DOI: 10.4018/IJSESD.2017010102 Copyright © 2017, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. International Journal of Social Ecology and Sustainable Development Volume 8 • Issue 1 • January-March 2017 The Role of Local Wisdom-Based e-Eco-Innovation to Promote Firms’ Marketing Performance Vincent Didiek Wiet Aryanto, Universitas Dian Nuswantoro, Semarang, Indonesia ABSTRACT This study aims at investigating the effect of market orientation on local wisdom-based e-eco- innovation as mediating variable to the Small and Medium Enterprises’ marketing performance. Model and hypotheses testing were undertaken by means of SEM (Structural Equation Modeling) Amos version 23. A total of 250 questionnaires were distributed among the three industrial clusters, however, 189 was valid to be further followed up. The findings were market orientation has significant effect on local wisdom-based e-eco-innovation, market orientation has significant effect on firm’s marketing performance and local wisdom-based e-eco-innovation has significant effect on firm’s marketing performance. The study has provided some empirical evidence that the development of local wisdom-based e-eco-innovation particularly in developing countries, enhance the SMEs marketing performance. KEyWoRDS Local Wisdom-Based E-Eco-Innovation, Market Orientation, Marketing Performance, Structural Equation Modeling (SEM) INTRoDUCTIoN Currently, Batik is the Indonesian traditional textile, it is recognized by the UNESCO to be one of the world heritages that must be preserved. Batik itself is an art of hand-painting, formerly, by means of natural dyes, originated from leaves, tree bark, and root of a particular bush and tree. The way the Batik craftsmen carry out to produce their products used to be in accordance with the local wisdom. The waste disposal was treated in accordance with natural conservation, since they dye their batik products to adopt the do and don’ts of the local taboo and wisdom. In contrast, nowadays with the need to engage in mass production, the batik artisans prefer to use synthetic dyes that give more glaring effect of batik color. The batik craftsmen tend to abandon local wisdom and shift their production to mass and fast moving technique for coloring the batik. In result, the way they dispose the waste with the high toxic chemical substances, pollute the river and so the sea coastal area. Those generates externalities cost shouldered by people at the polluted area, for instance the fishermen, the peasants or even the society at large that use the public tap water, prone to have been exposed by hazardous substance direct or indirectly that could endanger their health and quality of life. Hermawan & Yoshanti (2016) conduct research in Jenes River in Surakarta Indonesia; they find out that the river totally deteriorated because of the waste disposal from the batik industries along the water stream. Therefore, the clamor to have green and clean production, needless to say is imperative. Local knowledge and wisdom that has 17