The smart economy represents a new model of economic development that integrates digitalization, innovation, sustainability, and human capital. This article examines how small and medium-sized enterprises (SMEs) in the Czech Republic adopt smart economy elements and how these influence their competitiveness. The research is based on primary data collected through focus group interviews with 150 SME owners across various sectors. The aim was to assess the use of digital technologies such as the Internet of Things, artificial intelligence, cloud solutions, and ERP systems, and to identify the types of innovations implemented in these businesses. The findings show that process and marketing innovations were most introduced, while the use of AI, cloud computing, and collaboration with research institutions remained limited. Nevertheless, most respondents perceive smart technologies as tools to improve efficiency, service personalization, and long-term sustainability. The results confirm that SMEs have the potential to drive economic transformation if they strategically invest in digital skills and connect innovation with sustainable growth.