Increased knowledge sharpens entrepreneurial orientation, improves corporate strategy and increases the company's competitive advantage. The aim of this research is to explain the moderation of knowledge absorption in the relationship between entrepreneurial orientation and corporate strategy on the competitive advantage of batik companies. Quantitative research paradigm, type of causal relationship research. The data collection technique uses a questionnaire. The research population was in batik company centers in Banyuwangi, Jember, Bondosowo, Situbondo, Lumajang Regencies. The research sample used a non-probability sampling method. The research respondents were 50 batik company owners. Data analysis uses multiple linear regression. Research findings show that knowledge absorption capacity has not been able to moderate the relationship between entrepreneurial orientation and corporate strategy more strongly on the competitive advantage of batik companies. The research contribution is that the ability to absorb new knowledge is very important for small batik companies to encourage innovation. The study of strategies for absorbing new knowledge for small companies needs to be intensified at the theoretical and practical levels. The limitation of the research lies in the homogeneous population, namely all small companies. Recommendations for future research should be that the research population is heterogeneous. This study serves as a good yardstick for exploring the effects of knowledge absorption on competitive advantage. At the same time, this study is within the Indonesian context, especially in small businesses and the creative industry, namely Batik. It is undoubtedly helpful in the Central European context in discussing entrepreneurial orientation and corporate strategy in small businesses. Knowledge absorption is dispersed over countries depending upon their business culture; this study focuses on strategic management theory and its findings valuable for small businesses and creative industries in Central European countries.