In the age of global competition, commercial diplomacy is becoming an important factor in the development of the international business and in increasing the value of small and mediumsized enterprises. Although scholars point out the importance of institutional support in the internationalisation process, the relationship between state institutions and the business sector in the context of strengthening international visibility and developing international business is not clearly defined, while value as a product of their interaction is treated fragmentarily and without an integrating concept. At the same time, the research problems are defined far beyond the level of actual business activity and much more broadly, while the specificities of individual industries are hardly taken into account. The doctoral thesis approached the aforementioned problem directly from the (business management) perspective of the enterprise, with the research focussing on small and mediumsized enterprises in the hotel industry. The research goal was to determine the factors and processes of value creation and the possibilities of value measurement as a result of the internationalisation of small and medium-sized hotel enterprises, which is realised with the instruments and mechanisms of commercial diplomacy, taking into account the given economic and institutional conditions at micro- and macroeconomic levels. To this end, an empirical study was conducted to determine the forms and levels of co-operation between state institutions and hotel enterprises in relation to positioning in the international tourism market. The research sample comprised 103 hotels operating within the framework of small and medium-sized hotel enterprises in the Republic of Croatia. The largest proportion of hotels operate as micro-enterprises (66%), are located in the Adriatic region - by the sea (53.4%) and belong to the generation of young hotels established after 2015 (36.9%). By applying the Path analysis method, the relationship between commercial diplomacy, internationalisation and the value of the enterprises mentioned was established. Different aspects of the contribution of commercial diplomacy were examined based on their formal and informal dimensions and their contrasting but statistically significant effect on internationalisation and value was identified. While hotels with greater engagement in the formal dimension report greater internationalisation and value for the enterprise, hotels with greater engagement in the informal dimension report lower internationalisation and value. The findings of this research are an important source of information and a scientifically sound basis for decision-making in the hotel management sector. In addition to shaping, building and completing the theoretical concepts and phenomena of this field of knowledge, the results of the research offer new insights into the role and importance of formal and informal commercial diplomacy instruments in the practical economic reality of the internationalisation and value creation process in the small hotel industry.