This paper investigates how competitive advantage influences the relationship between innovation and business performance, analyzing the cause-effect dynamics of this interaction. As indicated by some scientific literature, the impact of innovation on business performance varies among firms. Competitive advantage likely holds the key to understanding this variation. To explore this hypothesis, the study examines the role of competitive advantage in moderating the relationship between business innovation and performance. Data were collected from selected companies in Morocco and analyzed using Partial Least Squares-Structural Equation Modelling (PLS-SEM) in the confirmatory analysis phase. The findings confirm that competitive advantage moderates the relationship between business innovation and performance. Additionally, a significant positive relationship between innovation and competitive advantage was observed, also a positive significant relationship between competitive advantage and business performance. Based on these results, it is recommended that companies enhance their competitive advantage to maximize the positive impact of innovation on performance.