advantages and disadvantages of the Turkish SMEs during the transition period to EU membership will be examined after the importance of innovation in SMEs in the developing countries being discussed.