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Article history: Received: March 3, 2020 Received in revised format: March 25 2020 Accepted: May 5, 2020 Available online: May 6, 2020 This research aims at examining the mediating of product innovation on the relationship between employee development and marketing capacity on product innovation of small and medium enterprises (SMEs) in Hanoi. After 4 months of collecting data, the author received 350 responses and 311 responses left after refining. The findings from the research indicate that employee development and marketing capacity did not only directly but also indirectly affect competitive advantages via product innovation. The findings provide enterprises with important implications for improving competitive advantages from marketing, human resources and product innovation perspectives. © 2020 by the authors; licensee Growing Science, Canada