This article considers the issues of implementation of managerial innovations by business entities in the Republic of Estonia, as well as experience and strategic plans for the support and development of innovation and entrepreneurship in the European Union. The role of small business as a major subject of innovative activity of the Republic of Estonia is substantiated. The article describes cross-border cooperation programmes of Estonia with the European Union and Russia in the field of research and innovation. The authors consider development of clusters and technology parks as one of the possible ways to stimulate innovative development of the country, in particular, the paper describes the project of Smart City inside the Republic of Estonia as a catalyst for the development of innovative entrepreneurship and small business, based on science and technology.