Is sustainable performance in MSMEs driven by entrepreneurial orientation through knowledge management and dynamic capabilities?

Abstract

Purpose – Despite the extensive focus on entrepreneurial orientation (EO), its full impact on environmental, social and economic performance remains ambiguous. This study aims to clarify EO’s influence on enterprise sustainability. In addition, it investigates how knowledge management (KM) and dynamic capabilities (DCs) serve as serial mediators between EO and the sustainable performance (SP) of manufacturing micro, small and medium-sized enterprises (MSMEs). Design/methodology/approach – The proposed model’s relationships were investigated using data from 238 Indian MSMEs, collected through a standardized cross-sectional survey. A disjoint two-stage structural equation modeling (SEM) path analysis was used to derive valuable insights from the data. Findings – The findings indicate that EO’s dire impact on SP is statistically insignificant. However, through the mediating roles of KM and DCs, EO exerts a significant indirect influence. EO fosters KM processes that, in turn, enhance DCs, enabling MSMEs to innovate, recognize opportunities and manage risks effectively. This highlights the essential pathways through which EO contributes to achieving SP. Research limitations/implications – These findings offer practical guidance for MSME entrepreneurs, administrators and scholars on implementing KM and DC strategies to strengthen SP and foster long-term competitive advantage. Originality/value – To the best of the authors’ knowledge, this is one of the first studies to examine the serial mediation of KM and DC in the EO–SP relationship within Indian MSMEs. By integrating the dynamic capability view (DCV), knowledge-based view (KBV) and triple bottom line (TBL) framework, this study provides novel theoretical insight and responds to recent calls for deeper exploration of how strategic enablers shape sustainability outcomes in emerging economies. © 2025 Emerald Publishing Limited