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Small and medium-sized enterprises (SMEs) heavily rely on innovation, which plays a very important role in their competitive advantage and business performance. The present study examines to what extent product innovations and business relationships have an impact on SME performance. The samples were 37 small and medium-scale leather industries in Garut, Indonesia. The results of data analysis showed that product innovations had a significant positive impact on SME performance, so did business relationships. This finding provides an empirical information particularly useful for related parties to determine proper competitive strategies.

Product Innovations and Business Relationships: Impact on Leather Industry Performance