Qualitative and Quantitative Research Review, Vol 4, Issue 3, 2019. ISSN No: 2462-1978 eISSN No: 2462-2117 40 INNOVATION CAPABILITY, AND SME’S PERFORMANCE IN MALAYSIA, MEDIATE BY DISRUPTIVE TECHNOLOGY DALJEET SINGH MALKEET SINGH NORSHAFIZAH BINTI HANAFI Universiti Utara Malaysia, Kedah, Malaysia. Date of receipt: 11/01/2019 First Review: 12/03/2019 Second Review: 30/05/2019 Acceptance: 17/06/2019 ABSTRACT The research aim to explore and examine the relationship between innovation capacity (IC), and firm performance (FP) mediated by disruptive technology (DT) among SMEs in Malaysia. The approach of this study is quantitative, and data used to test the hypotheses were gathered from 150 firms located within the state of Selangor. This research utilized “Partial Least Squares Structural Equation Modeling” (PLS-SEM) to establish validity and reliability of measurement model and test the relationships among the study variables. The results show a positive and significant relationship between innovation capacity and firm performance mediated by disruptive technology. Owner- manager of SMEs should emphasize innovativeness and adoption of disruptive technologies to ensure an overall better firm performance. Keywords: innovative capacity, disruptive technology, SMEs’ performance, Malaysia INTRODUCTION The thriving world’s economic growth over the last few years has been aided and spurred by, the contributions of small firms in every country (OECD, 2008, 2015; EIM, 2010). Based on considerable contributions by the SMEs to the development of a country, many countries including Malaysian government had put in place various types of schemes, incentives, campaigns, assistance,