ABSTRACT Modern business environments have two major features -Complexity and Uncertainty. These two characteristics can affect and create stress for young and small businesses. On one hand, remaining in such a competitive environment requires entrepreneurial capabilities, and on the other hand, aspects of corporate entrepreneurial behavior are also heavily influenced by the nature of their relations with the environment. Additionally, in recent years many more firms are looking to compete in the global market and engage corporate entrepreneurship. Therefore, it is essential to identify and analyze the environmental components.On the other hand, nowadays small and medium size enterprises play key role on economic and social growth and development process. These businesses due to having great share on national gross production, employment and reducing economic problems have crucial importance. Therefore, it is necessary for planners and policy makers to pay specific attention to this issue in order to take duly action for improving such institutes. Select volume sample it was benefit from Morgan sampling table, the number of 240 active small and medium size business managers persons were selected as volume sample, this study tries to find out the effect of Environments components and corporate entrepreneurship and performance in Iranian small and medium enterprises. Results of SEM indicated that environmental factors were effective regarding corporate entrepreneurship and performance