Small and medium hospitality enterprises are the main providers of the tourist offer. In this regard, the enterprises must formulate a strategy that will enable them a long-term development. One of the development strategies is in their strategic networking with other hotel enterprises, economic and non-economic subjects of the tourist offer. The purpose of this doctoral thesis is based on the assessment and identification of conditions, analysis of the environment and conditions under which Croatian hospitality enterprises operate, analysis of the possibilities, i.e. strengths and weaknesses as a starting point for early detection and their impact and landmark for the companies' business. All further research in this dissertation are based on this premise. The researches have give answers to questions related to strategic networking of these enterprises with economic and non-economic subjects, which applied if they are to operate on a rational basis as a precondition for long-term success, and therefore the continuity of development. Already initiated process of clustering in Croatia can be a good way to increase the economic efficiency of Croatian small and medium hospitality enterprises. It has been proven in this dissertation that clustering affects the quality of small and medium hospitality enterprises, leading to increased competitiveness in the tourism market thus becoming an important factor for the business of hospitality enterprises. Vertical linkages with farmers, small and medium hospitality enterprises have been proven to become more competitive in the tourism market through affordable price and a higher quality of hotel offer. Horizontal linkages, according to the research results, are not utilized enough in Croatia and as such do not boost market strength and advantages.