Abstract:Research on market orientation and core competence is burgeoning, yet our understanding of the consequences of both activities remains rather unclear.This paper examines the relationships among market orientation, innovation, core competence and firm performance.Using data gathered through a survey of 314 enterprises in eastern, middle, and western China, we proved that market orientation has positive indirect impact on core competence by innovation while the direct effect of market orientation on core competence is not statistically significant.Moreover, a process of developing core competence is required in the chain of innovation-firm performance, while innovation has positive indirect impact on firm performance.