Permasalahan didalam riset adalah dengan adanya kebijakan tentang Covid-19 banyak UMKM kerajinan tangan di kawasan wisata Candi Borobudur yang terkena dampak kerugian dalam hal penjualan. Tujuan dalam penelitian ini adalah melihat pengaruh dari lingkungan internal, lingkungan eksternal dan kapabilitas pemasaran terhadap kinerja UMKM kerajinan tangan di kawasan wisata Candi Borobudur. Riset yang dilakukan adalah jenis penelitian kuantitatif deskriptif. Riset menggunakan unit analisis individu. Penelitian ini menggunakan sampling jenuh dan terdapat UMKM kerajinan tangan di Borobudur sejumlah 43 UMKM. Metode yang dipilih adalah Structural Equation Model berbasis Partial Least Square. Hasil penelitian ini menyatakan bahwa lingkungan eksternal mempengaruhi lingkungan internal. Hasil kedua, lingkungan eksternal berpengaruh terhadap kapabilitas pemasaran. Hasil ketiga, lingkungan eksternal berpengaruh terhadap kinerja bisnis. Hasil keempat, lingkungan internal berpengaruh terhadap kapabilitas pemasaran. Hasil kelima, lingkungan internal berpengaruh terhadap kinerja bisnis. Hasil keenam, kapabilitas pemasaran mempunyai pengaruh terhadap kinerja bisnis UMKM kerajinan tangan di kawasan wisata Candi Borobudur./The problem in the research is that with the policy on Covid-19, many handicraft MSMEs in the Borobudur Temple tourist area are affected by losses in terms of sales. The purpose of this study is to see the influence of the internal environment, external environment and marketing capabilities on the performance of handicraft MSMEs in the tourist area of Borobudur Temple. The research carried out is a type of descriptive quantitative research. The research uses individual units of analysis. This study used saturated sampling and there were 43 handicraft MSMEs in Borobudur. The chosen method is a Structural Equation Model based on Partial Least Square. The results of this study state that the external environment affects the internal environment. The second result is that the external environment affects marketing capabilities. The third result, the external environment affects business performance. As a result, the internal environment affects marketing capabilities. The fifth result, the internal environment affects business performance. The sixth result, marketing capabilities have an influence on the business performance of handicraft MSMEs in the tourist area of Borobudur Temple.