Small and medium enterprises have insufficient resource base for stand-alone exit and struggle in the modern market. The solution to this problem is recognized in the concept of economic association. The purpose of the research is to determine how the process of economic association affects the strengthening of the market and financial position of affiliated small and medium entrepreneurs in the Republic of Croatia and the selected EU countries. In the theoretical framework of research, strong influences of certain forms of economic associations; namely clusters, cooperatives and manufacturing associations, have been demonstrated in the growth and development of small entrepreneurship through the acquisition of sustainable competitive advantage. By analyzing secondary data on the cooperative example, it can be concluded that the success of economic associations in stimulating the growth and development of small and medium entrepreneurship of the Republic of Croatia depends on the acquisition of the critical mass of members. Without the critical mass, no positive economic effects of economic association can be achieved. This disadvantage is recognized as important feature of co-operative associations in the Republic of Croatia. The identified problem needs to be eliminated by educating and motivating small and medium-sized entrepreneurs to make stronger economic links through associations. The paper proposes the establishment of a production organization of olive oil producers in Zadar County. The establishment of the said organization is considered to be perspectives due to the existence of pedological, market and advisory prerequisites and the trend of promoting the consumption of olive oil at the supranational level within the ARISTOIL project. It is also possible to finance and co-finance the product organization activities by applying for grants according to measure 9.1. “Establishment of producers groups and organizations.”