Research related to the business performance of various types of industry has been done, but in the digital technology industry is new interesting to do. The purpose of this research is to see the effect of distinctive capabilities and innovation management on business performance. Surveys have been conducted in five major cities in Indonesia, namely Jakarta, Surabaya, Bandung, Medan, and Makassar. The number of samples of 138 taken by proportional random sampling. The analysis technique is done with Structural Equation Models and AMOS program as a tool. The results showed that the distinctive capabilities and innovation management significantly influence the performance business of the digital IT industry in Indonesia. Distinctive capabilities and the ability of innovation management will support the implementation of the corporate strategy that is difficult to imitate by competitors so that will create a competitive advantage.