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Ni Ketut Lasmini Business Administration Department Bali State Polytechnic Badung, Indonesia ketutlasmini@pnb.ac.id Abstract— The aims of this study was to analyze (1) the impact of market orientation on product innovation and marketing performance ; (2) analyze the impact product innovation on marketing innovation. This study was conducted with 100 owners of SMEs of wood craft in Gianyar regency, Bali, Indonesia. Data were collected using questionnaires, interviews, observations, and literature studies. The research model was built using the structural equation model and analyzed with smartPLS-3 software. The results of the analysis show that (1) there is a positive and significant impact of market orientation on product innovation and marketing performance ; (2) there is a positive and significant influence of product innovation on marketing performance. The suggestions that can be given to SMEs are: making a variety of product variations, increasing product quality and must produce in accordance with market demand.

Market Orientation and Its Impact on Product Innovation and Marketing Performance of SMEs in Bali