Improving of SMEs performance need good management system. The purpose of this research
is analyze the factors influencing the performance of SMEs and to determine whether the
variables of innovation, environmental hostility and firm size affect to improvement processs.
A survey was conducted in Purbalingga regency by purposive sampling technique. The
samples that are used to data analysing are 110 small medium enterprises. Partial Least
Squares method was used to examine 6 (six) research hypotheses. Research instrumens
validity was measured by convergent validity and discriminant validity. Instrument reliability
was measured by cronbach’s alpha and composite reliability. The result shows that innovation
and firm size positively effect to improvement process. Improvement process has a positive
effect on firm’s growth.
