This　paper　proposes　a　dominant　element　innovation　theory　of　small　and　medium-sized　enterprises(SMEs),　analyzes　the　theoretical　connotation　which　start　from　extracting　dominant　element　and　end　in　forming　dominant　innovation　pattern,　then　takes　the　dynamic　and　evolutionary　perspective　to　describe　the　evolvement　mechanism　of　element-oriented　innovation　pattern,　later　through　a　case　study　of　Fujian　Haiyuan　automatic　equipments　CO.LTD　to　analyze　and　prove　the　theory　proposed　above,　aims　to　provide　a　theoretical　reference　and　practical　guidance　for　SMEs　innovation　and　gradually　towards　innovative　enterprises.　©　2010　IEEE.