International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR MARKET ORIENTATION AND ENVIRONMENTAL PRODUCT INNOVATION ON BUSINESS PERFORMANCE : THE MEDIATING ROLE OF COMPETITIVE ADVANTAGE Sandy Hana Widya Sims. Bima Cinintya Pratama. Iwan Fakhruddin. Nur Isna Inayati. Universitas Muhammadiyah Purwokerto 1,2,3,4 Corresponding Email : bimacinintyapratama@ump. Abstract : This study aims to analyze the effect of market orientation and environmental product innovation on business performance in MSMEs, with competitive advantage as a mediating variable. Market orientation is a factor that allows MSMEs to survive and thrive in increasingly fierce competition. In addition, environmentally based product innovation focuses on developing environmentally friendly products. This research uses a quantitative method with a survey approach to a number of MSME actors. The targets of this research were MSME actors in Banjarnegara. Purbalingga. Banyumas. Cilacap and Kebumen Regencies. The data used uses primary data and used a sample of 200 respondents. The analytical tool used in this research is Smart-PLS by using the inner model, outer model, and hypothesis testing. Outer model is used for validity and reliability tests. Inner model is used for R-square and F-square tests and hypothesis testing using Bootstrapping The results of this study indicate that the variables of Market Orientation. Environmental Product Innovation, and Competitive Advantage have a positive effect on Business Performance. The practical implication of this study is that MSMEs must pay attention to and optimize business potential by considering Market Orientation. Environmental Product Innovation. Competitive Advantage to improve business performance. Keywords: Business performance. Competitive advantage. Environmental product innovation. Market Orientation. Introduction In the development of a business today by increasing competitiveness, operational efficiency, and market access as well as product and service quality, innovation can help MSMEs to grow and develop in an increasingly competitive business environment. According to Husnaini & Tjahjadi . Sari & Gantino . innovation oriented with environmental awareness is needed because a decrease in the value of the company both in the eyes of society and stakeholders can arise due to the company's lack of attention to its environmental Whereas innovation is an important factor that determines the sustainability and development of MSMEs amidst changing market dynamics. Husnaini & Tjahjadi . revealed that if a company wants to continue to develop and maintain its business, it must continue to innovate. Based on data from the Central Java Statistics Agency. MSMEs are expected to be able to develop innovations so that their businesses are more advanced and can compete with medium or large businesses abroad. Although only about 6% of MSMEs in Central Java have innovated, consisting of 75% of product innovation and 35% of marketing innovation, these innovations can show great potential for economic growth in Central Java. The following is data on MSME players who innovate: International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 1 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR Table 1. Innovation Data in Central Java Province District Innovate Innovate Innovatio Innovate Innovation Innovation Banjarnega Purbalingg Banyumas Cilacap Kebumen Total Source: Central Bureau of Statistics / BPS . Based on the data in table 1. shows that in 2020 MSME actors who made innovations in the Barlingmascakeb region were only around 0. 4%, then in 2021 it showed an increase of 3. 7%, but in 2022 it actually decreased by showing only 2. 2% of MSME actors who made innovations. This identifies that MSME actors who innovate from 2020-2022 experience fluctuations and are very small. The development of innovation based on the Central Java Tribune . shows a figure of 4. 2 million MSMEs in Central Java with various types and production sectors, most of which are still operating in the local market. This causes MSME players to compete in a small market so that competition becomes very tight. Therefore, by expanding to the export market, market opportunities will be much wider and the number of consumers will increase Based on data from the Central Java Statistics Agency . , the forms of innovation carried out by MSME actors are product innovation, marketing/distribution innovation, and production innovation. MSME actors who make these innovations will be able to improve their performance because innovation can have an impact on the success of business performance. Furthermore, according to a study conducted by Kurniawan et al. proves that the success of product innovation in MSMEs is highly dependent on the ability of a business actor to identify market opportunities, optimize available resources and implement the right innovation strategy. According to Karnowati & Handayani . also revealed that product innovation capabilities and market orientation are also important factors to consider in the growth of MSMEs. combining product innovation and strong market orientation, it can increase the value of competitive advantages that are different from competitors. In line with Rahmasuci . which states that the Resource Based View is a unique resource which is then processed through good corporate capabilities, the company will be able to achieve a competitive advantage which will then lead to superior performance. Based on this, one way to see a business has good quality or not is to look at business According to Fakhruddin . business performance is the key to surviving in the global market because business performance is a factor used to measure the impact of a An MSME that is able to combine innovation with market orientation will be able to adapt to market changes and meet customer needs, so as to increase overall business Value creation for all stakeholders requires management to be able to improve its performance in financial performance, social performance, and environmental performance (Agustia et al. , 2. According to Hamidi . explains that financial performance International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 2 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR determines various measures as a measure of the company's success in generating profits, so that financial performance can be described by the level of company profitability. A business if it focuses on financial aspects without considering social and environmental impacts can face reputational risks and long-term sustainability. The first factor that affects business performance in this study is market orientation. Market orientation is something that is important for companies in line with increasing global competition and changes in customer needs where companies realize that they must always be close to the market Harini et al. According to Harini et al. market orientation is an important thing to pay attention to, because of the market orientation in its business, the company can find out the intended market orientation so that it will be able to meet the satisfaction of consumers. Therefore, through good market orientation. MSMEs can collect market information effectively, analyze emerging trends, and identify opportunities and threats in the market (Hidayat, 2. The role of market orientation will lead to improved performance for the company and the fulfillment of customer needs will help business actors in running their Previous research conducted Udriyah et al. and Wiwoho . explain that market orientation has a positive influence on business performance. The same thing is also found in research Hamel & Wijaya . and Ie & Pratama . which states that market orientation has a significant effect on business performance. However, research Purnamasari & Wijaya . states that market orientation has no significant effect on business performance. The second factor that affects business performance in this study is environmental product Huang et al . say that environmentally based product innovation focuses more on environmental protection and environmentally friendly development, creating economic value for the company while increasing environmental benefits. This means that environmentally based product innovation is a necessity for companies to implement creativity given the rapid market competition as a result of the impact of globalization and rapid advances in technology. According to Saputra and Inayah . New product processing provides innovation, in order to manage finances in the production process and product marketing. MSMEs that continue to innovate tend to be better and more relevant to consumers (Hasna, 2. Previous research conducted by Hasna . explained that product innovation has a positive influence on the performance of MSMEs. On the other hand, researchers such as (Sudjatmoko et al. , 2. found that innovation does not affect business performance directly. The third factor that affects business performance in this study is competitive advantage. Competitive advantage is a benefit strategy of companies that cooperate to create a continuous competitive advantage so that companies can dominate both in the old market and in new markets (Wiwoho, 2. That is, competitive advantage is the ability of a company to create more value for customers than its competitors through the management of unique resources and By having a competitive advantage, the company will be able to survive to continue the life of the company. Previous research conducted by Udriyah et al. states that competitive advantage has a positive effect on business performance. However, research conducted by Wiwoho . states that competitive advantage has no effect on business Based on the description above, this study discusses the role of market orientation and environment-based product innovation and competitive advantage on business performance in MSMEs. This research develops research conducted by (Udriyah et al. , 2. by developing innovation variables into environmentally based product innovation. Furthermore, this research focuses more on environment-based product innovation to improve performance and competitive This research will be used as a reference on the need for innovation in products to be International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 3 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR Sector differences are also a novelty in this study because they are focused on the MSME sector in the Banyumas. Purbalingga. Cilacap. Kebumen and Banjarnegara regions. LITERATURE REVIEW Resaurce Based View Theory Resource Based View is visually defined coordination between functions as an element of the company's resources and capabilities to be competitive and can survive in the midst of competition (Lorenzo et al. , 2. According to Lorensa & Hidayah . RBV emphasizes that resources are important because basically business performance can be measured based on the resources owned by the company. RBV focuses on company attributes that are difficult to imitate as a source of performance and competitive advantage (Miller, 2. Valuable, rare, incomparable and irreplaceable resources enable businesses to develop and maintain a competitive advantage, to leverage organizational resources (Aisyah et al. , 2. Companies that are able to create effective and efficient marketing strategies will be able to minimize costs incurred and targets can be targeted. Companies can achieve competitive advantage and create value from unique, rare, valuable and irreplaceable resources, which will have an effect on improving business performance. Company success, as shown by superior customer service, better efficiency, or higher economic profits, has become a major topic of competitive strategy. One manifestation of this important role can be seen from the use of knowledge that generates innovation and as a basis for increasing responsiveness to the needs of customers and stakeholders (Widagdo et al. , 2. As a result, the higher the value of intangible assets, the higher the business performance. The Effect of Market Orientation on Competitive Advantage and Business Performance Market-oriented businesses need to develop competitors' strengths and weaknesses, use and implement strategies to create advantages and superior performance. Yadav et al. explains that market orientation is the company's perspective on several main elements, namely customers, competitors and coordination between functions within a company in order to achieve competitive advantage and superior business performance. By integrating all these elements, companies can create greater value for customers and will increase competitive advantage and business performance. In accordance with the Resource Based View (RBV) explains that the success of an organization in achieving excellence and high performance depends on its ability to utilize its resources. RBV describes the company's ability to provide a sustainable competitive advantage by managing resources in such a way that what is produced is difficult for competitors to imitate or make, thus ultimately creating barriers to competition (Talaja et al. , 2. states that market orientation increases competitive advantage which in turn increases the business performance of a company. The results of this study are also in line (Afiyati et al. , 2019. Irwan et , 2023. Taufik, 2. proves that market orientation has a positive effect on competitive Furthermore, this research is in line with research (Hartato & Handoyo, 2021. Sondra & Widjakkja, 2. proving that market orientation has a positive effect on business H1a: Market orientation has a positive effect on competitive advantage. H1b: Market orientation has a positive effect on business performance The Effect of Environmental Product Innovation on Competitive Advantage and Business Performance In a broad sense, innovation is a process that operationalizes creative potential with commercial or social motives, applies adaptive solutions and technologies, and contributes to competitive advantage (Singh & Aggarwal, 2. Environmental product innovation contributes International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 4 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR to competitive advantage and better business performance by creating added value for customers, building a strong reputation and improving operational efficiency. According to Fadila . innovation is not only measured based on how much change is made to the product, but the size of an innovation is based on how much the needs of consumers are met. Wiwoho . reveals that the company's success in innovation can be said if the company is one step ahead of the competition, intelligence is needed in innovation activities so that innovation can create competitive advantages to improve business performance for the company. Innovation is expected to increase market pairs which will affect sales. By increasing sales, the profits earned will increase and business performance will increase. Based on this knowledge and competence, environmental-based product innovation was launched to develop new products that are more energy efficient and environmentally friendly (Mansoor et al. , 2. According to the ResourceBased View (RBV), environmental product innovation is a valuable form of resource because it involves unique capabilities that are difficult to imitate, such as technical knowledge in developing environmentally friendly products and expertise in meeting sustainability standards. This explanation can be supported by research Ani . Budianto & Setiawan . Darma et al. , . Fadhillah et al. about the positive effect of environment-based product innovation on competitive advantage. Then, it is also supported by research from Afiyati et al. Hasna . Nurdina & Ariprabowo . Sari . which discusses the positive effect of environment-based product innovation on business performance. H2a: Environmental Product Innovation has a positive effect on competitive advantage H2b: Environmental Product Innovation has a positive impact on business performance. The effect of Competitive Advantage on Business Performance Competitive Advantage is the ability of a product or service to provide potential value and can create benefits for consumers and cannot be imitated by competitors (Fadila, 2. Competitive advantage can be recognized through the successful use of human resources because of higher efficiency and can produce high business performance. When a company can do something that competitors cannot do or has something that competing companies want, then it can represent a competitive advantage (Anggraini et al. , 2. According to Anwar et al. that competitive advantage is a company's strategic advantage compared to competitors so that it can perform better. In line with the Resource-Based View (RBV), it reveals the company's ability to maximize superior internal sources of strength in the company by identifying its resources and determining its capabilities so that it is superior to other companies (Andika et al. This explanation can be supported by research from Afiyati et al. Putra & Suparna . about the positive effect of competitive advantage on business performance. H3: Competitive advantage has a positive impact on business The effect of Competitive Advantage mediates Market Orientation on Business Performance Market orientation is very important in marketing strategies related to the company's focus on customer needs and desires. According to Anggraini et al. market oriented companies must be able to continuously monitor changes in customer needs and wants quickly and Through competitive advantage, it can improve business performance, both in terms of sales, market share, and profitability. Therefore, companies that want to improve their performance should focus on developing a strong market orientation, which in turn can generate sustainable competitive advantages. The Resource-Based View (RBV) explains that sustainable competitive advantage results from the utilization of resources that are unique, rare, and difficult to imitate (Barney, 1. Utilizing the company's resources in order to more effectively respond to market needs and increase customer satisfaction ultimately contributes to improving overall business performance. This explanation is supported by Afiyati et al. Anggraini et al. International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 5 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR . Sefanya & Ie . which discusses competitive advantage mediates the relationship between market orientation and business performance. H4: Competitive advantage mediates market orientation on business performance. The effect of Competitive Advantage mediates Environmental Product Innovation on Business Performance Environmental product innovation is a major focus in modern business strategy, especially in the context of competitive advantage. According to (Udriyah et al. , 2. innovation is the process of transforming marketable idea opportunities. This means that innovation is a strategy to increase the value of products that will bring companies to have a competitive advantage (Subekti, 2. According to Farida & Setiawan . environmental product innovation not only focuses on developing more sustainable products, but also includes efficient and environmentally friendly processes in essence, if a company innovates products, its business performance will also increase. This is due to the market orientation that has been applied, thus creating a competitive advantage and can improve business performance. The attractiveness of a product comes from its inherent features and users usually become more interested in a product that is different from most but provides similar or even more benefits (Wahab et al. , 2. This explanation is supported by Soegihono & Yuniawan . Susana & Andarwati . Susanti et al. which explains that competitive advantage can mediate the effect of environmental product innovation on business performance. H5: Competitive advantage mediates environmental product innovation on business Market Orientation (X. Competitive Advantage (M) Business Performance (Y) Environmental Product Innovation (X. Figure 1. Research Model Research Method This research uses a quantitative approach obtained using a questionnaire. There are more than 43,006 business actors in Banjarnegara. Purbalingga. Banyumas. Cilacap and Kebumen The sampling technique used multistage sampling technique. Using the multistage sampling technique can facilitate the determination of sampling in a large area. Calculation of the number of sample adequacy using tools, namely the G * Power application with an alpha error probability of 0. effect size 0. and power 0. 8 with the number of preditors 3 resulting in the smallest sample of 114. Researchers added 86 samples so that the total sample used was 200 MSME players in the Barlingmascakeb area. The tool used in data analysis is the Smart Partial Least Square (Smart-PLS) application. According to (Ashari et al. , 2. Smart-PLS is the same statistical software that aims to test the relationship between variables, both among latent variables and indicator variables. In testing the data, two models are used, namely the outer model and the inner model. The outer model is used to test validity and reliability. The R-square and F-square tests are carried out to test the inner Both of these models are carried out through PLS Algorithm testing. Furthermore, hypothesis testing is done through bootstrapping testing. International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 6 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR Operational definition and measurement of variables This study uses two independent variables, namely Market Orientation (X. and Environmental Product Innovation (X. then the Competitive Advantage variable (M) as a mediating variable. Meanwhile, the variable Business Performance (Y) as the dependent variable All variables are measured using indicators of each variable The following is the operational definition and measurement of variables in this study Table 2. Operational definition and measurement of variables Variables Operational Definition Indicator X1 : Market Market orientation is defined as MO 1 : Customer Orientation the organizational culture that MO 2 : Competitor Orientation most effectively creates the MO 3 : Coordination between behaviors essential to creating superior value for buyers as well as performance in business (Narver & Slater, 1. X2 : Environmental product EPI 1 : Environmental Friendly Environmental innovation defined as product innovation environmental product innovation EPI 2 : Environmental Friendly that focuses more on Packaging environmental protection, creating economic value for the company while increasing environmental benefits (Huang & Chen, 2. Competitive Advantage is defined CA 1 : Competitive Price Competitive as the aggregation of various CA 2 : Customer Satisfaction Advantage items that differentiate from their CA 3 : Product Advantages competitors and provide a unique and superior position in the market (Udriyah et al. , 2. Y : Business Business performance is defined BP 1 : Financial Perspective as an achievement in carrying out BP 2 : Customeer Perspective organizational tasks to realize to BP 3 : Internal Business Process goals, vision and mission of the Perspective organizational (Khalique, 2. BP 4 : Learing and growth Results and Discussion Results Respondent Characteristics Respondents Gendre Age Tabel 3. Respondent Characteristics Category Frequency Precentage Male Female 23,5% International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 7 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR 27,5% 20,5% 3,5% Banjarnegara 11,5% Banyumas 48,5% Region Cilacap Kebumen 8,5% Purbalingga 16,5% 1-2 years 2-6 years 7-11 years 13,5% Business Age 12-16 years 17-25 years >25 years 7,5% Private Business Family Business 20,5% Type of Ownership Limited Partnership Limited Liability Company 1,5% Culinary 48,5% Clothing and Beauty 8,5% Services 12,5% Business Type Crafting 2,5% Livestock 3,5% Grocery Store 24,5% 2-3 People 4-6 People 17,5% Number of Employees 7-10 People 7,5% >10 People 0. 7 will produce an ideal value and the indicator is declared valid. Average variance extracted according to Ghozali & Latan . , to meet the requirements of convergent validity, the average variance extracted (AVE) value is> 0. 5 to meet reliability requirements. A good composite reliability requirement if it is> 0. 70 which means acceptable,> 0. 80 is good value, and> 0. 90 which means very good value (Hair et al. , 2. The data is presented in the following table: Table 4. Facktor Loading. AVE and Composite Reliability Variabel Indikator Loading Factor AVE Composite Realibility MO 1 0,839 MO 2 0,727 MO 3 0,841 MO 4 0,797 Market M0 5 0,906 0,712 0,983 Orientation MO 6 0,873 MO 7 0,836 MO 8 0,872 MO 10 0,845 EPI 1 0,979 EPI 2 0,908 Environmonetal Product EPI 3 0,967 0,880 0,965 Innovation EPI 4 0,856 EPI 5 0,974 CA 1 0,927 CA 2 0,716 CA 3 0,774 CA 4 0,947 CA 5 0,877 Competitive 0,763 0,964 Advantage CA 6 0,873 CA 7 0,936 CA 8 0,864 CA 9 0,847 CA 10 0,941 BP 1. 0,949 BP 1. 0,843 BP 1. 0,948 BP 1. 0,740 BP 1. 0,947 Business 0,769 0,983 Performance BP 2. 0,947 BP 2. 0,940 BP 2. 0,835 BP 2. 0,934 BP 2. 0,751 International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 9 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR BP 3. 0,886 BP 3. 0,937 BP 3. 0,824 BP 3. 0,940 BP 4. 0,742 BP 4. 0,947 BP 4. 0,833 BP 4. 0,934 BP 4. 0,712 Source: SEM-PLS Data Processing Result . Based on table 4. Is the loading factor. AVE and composite reliability value of each The loading factor value shows that all variable indicators have a correlation value of more than 0. 7, so it can be concluded that these indicators can be used as measuring Average variance extracted (AVE)> 0. 5 which means that all variables have good convergent validity. Composite reliability is 0. 90, which means that the variable is very good, so the variable is said to be reliable because it meets the requirements of composite reliability (Hair et al. , 2. Structural Model Test (Inner Mode. R-Square According to Hair et al. states that R-Square is used to measure structural model evaluation and can consider the predictive ability of the model. The R Square value is used to measure the effect of the independent variable on the dependent variable, namely to measure the evaluation of the structural model and can consider the predictive ability of the model (Innayah & Pratama, 2. The R-Square value is divided into three categories, namely strong . , medium . and weak . The results of the R-square model test are presented in the table below. Table 6. R-Square R-Square Adjusted Business Performance Competitif Advantage Source: SEM-PLS 3 Output . Based on table 6. shows the R-square value on business performance 0. 786, meaning that it has an influence of 78. 6% on market orientation. Environmental product innovation and market orientation, while 21. 4% is influenced by other variables outside this study. In the competitive advantage variable, the R-square value is 0. 384, which means that it has an influence of 38. 4% on market orientation, environmental product innovation and market orientation, while 61. 6% is influenced by other variables outside this study. F-Square F-square assesses the relative impact of an exogenous variable on an endogenous According to Juliandi . changes in the r-square value when certain exogenous variables are removed from the model, can be used to evaluate whether the omitted variable has a substantive impact on the endogenous construct. The f-square criterion according to (Juliandi, 2. indicates a small . , medium . , and large . International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 10 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR Table 7. F-Square Business Performance Variabel Competitive Advantage Competitif Advantage Environmental Product Innovation Market Orientation Source: SEM-PLS 3 Output . Based on table 7, the results show that the f-square value on the competitive advantage variable is 1. 134, environmental product innovation is 0. 394 and market orientation is 0. This means that competitive advantage and environmental product innovation have a big influence on business performance, while market orientation on business performance has a moderate influence. Furthermore, the f-square value of environmental product innovation is 037 and market orientation is 0. This means that environmental product innovation and market orientation have a big influence on competitive advantage. Bootstrapping Analysis Table 8. Path Coefficient Value of Direct Effect Sampel Asli (O) Sample Mean (M) Standard Deviation (STDEV) T Statistics (|O/STDEV| Values Decision MO -> CA (H. 0,567 0,560 0,085 6,701 0,000 Supporte EPI -> CA (H. 0,155 0,169 0,077 2,024 0,043 Supporte MO -> BP (H. 0,532 0,523 0,086 6,202 0,000 Supporte EPI ->BP (H. 0,400 0,414 0,088 4,542 0,000 Supporte CA -> BP (H. 0,6257 0,608 0,083 7,512 0,000 Supporte Source: SEM-PLS 3 Data Processing Results . Table 9. Specific Inirect Effects Indirect influence Original Sample (O) Sample Mean (M) Standard Deviation (STDEV) T Statistic P /STDE Value V|) Decisio EPI -> CA -> BP 0,097 0,099 0,038 2,527 0,012 Support MO -> CA -> BP 0,354 0,346 0,089 3,995 0,000 Support Source: SEM-PLS 3 Output Data Processing Results . International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 11 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR Discussion First Hypothesis Testing Results Table 8 shows that the P-value of market orientation on competitive advantage is significant at the = 5% level with a positive coefficient direction. The test results of this study provide a conclusion that market orientation in MSMEs in the Barlingmascakeb region has a positive and significant effect on competitive advantage. The results of this study prove that H1a, is accepted. Furthermore, the P-value for market orientation on business performance is significant at the = 5% level with a positive coefficient direction. The results of the research test provide a conclusion that the hypothesis H1b, which proves that market orientation in MSMEs in the Barlingmascakeb region has a positive effect on business performance, is accepted. The results of this study are in line with (Afiyati et al. , 2019. Irwan et al. , 2023. Taufik, 2. market orientation has a positive effect on competitive advantage. Furthermore, research (Hartato & Handoyo, 2021. Sondra & Widjakkja, 2. proves that market orientation has a positive effect on business performance on MSME actors in the Barlingmascakeb region. MSMEs that have a strong competitive advantage tend to experience an increase in sales and market share. Market orientation greatly impacts the profitability of a business's performance. Based on this, the Resource Based View states that the success of an organization in achieving competitive advantage and high business performance depends on its ability to utilize its Based on this description, that market orientation has a positive influence on competitive advantage and business performance. Second Hypothesis Testing Results Table 8 shows that the P-value of environmental product innovation on competitive advantage is significant at the = 5% level with a positive coefficient direction. The test results of this study provide a conclusion that environmental product innovation on competitive advantage has a positive effect. These results prove that H2a, is accepted. Furthermore, the Pvalue for environmental product innovation The results of the research test provide the conclusion that the H2b hypothesis, which states that environmental product innovation has a positive effect on business performance, is accepted. The results of this study are in line with (Ani, 2020. Budianto & Setiawan, 2020. Darma et al. , 2022. Fadhillah et al. , 2. environmental product innovation has a positive influence on competitive advantage. Furthermore, in accordance with research (Afiyati et al. , 2019. Hasna. Nurdina & Ariprabowo, 2022. Sari, 2. proves that environmental product innovation has a positive influence on business performance. Wiwoho . reveals that the company's success in innovation can be said if the company is one step ahead of the competition, intelligence is needed in innovation activities so that innovation can create a competitive advantage to improve business performance for the company. Innovation is expected to increase market pairs in MSMEs in the Barlingmascakeb region which will affect sales. By increasing sales, the profits earned will increase and business performance will increase. Resource-Based View (RBV) states that environmental product innovation is a form of valuable resource because it involves unique capabilities that are difficult to imitate, such as technical knowledge in developing environmentally friendly products and expertise in meeting sustainability standards. Based on this description, environmental product innovation has a positive influence on competitive advantage and business performance. Third Hypothesis Testing Results Table 7 shows that the P-value of competitive advantage on business performance is significant at the = 5% level with a positive coefficient direction. The test results of this study International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 12 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR provide the conclusion that competitive advantage has a positive effect on business performance. This result proves H3, accepted. The results of this study are in line with (Afiyati et al. , 2019. Putra & Suparna, 2. competitive advantage has a positive influence on business performance. The higher the MSME players in the Barlingmascakeb region perform competitive advantage, the more business performance will increase. Therefore competitive advantage is believed to be a reference for every industrial company, both small, medium and large industries as a benchmark in facing business competition (Putri et al. , 2. Khotimah . reveals that competitive advantage can be obtained with intangible assets and has the ability to be reflected in superior performance for the company, superior performance is reflected in good financial capabilities such as an increase in good profits such as an increase in sales. Based on this description, it can be concluded that competitive advantage has a positive influence on business performance. Fourth Test Results Table 8 shows that the P-value of market orientation on business performance with competitive advantage as a mediating variable is significant at the = 5% level with a positive coefficient direction. The research test results provide the conclusion that H4 competitive advantage mediates market orientation on business performance, accepted. The results of this study are in line with Afiyati et al. which states that competitive advantage mediates market orientation on business performance. MSME actors, especially in the Barlingmascakeb region, who apply a strong market orientation can not only improve their business performance directly, but also through the creation of competitive advantages. Barney . explains the Resource-Based View that sustainable competitive advantage results from the utilization of resources that are unique, rare, and difficult to imitate. Corporate success, as demonstrated by superior customer service, better efficiency, or higher economic returns, has become a major topic of competitive strategy. One manifestation of this important role can be seen from the use of knowledge that produces innovation as well as a foundation for increasing responsiveness to the needs of customers and stakeholders (Widagdo et al. , 2. As a result, the higher the innovation, the higher the business performance. The results of this study are supported by (Afiyati et al. , 2019. Anggraini et al. , 2022. Sefanya & Ie, 2. which proves that competitive advantage mediates the relationship between market orientation and business performance. Based on this description, it can be concluded that competitive advantage can mediate market orientation on business performance. Fifth Hypothesis Testing Results Table 8 shows that the P-value of environmental product innovation on business performance with competitive advantage as a mediating variable is significant at the = 5% level with a positive coefficient direction. The research test results provide the conclusion that H5 proves competitive advantage mediates environmental product innovation on business performance, accepted. The results of this study are in line with (Soegihono & Yuniawan, 2023. Susana & Andarwati, 2. proves that environmental product innovation on business performance with competitive advantage as a mediating variable. MSME players in the Barlingmacakeb region who carry out environmental product innovation will be able to create competitive advantages and improve business performance. Amandasari et al. identified that companies that implement environmental product innovation are not only able to create more efficient and environmentally friendly products, but can also increase competitiveness in the market. Resource-Based View (RBV) is a theory that discusses resources that can provide more economic advantages to owners with the availability of resources that are both fixed and limited (Sherman, 2. By integrating RBV in innovation strategies, companies can maximize the potential of resources to achieve competitive advantage and improve overall business International Journal of Economics. Bussiness and Accounting Research (IJEBAR) Page 13 International Journal of Economics. Business and Accounting Research (IJEBAR) Peer Reviewed Ae International Journal Vol-9. Issue-1, 2025 (IJEBAR) E-ISSN: 2614-1280 P-ISSN 2622-4771 https://jurnal. stie-aas. id/index. php/IJEBAR Based on this description, it can be concluded that competitive advantage can mediate environmental product innovation on business performance. Conclusion This study aims to examine the effect of market orientation and environmental product innovation on business performance and by considering competitive advantage as a mediating The conclusion obtained from the results of this study is that market orientation, environmental product innovation, competitive advantage and business performance have a positive effect on the development of MSMEs in the Barlingmascakeb region. The results of this study identify positive results in each hypothesis that has been proposed. The results of this study have important implications for MSME actors in the Barlingmascakeb region. The implication of this research is that business performance has an important role for MSME actors in developing their business for the better. The performance of an MSME will be better if it is influenced by factors such as market orientation, environmental product innovation and competitive advantage to increase MSME profitability. More specifically, it is hoped that this research will provide theoretical contributions to the development of MSMEs in Banjarnegara. Purbalingga. Banyumas. Cilacap, and Kebumen districts. In addition, this research has implications for the Government so that it can develop MSME management to increase economic development in Central Java. The limitation in conducting research is that there are variations in the business sector. MSMEs in the Barlingmascakeb region include various businesses, ranging from trade, services, to creative industries. These variations can affect the results in the study, because each sector has different characteristics, challenges and opportunities. The variables selected in the study used market orientation variables, environmental product innovation, competitive advantage and business performance. Suggestions that future research can add other variables related to business performance to be used in further research besides those already used by researchers, such as market orientation, environmental product innovation and competitive advantage Reference