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Although the importance of entrepreneurial culture (EC) has been recognized, it remains unclear how EC affects sustainable competitive performance (SCP). This study aims to explore how EC affects SCP via the mediating role of innovation capability (IC) and the moderating role of digital marketing capability (DMC).

Based on data gathered from manufacturing small and medium-sized enterprises (SMEs) in Malaysia, the proposed model was tested using partial least squares structural equation modeling via SmartPLS software.

The analysis results indicate that EC affects IC, which in turn has a positive effect on SCP. In addition, IC mediates the EC-SCP relationship. Importantly, DMC positively moderates the EC–SCP relationship.

This study combines IC, DMC and SCP under resource-based view and dynamic capabilities theory into a single framework. Results confirm EC's impact on SMEs' manufacturing sector SCP, with IC mediating this link. However, the cross-sectional design restricts deeper respondent analysis.

This study offers SME managers/owners and decision-makers insights on enhancing EC for better performance and competitive edge. It highlights IC's crucial role in translating EC into innovation and value creation. Policymakers can also use these findings to design programs for SMEs in emerging markets.

This study underscores the significance of EC adoption not only to generate a sustainable competitive advantage for the firm but also to increase the social as well as economic well-being of the firm, especially in the context of emerging economies, such as Malaysia; which are characterized by diverse ethnic groups contributing to their unique social fabric.

This work fills the knowledge gap by providing empirical evidence for the mediating and moderating role of IC and DMC, respectively, in the link between EC and SCP, thus significantly contributing to emerging markets, where managers seek to enhance their understanding of using EC for fostering SCP.

By combining relevant literature and using quantitative methodology, this study aims to look into the role of knowledge management (KM) as a mediator between entrepreneurial competencies (ECs) and the sustainable performance (SP) of manufacturing small and medium-sized enterprises (SMEs).

The relationships in the proposed model were examined with data collected from 122 Malaysian SMEs using a cross-sectional technique and a standardized questionnaire and analyzed using structural equation modeling path analysis.

According to the findings, ECs have a positive and considerable impact on KM as well as the SP of manufacturing SMEs. Importantly, KM partially mediates between ECs and the SP of manufacturing SMEs.

This research provides a theoretical contribution through the integration of ECs, KM and SP within a unified framework that takes into account the viewpoints of the resource-based view, the knowledge-based view and the triple bottom line. The results corroborate that ECs directly affect SP and indirectly through KM. Nevertheless, the study’s use of cross-sectional survey data makes it impossible to draw conclusions about causes. This is because ECs, KM and SP all have effects on time that this empirical framework cannot account for.

The findings of this research provide valuable insights for managers and decision-makers in SMEs, who are expected to show an increasing interest in adopting KM processes into their companies through which ECs can be translated into SP.

By applying the proposed framework, SMEs can conduct their activities in ways that do not harm environmental and societal well-being while achieving appropriate economic performance at the same time.

As a result, the findings of this study can add to the literature on ECs and KM, as well as boost the chances of SME sustainability. Directions for future research are also provided in relation to a better understanding of the factors affecting the SP of SMEs.