<p>This research aims to build a model of innovation capability to increase the competitiveness of embroidery products in Jepara. This research respondance is the owner of SMEs embroidery as much as 132 people. The sampling technique used is purpusive sampling and analysis technique using Partial Least Square (PLS). Research results show a variety of knowledge; customer orientation has significant positive effect on innovation capability.  Customer orientation and innovation capability significantly affect on the marketing performance, but for competitive finance has no significant effect on marketing performance, it shows the competitiveness of embroidery products is still low so that no impact on marketing performance. The competitive advantage of the product must be unique to the competitor embroidery products that have not been able to improve the competitiveness of embroidery products.</p>