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The craft industry is growing rapidly in Bali as a support for the tourism sector, moreover Bali is a world tourist destination. One of them is silver craft, which has now developed as a fashion value product. To create a competitive product, which has quality, quality and uniqueness, of course management material (in this case silver as raw material) needs to be considered. The purpose of this study is to analyze the influence of innovation and competitive advantage on business performance, as well as the role of material management on the influence of competitive advantage on the business performance of silver craft SMEs in the Province of Bali. The population in the study was silver craft SMEs in Gianyar Regency, which is the center of the silver industry in Indonesia. The sample size is determined by the formula Isaac and Michael, so that a sample of 146 respondents was obtained. Data was collected through questionnaires and independent interviews. Furthermore, the data were analyzed using the SEM-PLS approach. The results of data analysis show that competitive advantage has a positive and significant effect on business performance, while material management directly or as a moderator turns out to have no significant effect on business performance. It is recommended that silver craftsmen do material management in a simple but careful manner, and focus more on forming product competitiveness.

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