The aim of this study is to contribute to the literanre review, and to the conceptual rnodel of the relationship between the collaborative networ* on innovation, the relationship between innovation on SMEs performance. The study concerns on the performance of Batik SMEs in Surakarta Indonesia by involving 170 respondents as the research sample. The sampling was done by way of purposive sampling. The study showed that collaborative network has positive effect on the SME's performance and positive effect on innovation. Consequently. innovation eal1 positively affect SMEs' performance. The findings highlight the importance for a company to create and to develop innovation and collaborative network to enhance SMEs performance.