This research is to improve product development with resource-based innovation that is based on the competitive advantage of local product SMEs with an initial market orientation and the role of mediating entrepreneurial skills and driving skills. This study is based on product cases in the domestic market and develops markets for local SME products with interviews and quantitative methods in 30 Small and Medium Enterprises in Central Kalimantan with PLS SEM analysis tools. The findings in this study included identifying and supporting mediating roles. Entrepreneurial orientation towards product innovation in increasing proactive knowledge and risk-taking, innovative market-oriented ideas in product innovation. This research only has results and research units from the scale of local SME products and then for research and theoretical research can be examined on a large scale with additional literature on market orientation. The research implications of research and analysis in product research in local products with market orientation and entrepreneurial orientation can increase revenue and sales, SMEs can implement EO as an important role after market control to improve innovation products and as a strategy in competition with cultural values. The novelty in research is the contextual business strategy and the theory of RBV in a significant positive competitive advantage from EO support in local SME product innovation