Increasing market changes has led to a need for increased innovation and, therefore, programs of innovation in SMEs. The interrelationships among a firm’s market-orientation, learning-orientation, and innovativeness are an important research area for investigators in the literature of management, strategy, and marketing. However, most of the empirical studies were conducted in large-scale firms in developed countries and ignored small and medium-sized business (SMEs) in general, and in developing countries in particular. This paper examine the nomological relations among market-orientation, learning-orientation and innovativeness in medium-sized business (SMEs) of developing countries. The study involves a questionnaire-based survey of managers from small-sized-firms operating in Iran. These were subjected to a structural equation modeling (SEM) analysis. The results show that; firm learning-orientation positively influences firm innovativeness; firm market-orientation positively impacts firm learning orientation; firm learning-orientation mediates the relationship between firm market-orientation and firm innovativeness.