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This study aims to examine the mediation effects of innovation in influencing the entrepreneurial leadership and information technology flexibility on increasing the competitive advantage of Small and Medium Enterprises in the Magelang region. There are 5 (five) hypotheses in this study and the method uses is a survey in the form of a questionnaire. Population of this study is the employees of the Small and Medium Enterprises in the Magelang region and sample selection method takes the form of non-probabilistic sampling with a purposive sampling technique. The sample of this research was 105 respondents. The analysis tool uses Structural Equation Modeling (SEM) in testing hypotheses and through Warp PLS program. The test results show that entrepreneurial leadership and information technology are highly substantial in fostering competitive advantage in small and medium businesses.