This study developed a model that identified factors that will enhance the innovative performance of Industry Locators in the Province of Laguna. Specifically, it investigated the innovative performance of industrial locators, their dynamic capability in terms of sensing, seizing and managing threats and reconfiguration. Further, the study determined as well as the industrial locators? absorptive capacity in terms of acquisition, assimilation, transformation and exploitation. To attain these goals, the researcher utilized descriptive-correlational research design. The locale of the study is the manufacturing companies in the Philippine Economic Zones situated in Laguna. The 267 respondents consisted of team leaders who work in any of these departments in the industrial locators: research and development, planning, manufacturing, on-site assembling, engineering, maintenance and service. Based on the findings, Industrial locators in the Province of Laguna obtained high level of innovative performance, dynamic capabilities (sensing, seizing and managing threats and reconfiguration) and absorptive capacity (absorption, assimilation, transformation and exploitation). Through Structural Equation Modelling (SEM) it was found that acquisition and transformation have both direct and indirect effect to innovative performance. On the other hand, exploitation has indirect effect to innovative performance and must be mediated by dynamic capability to amplify its effect to the latter.