This study develops a conceptual model to explore the direct and indirect relationships between business climate, sustainable establishment, and business partnership for strengthening internal environment and sustainable operational performance of small and medium enterprises (SMEs). The primary data were collected through survey technique from 390 agribusiness SMEs as respondents in South Sumatra provinces-Indonesia and taken by random sampling method and was analyzed by LISREL program. In partial analysis, business climate, sustainable establishment, and business partnership showed significant influence not only in internal environment but also in operational performance of SMEs; from the analysis too, showed there was a positive and significant influence between the internal environment toward the SMEs operational performance. Testing of this model could provide a better understanding of the business climate, sustainable establishment, and business partnership construct that better predict internal environment and sustainable operational performance of SMEs