ABSTRACT This study aims to examine competitive advantage (CA) as a mediating variable between entrepreneurial orientation (EO) and business performance (BP) in the small and medium business sector, especially the handicraft industry. This study uses the positivism method, the sample used in the study is handicraft craftsmen who have been clustered based on research variables and 119 respondents were obtained as research samples. Data was obtained by distributing questionnaires to business actors. Furthermore, the data is processed to test the hypothesis formulated using SEM variance Partial Least Square (PLS). The results showed that competitive advantage gave a positive contribution between entrepreneurial orientation and business performance, yet entrepreneurial orientation did not significantly affect the achievement of business performance. The practical implication of this research is to improve business performance post pandemic Covid-19 SMEs handicraft industry is to create competitive advantage (CA). Competitive advantage (CA) can be created with an entrepreneurial-oriented attitude.