Using the Resource Advantage Theory approach, this research aims to examine the gap between entrepreneurial opportunities and marketing performance, with market-based innovation capability acting as a mediating variable. The data collection method used non-probability sampling with a purposive sampling technique. The data that was eligible to be processed were 250 respondents. Hypothesis testing was used using the AMOS application. The research results show that market-based innovation capability can improve marketing performance as a mediating variable. In addition, market penetration strength can also improve marketing performance. As a strategic variable, market-based innovation capability (MBIC) converts entrepreneurial opportunities into competitive advantages relevant to market needs. In addition, business actors become more adaptive and responsive to market dynamics, increasing competitiveness sustainably. MBIC, rooted in the Resource Advantage Theory of competition, contributes to developing market-based innovation strategies in the UMKM sector.

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