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This study aim to prove the impact of competitive pressure and innovation capability toward business performance. Furthermore this study also explore the impact of competitive pressure toward business performance through innovation capability as mediating variable. 254 Small Business Company involved in this research as correspondents. The data for this study is collected using questionnaire, and analysed using SEM-PLS. The result of the study shows that 1) competition pressure influences business performance, 2) competition pressure also influences Innovation Capability. 3) The results of the study also showed that innovation influences business performance. 4) Innovation Capability has a partial mediating role to the effect of competitive pressures on business performance.