This study aims to describe and analyze the direct effect of innovations on the financial performance, to measure and analyze the effects of environmental dynamics as a moderating influence innovation on the financial performance. The study was conducted in the telecommunications sector in Indonesia Stock Exchange (IDX) with the observation period 2008-2012. The sampling method is saturated. The unit of analysis of 30 cases by using Structural Equation Modeling (SEM)-based variance that is SmartPLS Ver 2.0 M3. Research findings that innovation is significant and positive effect on financial performance. Effects of environmental dynamics as a quasi moderating influence is weakening innovation on financial performance.
                        
                        
                        
                        
                            
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