This study aims to examine empirical evidence about the relationship between technological capability, absorptive capacity and innovation on business performance in the export orientation of small and medium-sized enterprises (SMEs) in Central Java and D.I. Yogyakarta, Indonesia. This study uses a quantitative research approach to investigate the relationship between technological capability, absorptive capacity and innovation on business performance. To achieve the research objectives, data were collected from export-oriented SME managers or owners in Central Java and D.I. Yogyakarta, Indonesia. Using structural equation modeling, and after a series of exploratory and confirmatory factors are analyzed, the authors examine an integrated model of the relationship between technological capability, absorptive capacity, innovation and business performance. The results of this study indicate that technological capabilities have no effect on business performance. Arbsorptive capacity has a positive and significant effect on business performance. The ability of technology has a positive and significant effect on innovation. Arbsorptive capacity has a positive and significant effect on innovation. Innovation has a positive and significant effect on business performance. innovation mediates technological capabilities to business performance, and other results also show that innovation does not mediate absorptive capacity on business performance.