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This research aims to excavate the impact of market orientation and innovation capability to value creation in small and medium knitting industry (SMEs) located in Bandung, West Java Province. The descriptive and verification methods were used in this research while the data obtained from 281 respondents of entrepreneurs in Binong Jati Knitting Center (Sentra Rajut Binong Jati) in Bandung. The analysis tools used was Structural Equation Modeling (SEM) and the hypotheses was tested using LISREL 8.7 software. The result of this research indicated that both independent variables was having a positive annd significant impact on dependent variable partially and simultaneously. This research was expected to be a useful input for entrepreneurs in Sentra Rajut Binong Jati to increase their market orientation and strengthen their innovation capability to embedded superior value in their products.