Abstract

                The purpose of this study was to analyze the effect of intellectual capital and strategic orientation on the ability of innovation and the performance of small business tourism in Indonesia.The population in this study consisted of the owners of small business tourism in Indonesia. The sampling method employed purposive sampling. Methods of collecting data used questionnaires and data analysis methods used Path Analysis. The dependent variable in this study was the performance of small businesses. The mediating variable was the ability of innovation, and its independent variablewasstrategic orientation.The results of this study indicate that intellectual capital has a positive and significant effect on the ability of innovation. Strategic orientation has a positive and significant effect on the ability of innovation and the performance of small businesses.The implication of this research is to improve performance in which small businesses must have the ability of innovation and good marketing strategy. The ability of innovation can be developed from the knowledge possessed by small-scale entrepreneurs.Originality, intellectual capital and marketing strategies carried out by small businesses have less concern for researchers, even though these are important variables that support the performance of sustainable small businesses.