Open innovation has been identified as two dimensions, the flow of knowledge obtained from outside and processed within the organization and has a role as a key business responsiveness to prevent any risks that will be faced. From this knowledge flow is a successful approach to new product development featuring outbound and inbound knowledge that is managed with the aim of getting out of the bounds of risk. Therefore, this study investigates and explains the clausal relationship between the variables used, such as inbound and outbound open innovation, product innovation, marketing innovation, firm performance, and environmental turbulence as moderating variables. This study uses a quantitative approach and designs a questionnaire that has been distributed to 115 SMEs owner / managers as a sample. In the process of formal data collection, a random sample was used in this study which was distributed to the owner / manager of SMEs. While the processing, analysis, and hypothesis testing process of this study uses PLS-SEM which is a statistical tool for applying all data scales, does not require many assumptions, and confirms relationships. The findings in this study indicate that what has a positive and significant effect is the relationship of inbound open innovation to product innovation, product innovation to marketing innovation, marketing innovation to firm performance. In addition, the moderating effect of environmental turbulence in a positive way is only product innovation on firm performance. Further explanation of the implications of the findings has been discussed and confirmed.

The aim of this study was to examine the role of entrepreneurial marketing as a mediating variable in the relationship between environmental turbulence and dynamic capability with sustainable competitive advantage. This study involved 130 craft industries in Malang Regency, Malang City, and Batu City, East Java, Indonesia. Application of loading factor followed by SEM-PLS developed a model showing how environmental turbulence and dynamic capability influence on entrepreneurial marketing which consequently leads to differentiation and performance improvement which are the established indicators of sustainable competitive advantage for the firms. The model was empirically validated using model fit indices and was found satisfacto-ry. The findings show that environmental turbulence did not have any significant relationship with a sustaina-ble competitive advantage. Dynamic capability had a significant relationship with a sustainable competitive advantage. Entrepreneurial Marketing mediates the relationship between environmental dynamic capabilities with sustainable competitive advantage. The analysis shows that highly dynamic capability and entrepreneurial marketing tends to highly sustainable competitive advantage. It indicated that dynamic capability and entrepreneurial marketing offer systematic model for supporting Micro, Small, and Medium Enterprises (MSMEs) to build a well-maintained environment and sustainable competitive advantage.