How Knowledge Sharing Capability and Innovative Capability Drive Entrepreneurial Performance: The Mediating Role of Dynamic Capabilities

Abstract

This study describes the partial impact of dynamic capability with knowledge sharing capability and innovative capability on entrepreneurs’ performance, among manufacturing SMEs of Upper Sindh, Pakistan. This research is based on two theories like Knowledge-Based theory and Dynamic Capability theory. A quantitative approach was adopted, and data process was completed with structured questionnaire through convenience sampling from 389 manufacturing SME respondents. Smart-PLS tool was used for hypotheses testing due to its fitness for complex models and SME-related research. Findings indicate that knowledge sharing capability and innovative capability positively and significant influence on entrepreneurial performance. Dynamic capability also contributes positive and significant role as mediating, it enables to SMEs to adapt to changing business environments and capitalize on emerging opportunities. The results suggest that firms with stronger knowledge-sharing and innovation capability achieve better entrepreneurial performance when supported by dynamic capabilities. This study contributes to the literature by extending KBV and DCV in the context of manufacturing SMEs in an emerging economy. It also provides practical implications for SME owners, managers, and policymakers to strengthen knowledge management and innovation capability. However, the cross-sectional design limits causal inference. Future studies should employ longitudinal approaches, incorporate additional mediating or moderating variables, and expand the investigation to other SME sectors and regions of Pakistan.