Prior studies suggest that differentiating strategy (DS) has an intervening impact on the relationship between entrepreneurial orientation (EO) and performance. However, they only examine the impacts based on each dimension of EO, provide a lack of theory underpinning why this strategy is the mediator, and focus on the manufacturing industry of an emerging market. Addressing these gaps, the purpose of this study draws from the contingency theory in strategic management to examine whether this strategy is the mediator in the context of Vietnam. Partial least square structural equation modeling used to assess the research model with data collected from 142 SMEs operating in Vietnam. The result indicates that DS fully has an intervening effect on the association between EO and SMEs' performance.